Asian Stocks Fall as Credit Crisis Deepens; Westpac Declines

By Patrick Rial and Ian C. Sayson
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Sept. 29 (Bloomberg) -- Asian stocks fell for a fifth day after Fortis received a $16 billion bailout and concern grew that a U.S. rescue plan will fail to prevent more bank collapses. U.S. index futures declined.

Westpac Banking Corp., Australia's third-largest bank, fell 3.5 percent, and financial shares reversed earlier gains as three European governments agreed to invest in Belgium's Fortis and the U.K. seized Bradford & Bingley Plc. Mining and shipping companies declined, led by BHP Billiton and China Cosco Holdings Co. after commodity prices and cargo rates slumped.

``It's too early to say if this bailout will lead to long- term optimism,'' said Olan Caperina, who helps manage about $6.7 billion at BPI Asset Management Inc. in Manila. ``The magnitude of the bailout is an indication of the size of the trouble and the possibility that other problems may still be lurking.''

The MSCI Asia Pacific Index lost 2.4 percent to 111.07 as of 3:51 p.m. in Tokyo, with financial companies accounting for 28 percent of the drop. The gauge has tumbled 29 percent this year as the credit turmoil caused the collapse of Bear Stearns Cos. and Lehman Brothers Holdings Inc. Wachovia Corp. is in talks to sell itself to Citigroup Inc. and Wells Fargo & Co., the Wall Street Journal reported today.

Most benchmark indexes in Asia dropped. Japan's Nikkei 225 Stock Average lost 1.3 percent to 11,743.61. FamilyMart Co., operator of Japan's third-largest convenience store chain, climbed 6.3 percent as investors moved into companies whose profits are sheltered from weakening growth.

Subprime Fallout

Futures on the U.S. Standard & Poor's 500 Index declined 1.2 percent today. U.S. stocks tumbled the most in four months last week, with the S&P 500 losing 3.3 percent, on concern Congress wouldn't pass the rescue plan.

U.S. political leaders said yesterday they have reached an agreement on a $700 billion bank-rescue package that will allow the Treasury to purchase troubled assets from banks. It will also limit executive compensation at some participating financial institutions as well as provide guarantees to protect the government from excess losses.

Investor Marc Faber, who predicted the 1987 ``Black Monday'' crash, said last week the rescue package may require as much as $5 trillion. The crisis that erupted with the collapse of two Bear Stearns hedge funds last year has caused the world's biggest financial institutions to report $556 billion in losses.

Government Action

The turmoil is deepening in Europe where Fortis, the largest Belgian financial-services firm, received an 11.2 billion-euro ($16.2 billion) rescue from Belgium, the Netherlands and Luxembourg, while Germany's financial industry provided Hypo Real Estate Holding AG with a credit facility. Bradford & Bingley, Britain's biggest lender to landlords, became the second British bank to be nationalized this year.

Westpac fell 3.5 percent to A$23.15. Industrial & Commercial Bank of China Ltd., the world's largest bank by market value, declined 2.3 percent to HK$3.01 in Hong Kong. Sumitomo Mitsui Financial Group Inc., Japan's third-largest listed bank, dropped 1.6 percent to 678,000 yen.

The plan ``will not jump-start lending, as house prices appear likely to keep falling for some time,'' Ian Morris, chief U.S. economist at HSBC Holdings Plc, wrote in a note on Sept. 26. ``The beneficial effect of the rescue package will only be a small, partial unwinding of the earlier tightening of financial conditions.''

China Cosco, the world's largest dry-bulk ships operator, plunged 7.5 percent to HK$7.40, a level not seen since May 2007. Mitsui O.S.K. Lines Ltd., Japan's second-biggest operator of dry- bulk ships, lost 6 percent to 889 yen. Kawasaki Kisen Kaisha Ltd., the third largest, slumped 6.3 percent to 628 yen.

Baltic Dry

The Baltic Dry Index, a measure of shipping costs for commodities, plunged 10 percent on Sept. 26, the biggest drop on record. Elsewhere, Citigroup Inc. lowered its prediction for nickel and copper prices. Macquarie Group Ltd. cut its estimate for oil.

Mitsui & Co., Japan's second-largest trading company, slumped 8.4 percent to 1,304 yen. BHP Billiton, the world's largest mining company, fell 4.5 percent to A$34.24. Rio Tinto Group, the third biggest, lost 5.5 percent to A$95.50.

Crude oil fell 1.1 percent on Sept. 26, while copper and nickel also retreated. A measure of six metals traded on the London Metal Exchange, including copper and zinc, slid 1.5 percent, nearing the lowest level in two years.

`Need More Stability'

FamilyMart rose 6.8 percent to 4,390 yen. Astellas Pharmaceutical Inc., Japan's second-largest drugmaker, added 0.4 percent to 4,570 yen. Woolworths Ltd., Australia's biggest retailer, climbed 1 percent to A$28.37.

Investors betting that drug, power and food producers will provide stable earnings even when economies are in decline has helped make gauges of their shares the three best performers of the MSCI Asia Pacific's 10 industry groups this year.

``We need more stability globally before we can rally,'' Donald Williams, chief investment officer at Sydney-based Platypus Asset Management Ltd., which oversees the equivalent of $1.6 billion, said in an interview with Bloomberg TV.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Ian C. Sayson in Manila at isayson@bloomberg.net.