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Credit Woes Hit Asian Markets, Japan Sheds 2%

Markets in Asia closed down Friday, with financial stocks declining around the region on credit concerns after brokerages downgraded U.S. banking giants Citigroup and Bank of America.

The downgrades spooked investors in Asia who dumped major banks in the region including Japan's top lender Mitsubishi UFJ, Australia's Macquarie Bank, South Korean lender Kookmin
Bank
and HSBC, all down.

Japanese stocks posted a one-week closing low, snapping a two-day winning-streak. Besides tumbling bank counters, the stronger yen undercut exporters, especially automakers such as Honda Motor. Nissan Motor and Toyota. Both the Nikkei 225 Average and the TOPIX closed more than 2 percent lower on what market participants said was inevitable spillover from overseas trade and the re-emergence of worries about fallout from the subprime loan crisis.

South Korea's KOSPI shed 2.1 percent, as banks such as Woori Financial tumbled on fears of more fallout from the U.S. credit crisis, while exporters fell on concerns a firm Korean won would dent overseas earnings. But hanarotelecom surged as much as 10 percent on a report Australia's Macquarie Bank is close to buying the firm, though it trimmed gains to 1.79 percent.

Australian shares finished 1.9 percent lower, led down by financial firms such as Macquarie Bank. A pull-back in base metals prices also weighed down on resource firms, including top miner BHP Billiton, adding more pressure on a market which had hit record highs in the previous session following an interest rate cut in the U.S.

A man uses his mobile phone in front of electronic stock boards at the Australian Securities Exchange (ASX Ltd.) headquarters in Sydney, Australia.
Ian Waldie | Bloomberg | Getty Images
A man uses his mobile phone in front of electronic stock boards at the Australian Securities Exchange (ASX Ltd.) headquarters in Sydney, Australia.

Hong Kong's Hang Seng Index fell over 3 percent, tracking a drop in global equities, with local property developers leading a broad sell-off after their recent rally, and as more U.S. rate cuts were seen as unlikely this year. Investors were also cautious ahead of a U.S. payroll report, due out after Friday's market close.

Singapore's Straits Times Index shed more than 2 percent after those broker downgrades for Citigroup and Bank of America raised investor concerns of more fallout from the credit crisis. Banks such as DBS Group, United Overseas Bank and Oversea-Chinese Banking Corp led the declines.

Chinese stocks fell hit by concern about monetary policy, weak global markets and selling to raise money to buy shares in PetroChina, which will list on Monday. But limiting the index's drop was a further rise of heavyweight oil refiner Sinopec following news that China was hiking domestic fuel prices.