Asian Stocks, Index Futures Tumble as Financial Crisis Worsens

By Patrick Rial

Oct. 8 (Bloomberg) -- Asian stocks and index futures slumped on concern global economies will slow as the credit crisis deepens.

Australia & New Zealand Banking Group Ltd., Australia's third-largest, lost 4.2 percent. U.S.-traded receipts of Toyota Motor Corp., the world's second-largest automaker, slumped 6.2 percent after Nikko Citigroup Ltd. cut its rating to ``sell.'' BHP Billiton Ltd. tumbled 5.1 percent after aluminum producer Alcoa Inc. said profit dropped by half last quarter as weak demand sent raw material prices lower.

Australia's S&P/ASX 200 Index fell to the lowest level since November 2005, losing 3.7 percent to 4,448.20. New Zealand's NZX 50 Index, the first market in the Asia-Pacific region to begin trading, slumped 1.9 percent.

Nikkei 225 futures expiring in December closed in Chicago yesterday at 9,820, down from 10,210 earlier in Osaka and 10,160 in Singapore. The Bank of New York Mellon Asia ADR Price Index, which tracks the region's American depositary receipts, plunged 4.1 percent.

``The market is being pounded by worries about both the real economy as well as the financial system,'' Hiroichi Nishi, an equities manager at Tokyo-based Nikko Cordial Securities Inc., said in an interview with Bloomberg TV. ``The ongoing drop in U.S. markets and weakening dollar are pointing to another day of selling here.''

Yesterday, the MSCI Asia Pacific Index fell 1.7 percent to 98.71, the first time the gauge has closed below 100 since July 2005. U.S. shares dropped yesterday, with the Standard & Poor's 500 Index plunging 5.7 percent, led by a rout in financial companies such as Morgan Stanley.

Interest Rate Cut?

Continued efforts by political leaders have done little to assuage concern that the credit crisis is growing more serious. Federal Reserve Chairman Ben S. Bernanke signaled yesterday the central bank is ready to reduce interest rates, which was only able to spark a temporary rebound in U.S. markets.

Meanwhile, the U.K. is preparing a rescue package for British banks which includes cash injections and deposit guarantees, according to three people familiar with the plan. Royal Bank of Scotland Group Plc, the U.K.'s second-biggest bank, plummeted 39 percent yesterday as a downgrade in its credit rating sparked concerns of a run on the bank.

Investors should ``sell'' Toyota's shares, according to Nikko Citigroup's Noriyuki Matsushima. Matsushima had previously maintained a ``buy'' rating on the stock. Operating profit is likely to be 1.1 trillion yen for the year ending in March, according to the analyst, 31 percent below the company's estimate. The Nikkei said the company's operating profit may drop 40 percent this year to 1.3 trillion due to slowing demand for autos.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.