Asia Stocks Plunge This Week as Global Credit Crisis Deepens

By Chua Kong Ho

Oct. 11 (Bloomberg) -- Asian stocks plummeted this week, sending the region's benchmark index to its biggest weekly drop on record, as the deepening credit crisis threatened to push more companies into bankruptcy.

Mitsubishi UFJ Financial Group Inc. slumped 20 percent as Asian money-market rates climbed even as the Federal Reserve and other central banks cut borrowing costs to revive credit lending. BHP Billiton Ltd., the world's biggest mining company, sank 8.8 percent, while Toyota Motor Corp. plunged 21 percent on concern a worldwide slowdown will hurt demand for metals and automobiles.

``It's pure panic,'' said Ivan Tham, Singapore-based head of funds management at the state-backed Kuwait Finance House, which has about $24 billion in assets. ``You're seeing companies start to fail because they can't refinance. Good companies are being sold down aggressively with the bad.''

The MSCI Asia Pacific Index fell 18.7, or 17.8 percent, to 86.0. That's the biggest weekly decline since the index was created on Dec. 31, 1987.

Japan's Nikkei 225 Stock Average plunged 24 percent for the biggest weekly decline in its more than 50-year history. Australia's S&P/ASX 200 Index slumped 16 percent, the biggest rout since 1992. Hong Kong's Hang Seng Index fell 16 percent, the most since January 1998.

Singapore's Straits Times Index declined 15 percent as the city-state sank into a recession.

`It's Scary'

More than $6 trillion was erased from global equities this week even as central banks in China, Australia, South Korea, Taiwan and Hong Kong's monetary authority joined a global effort to cut interest rates after the yearlong credit-market seizure stoked concern banks will run short of money.

``It's scary,'' said Prasad Patkar, who helps manage $1.8 billion at Platypus Asset Management in Sydney. ``Equity markets are pricing in a very severe, deep recession as a function of people not getting credit.''

Mitsubishi UFJ fell 20 percent to 710 yen. Babcock & Brown Ltd., an infrastructure assets manager, tumbled 45 percent to A$1.01. ICICI Bank Ltd., the Indian lender with the biggest losses on overseas investments, plunged 10 percent to 504.35 rupees.


Asian money-market rates climbed as the interest-rate cuts and injections of more than $32 billion by Japan and Australia failed to unlock credit. The three-month interbank offered rate in Tokyo climbed to the highest to the highest since March 1998. Hong Kong's three-month rate rose to the highest in a year.

Oil, Copper

DBS Group Holdings Ltd., Singapore's largest bank by assets, fell 15 percent to HK$14. The city-state fell into the first recession since 2002 as manufacturing slumped. Gross domestic product contracted an annualized 6.3 percent in the third quarter from the previous three months, after shrinking a revised 5.7 percent between April and June.

BHP declined 8.8 percent to A$27.74. Mitsui & Co., Japan's second-largest trading company, dropped 13 percent to 1,040 yen. Inpex Corp., Japan's largest oil explorer, declined 14 percent to 657,000 yen.

Oil in New York fell to the lowest in a year and copper traded at its weakest since March 2006 in a week when the Dow Jones Industrial Average dropped below 9,000 on Oct. 9 for the first time since 2003.

Toyota, which gets about half its sales from North America and Europe, sank 21 percent to 3,220 yen. Honda Motor Co. dropped 26 percent to 2,110 yen, while Nissan Motor Co. slumped 25 percent to 464 yen. The yen also posted its biggest weekly gain in a decade against the dollar, hurting the value of automakers' overseas sales.

To contact the reporter on this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net