MW: Sydney, Mumbai come off lows on Citigroup rescue
By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Asian markets mostly declined Monday as financials such as HSBC Holdings paced losses on global financial worries, but banking shares helped a recovery in Sydney and Mumbai after the U.S. government agreed to inject additional capital into Citigroup and guarantee the banking giant's assets.
Japanese markets were closed for a holiday.
Australia's S&P/ASX 200 index rose 0.4% to 3,428.30 by late afternoon, reversing direction after shedding 1.6% earlier in the day.
In Mumbai, the Sensitive Index, or Sensex, gained 0.6% to 8,972.63 by mid-morning, also changing direction.
In Seoul, the Kospi pared losses and was recently down 0.8% at 995.91. Taiwan's Taiex also recovered some lost ground and was recently 0.3% down to 4,159.93.
The recovery came on news that Citigroup ) and the U.S. government reached an agreement to rescue the beleaguered financial giant with a plan that could lead to government guarantees of as much as $300 billion of Citi's troubled assets, according to a Wall Street Journal report. The plan also involves a $20 billion capital injection with an 8% interest rate, the report added. See full story.
Shares of Westpac Banking Corp. bounced 1.8%, while Commonwealth Bank of Australia pared losses and was recently 2.8% lower in Sydney trading.
In Mumbai, State Bank of India shares rebounded from their early lows and gained 2.5% by mid-morning, while ICICI Bank stock narrowed losses and was recently down 1.5%.
In Seoul, shares of Shinhan Financial Group cut losses and were recently down 2.1%, Korea Exchange Bank jumped 5.2% and Industrial Bank of Korea advanced 4%.
Elsewhere, Hong Kong's Hang Seng Index ended the morning trading session down 1.2% at 12,508.52, while the Hang Seng China Enterprises index lost 0.3% to 6,403.65.
China's Shanghai Composite index gave up 1.6% to 1,937.70.
Conita Hung, head of research at Delta Asia Financial Group, said investors were disappointed after the Chinese government and central bank didn't announce an interest rate cut, or other stimulus measures, over the weekend as investors anticipated.
Howard Gorges, vice chairman at South China Brokerages, said investors were cautious due to uncertainties in China as well as the U.S.
"A changeover period in the U.S. means it's also harder to take any measures to stimulate the economy there, until January," said Gorges.
Singapore's Straits Times Index lost 2% to 1,628.30, while New Zealand's NZX 50 index gained 0.1% to 2,575.48, after dropping for the five previous sessions.
Regional detail
Shares of HSBC Holdings, which have a weighting of more than 15% in the Hang Seng Index, fell to HK$73 ($9.34) in early trading, a level it hasn't seen since Sept. 25, 2001. The stock ended the morning session 1.9% lower at HK$75.60.
Shares of Standard Chartered lost 5.3% in Hong Kong trading, after the Financial Times reported that the bank was planning a $3 billion rights share issue to boost its capital reserves. Sunday night, the lender was finalizing details of the issue, which is expected to be priced at 400 pence a share ($5.96), or a steep discount to Friday's close at 759 pence in London, the report added.
Resource stocks advanced on higher crude-oil and gold prices, with BHP Billiton rising 6.4% and Santos advancing 4.1% in Sydney.
In Hong Kong, shares of Cnooc rose 2% in Hong Kong, while gold miner Zijin Mining Group Co. jumped 4.9%.
The advance in Cnooc shares came after the South China Morning Post reported that its parent, China National Offshore Oil Corp., has prepared a blueprint to invest 200 billion yuan ($29.4 billion) over the next 12 years to explore and develop deep-sea oil and gas fields in the South China Sea. The investment will be shared by China National, Cnooc, China Oilfield Services and Offshore Oil Engineering, and China National's overseas partners, the report added.
Shipbuilding stocks advanced, with Daewoo Shipbuilding & Marine Engineering Co. rising 2.7% while Hyundai Mipo Dockyard Co. surging 7.8% in Seoul.
January crude-oil futures rose as much as 72 cents to $50.65 a barrel in electronic trading, after rising 51 cents to $49.93 a barrel on the New York Mercantile Exchange Friday. December gold futures fell $4 to $787.80 an ounce recently, after rallying $43.10 to end at $791.80 Friday.
In currency trading, the U.S. dollar bought 95.29 yen in Asia, compared with 94.94 yen Friday. The Australian dollar purchased $0.6305 versus $0.619 on Friday.
On Wall Street, the Dow Jones Industrial Average surged 6.5% to end at 8,046.42 Friday on word President-elect Barack Obama would nominate New York Federal Reserve Bank President Timothy Geithner as Treasury secretary. The S&P 500 jumped 6.3% to 800.03, while the Nasdaq Composite ) gained 5.2% to 1,384.35.
