Asian markets see-sawed in volatile trade Tuesday to end mixed as financial counters rebounded on news that Citigroup will receive a large cash infusion from the investment arm of the Abu Dhabi government. The news pushed the Japanese and South Korean markets back into the black after spending most of the session in negative territory.
Late in the morning, Citigroup announced it agreed to sell $7.5 billion worth of Equity Units, to be converted into common shares, to the Abu Dhabi Investment Authority. Citi said ADIA's ownership in its common shares would total no more than 4.9 percent of all Citi's shares outstanding.
The U.S. dollar jumped 1 percent against the yen, and U.S. Treasuries extended losses after the deal was announced. The dollar rose to 108.45 yen, pulling away from a 2 1/2-year low hit on Monday as the sale is expected to offer a shot of funds into Citi, which has been one of the hardest hit banks from subprime mortgage defaults and the resulting credit crunch.
Tokyo's Nikkei 225 Average ended up 0.6 percent after a rollercoaster day that saw it climb more than 510 points from low to high, with bank shares
such as Mizuho Financial Group sitting in the front seats. A spate of short-covering took both the Nikkei and the broader TOPIX index into positive territory in a matter of
minutes on the Citigroup news.
South Korea's KOSPI closed 0.2 percent higher recovering falls of up to 3.6 percent with the Citigroup deal easing some credit market concerns. Hyundai Heavy Industry and other shipbuilders also advanced as the sector's rosy profit outlook caused investors to chase their
shares on dips.
Australian shares fell 0.6 percent as U.S.-exposed firms such as Westfield Group dropped on worries about the U.S. economy, though the market ended off lows after news of a fund injection for Citigroup eased some concerns about credit markets.
Hong Kong blue chips ended 1.5 percent lower and China plays also declined in a broad selloff, with Bank of China plunging after a key shareholder sold a $567 million stake. Investors fretted about what more would come from the credit crisis after global bank HSBC Holdings sought to bail out its two structured investment vehicles with funding of up to $35 billion.
Singapore's Straits Times Index finished 1.3 percent lower on short-covering and bargain hunting.
And Chinese shares slid 2 percent, led by a drop in index heavyweight PetroChina and other large-cap stocks hit by weakness in global stock markets.