Subprime worries weigh on Asian markets

Worries about US credit-market losses spreading to the Asia Pacific region flavoured trading Tuesday. Shares generally fell or rose only weakly, with Bangkok, Jakarta, Sydney and Seoul leading the drop.

Australian shares suffered after a recently floated mortgage lender, Rams Home Loans Group, warned that profits would be hit by the turmoil in world debt markets. Its shares dropped as much as 32 per cent, before closing down 19.4 per cent at A$1.41.

Its troubles spilled over to other Australian financial stocks. Commonwealth Bank of Australia ended down 1.1 per cent, Australia & New Zealand Bank dropped 1.4 per cent and Westpac Banking fell 1.1 per cent. Overall, the S&P/ASX 200 index closed 0.8 per cent lower at 5,964.80.

On currency markets, the US dollar hit a two-month high against the South Korean won as investors worried about credit and foreigners continued to sell shares. The Kospi ended the day down 1.7 per cent at 1,817.89. Some investors sold shares to avoid exposure to volatility elsewhere as Seoul will be closed Thursday for a national holiday. The dollar rose to 932.10 won.

Chinese shares seemed immune to credit crunch worries elsewhere in Asia. The Shanghai Composite index rose 1.09 per cent to close at 4,872.79 while the Hong Kong market managed an afternoon rally to close up 0.53 per cent at 22,007.32 despite falling during morning trading. Utility shares led the rise.

The premium of domestically listed A shares of mainland companies over H shares of the same firms listed in Hong Kong widened to 74.73 per cent on average, as the Hang Seng China AH Premium Index hit rose by 0.19 per cent to 174.73.

Japanese share prices edged higher as investors picked up bargains following a string of declines, with commodity-related stocks enjoying the biggest gains. The benchmark Nikkei average rose 0.3 per cent to 16,844.61 while the broader Topix index gained 0.3 per cent to 16,37.46.

General trading companies, which often invest in highly leveraged energy and mining deals, have been particularly hard hit by the recent market shake-out. On Tuesday Mitsubishi Corp. rebounded 4.2 per cent to Y3,090 and rival Itochu gained 6.9 per cent to close at Y1,323.

Shipping companies also recovered, with Mitsui OSK Lines picking up 4.6 per cent to Y1,698 and Kawasaki Kisen gaining 4.3 per cent to Y1,549.

Elsewhere, home appliance retailers gained due to a sustained bout of hot weather, as temperatures topping 35 degrees centigrade have led to a surge in air-conditioner sales. Edion rose 9.9 per cent to Y1,210 and Kojima floated up 5.8 per cent to Y998.

GMO Internet plunged 14.2 per cent to Y453 after the company, which provides a bevy of business and personal services online, said it would fall into the red this business year due to losses at its consumer loan business.