HSBC ends at lowest in over 7 years; Standard Chartered hit by rights issue
HONG KONG (MarketWatch) -- Most Asian markets declined Monday as the U.S. government's rescue of Citigroup Inc. and hefty pre-weekend gains on Wall Street failed to cheer investors concerned about global economic uncertainties and a weakening outlook for earnings.
Financials broadly paced losses across the region, although they briefly recovered lost ground after the U.S. government agreed to rescue Citigroup with a huge bailout plan that includes $20 billion capital infusion, guarantees of up to $306 billion of Citi's troubled assets and restrictions over executive bonuses. See full story.
"Value investors may think things are looking cheap, but they don't know what's coming next. Today we talk about Citigroup [rescue], but how about next week? Is economic data going to be worse, or how much can interest rates be cut? There is no visibility," said Dale Tsang, managing director at Imperial Dragon Asset Management Co.
Tsang said a few funds have lost more than half their assets under management this year, either through redemptions or in the form of market losses, and lacked the confidence to invest in the market.
Hong Kong's Hang Seng Index finished 1.6% lower at 12,457.94, while the Hang Seng China Enterprises Index gave up 0.8% to 6,376.96.
Japanese markets were closed for a holiday.
China's Shanghai Composite was the worst hit, ending 3.7% lower at 1,897.06.
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.
South Korea's Kospi slumped 3.4% to 970.14, although it narrowed losses on media reports about the U.S. government's bailout for Citi.
In afternoon trading, India's Sensitive Index, or Sensex, was little changed at 8,916.10, while Singapore's Straits Times Index skidded 2.5% to 1,620.29.
Australia's S&P/ASX 200 index finished 0.3% to 3,425.10, reversing early losses as resource stocks extended gains and banks pared losses toward the close.
Elsewhere, Taiwan's Taiex also recovered some lost ground to finish 0.3% lower at 4,160.54, while New Zealand's NZX 50 index slipped 0.1% to 2,575.48, ending lower for a sixth straight session.
Hirokazu Yuihama, head of regional strategy at Daiwa Institute of Research in Shanghai, said a sustainable rebound in the Asian markets was unlikely, as the U.S. economic downturn was likely to "continue well into the next year."
"No one believes the price-to-earnings ratio at the moment because the quality of earnings is getting worse," said Yuihama. "I think the downward revision in earnings will continue and the extent of the revision will be bigger, going forward."
HSBC ends at 7-year low
Shares of HSBC Holdings , which have a weighting of more than 15% in Hong Kong's Hang Seng Index, ended at HK$74.75 ($9.65), its lowest level since Sept., 2001 as financials were broadly sold off across the region.
News of Citigroup bailout helped some Australian banks rebound, with shares of Westpac Banking Corp.bouncing 0.9%, while Commonwealth Bank of Australia pared losses to finish 2.4% lower in Sydney.
Mumbai-listed shares of State Bank of India and Housing Development Finance Corp. and Seoul-listed Shinhan Financial Corp. and KB Financial Group also briefly narrowed losses, but slipped back again on intensified selling. In Mumbai afternoon trading, State Bank stock slid 2.9% and HDFC lost 1.2%.
In Seoul, Shinhan skidded 8.6%, while KB Financial shrank 8.8%.
