Asian Shares Drop; Nikkei Falls 3.2%

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Asian shares were falling at the start of the week amid worries about the health of large U.S. banks and the economy more broadly, with financial stocks falling again and sellers coming into Japanese auto companies.
Risk aversion also hit the currency market, sending the euro and Asian currencies tumbling.

"There's just no good news," said Macquarie Private Wealth associate director David Halliday. "The U.S. economy is in the worst shape it's been for probably 50 or 60 years, so it's hard for equities to rally."

Japan's Nikkei 225 was down 3.2% with Australia's S&P/ASX 200 down 2.7% after hitting a three-month low, while South Korea's Kospi Composite was down 3.2% to its lowest intraday level since December 5 and Hong Kong's Hang Seng Index was down 2.7%.

The falls followed declines on Wall Street Friday, with the Dow Jones Industrial Average dropping 11.72% for February as a whole, down six months in a row for its longest monthly losing streak since late 2002.

Concerns about the financial sector remained. Monday, the Wall Street Journal quoted people familiar with the matter as saying American International Group Inc. would receive up to an additional $30 billion in federal assistance as part of a revamp of its government bailout.

HSBC Holdings shares were suspended from trade in Hong Kong before the release of its 2008 results and a corporate announcement. The Wall Street Journal said the bank planned to curtail its foray into U.S. consumer lending as it prepared to raise billions of pounds to shore up capital and possibly hunt for acquisitions.

The coming week was also heavy with risk events, including central bank meetings and Friday's U.S. non-farm payrolls report. Recently, DJIA futures were down about 72 points in screen trade.

Some analysts were looking for buyers to come in before long, given the large falls in many markets in February.
"Surely we are reaching some sort of market crescendo of bad news?" asked Southern Cross Equities director Charlie Aitken. "My gut tells me the negative effect that U.S. and UK bank equity is having on the broader equity markets must be peaking."

But that was by no means a shared view: In Tokyo, Tachibana Securities operating officer Kenichi Hirano said the Nikkei 225 could test February 24's intraday low of 7155.16 in the near term (the index was recently at 7325.96); "some aggressive sellers are actually seeing great opportunities now, because they can place large sell orders and still find buyers for them," he said.

Tokyo's declines were being led by financial and auto stocks with Mizuho FG down 4.3% and Mitsubishi UFJ FG lower by 5.1%. Honda fell 2.1% with Nissan down 3.3% and Toyota off 2.5% after their recent gains.
Financial stocks were also weak in Sydney with ANZ Bank and Commonwealth Bank of Australia weakening after ratings agency Moody's downgraded its outlook for their financial strength ratings to negative from stable; CBA was down 4.5% while ANZ Bank was down 3.2%.

Westpac received the same downgrade but its shares largely unchanged from before Moody's announcement, down 2.5%.
Korean markets were broadly lower with Samsung Securities down 2.9% and Hyundai Heavy shedding 5.1%.

Taiwan financial stocks followed their regional peers lower Cathay Financial down by its daily limit of 7.0% and Fubon Financial off 6.6%.

In New Zealand, Telecom fell 2.9% as the stock went ex-dividend, though PGG Wrightson gained 9.9% after news last week it had reached agreement with its banking syndicate to refinance its debt.

New Zealand's NZX-50 was 1.6% lower, Singapore's Straits Times Index was down 3.1%, Taiwan's Taiex was 1.5% lower, while Malaysia's Kuala Lumpur Composite Index was down 1.2%. The Shanghai Composite was 0.6% lower with the Philippine market down 0.4% and Indonesian shares falling 0.3%.

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