High-yield/macroeconomics (fka YIELD)

[Preciouslife1]

Asian stocks slump on renewed subprime worry; Australia hit by rate fears UPDATE
February 11, 2008: 05:11 AM EST

http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-22917156.htm?section=money_topstories

SINGAPORE, Feb. 11, 2008 (Thomson Financial delivered by Newstex)
Stock markets across Asia fell Monday as investors returned from the Lunar New Year break to continued gloom on Wall Street, while Australian benchmarks fell after the central bank cautioned that high inflation may require further rate hikes.

The S&P/ASX 200 closed down 213 percent at 5,537.6 and the All Ordinaries lost 2.1 percent to 5,603.1 after the Reserve Bank of Australia said there's a strong likelihood that inflation will remain uncomfortably high for some time. Barring a sharp slowdown, monetary policy will probably need to be tightened again, it said in its quarterly monetary statement.

The RBA hiked its target cash rate a quarter percentage point to 7.00 percent last Tuesday following two quarter percentage point rises in August and November last year. The rate is now at the highest level in 12 years.

'The statement on monetary policy released by the Reserve Bank didn't brighten the market at all with warnings of future interest rate rises, which goes down like a lead balloon in the market at the moment,' said Michael Heffernan, a private client advisor at Austock Securities in Sydney.

Adding to the downdraft, Macquarie unit Macquarie Fortress Investments said a leveraged fund it manages may not be able to refinance debt before existing financing arrangements mature, reigniting concerns about the financial sector.

'It looks like people are playing a game of roulette at the moment, putting it on one day and taking it off the next, rather than staying in for the long term,' said Juliette Saly, an equities analyst at CommSec in Sydney.

In other news, the Group of Seven finance ministers and central bankers are expecting losses from securities linked to the US subprime sector to reach 400 billion US dollars, far more than the 100-150 billion dollars that the Federal Reserve has predicted, the Financial Times reported Monday.

G7 officials at a weekend meeting in Tokyo highlighted their concerns about the subprime crisis and subsequent crunch in global credit markets.

'All these problems about economic recession and subprime losses are not yet over,' said Francis Lun, general manager at Fulbright Securities in Hong Kong.

The Hang Seng was down 2 percent at 22,999.99. The South Korean Kospi ended down 3.3 percent to 1,640.67.

The Singapore Straits Times was down 1.6 percent at 2,886.51 and the Philippines Composite was down 1.9 percent at 3,179.48.

The Indian Sensex lost 3.8 percent to 16,801 in early trade.

The Japanese and Chinese markets were closed. The Shanghai bourse will reopen on Wednesday and the Tokyo exchange will resume trade on Tuesday.

Banks in focus

Wall Street set the negative tone when the Dow Jones Industrial Average ended down 64.87 points or 0.5 percent at 12,182.13 on Friday.

Shares fell amid growing concerns about the big US bond insurers which are facing potential downgrades by the major ratings agencies, a move that would trigger a fresh round of writedowns for the big banks.

On Thursday, Moody's lowered its rating on the bond insurer Security Capital Assurance. (NYSE:SCA) On Friday, Fitch Ratings placed a series of mortgage-backed securities insured by MBIA on negative watch.

Meanwhile, soaring commodities prices hit retailers as investors worried that consumers will spend less in the shops if they have to pay more at the pump. Crude oil prices closed up 3.66 dollars at 91.77 dollars a barrel on the New York Mercantile Exchange on Friday on expectations of disruptions in Nigerian exports. Oil was last quoted at 91.99 dollars a barrel in Asian trade.

In Australia, the major banks were sharply lower amid concerns about possible higher provisions for bad debt.

Australia & New Zealand Banking Group (OOTC:ANZBY) closed down 3.1 percent to 24.80 dollars, Commonwealth Bank slipped 2.8 percent to 48.75 dollars and Westpac closed down 2.7 percent at 24.30 dollars.

National Australia Bank (OOTC:NABZY) was off 4.3 percent at 32 dollars.

Trading in Allco Finance Group (OOTC:AOFNF) was halted at the finance and asset management company's request. Allco, which last traded at 3.05 dollars, has been under selling pressure because of margin calls faced by shareholders due to market volatility.

In Hong Kong, HSBC lost 2.6 percent to 111.10 dollars. HSBC is planning to sell half of its 800-branch network in France as it wants to shift its focus to emerging markets, according to media reports.

Bank of Communications slid 4.5 percent to 8.72 and Cnooc lost 6.5 percent to 11.02.

In Seoul, Kookmin Bank (NYSE:KB) tumbled 6.5 percent to 58,000 won and Hana Financial dropped 5.2 percent to 43,500 won. Mirae Asset Securities tumbled 6.4 percent to 131,000 won.

Shipbuilders were key decliners. Hyundai Heavy ended down 4.3 percent at 333,500 won, Samsung Heavy was down 2.7 percent at 28,800 and Daewoo Shipbuilding was down 5.1 percent at 34,450 won.

Hynix edged up 0.2 percent to 26,100 won after Daewoo Securities raised its call on the stock to 'buy' from 'neutral', citing improving market conditions.

Rival Samsung Electronics slid 4.7 percent to 584,000 won.