By Patrick Rial and Chen Shiyin
Aug. 16 (Bloomberg) -- Asian stocks tumbled, extending a global rout with its biggest drop in three years, after Australia's Rams Home Loans Group Ltd. said it was unable to refinance $5 billion of debt as a credit crunch deepens.
South Korea's Kospi index plunged 6.5 percent, heading for its largest loss since June 2002. Mizuho Financial Group Inc., Japan's second-biggest bank which has lost a quarter of its value in the past three weeks, led a slide in financial stocks.
Toyota Motor Corp. and Samsung Electronics Co. fell after reports showed U.S. home sales dropped to a four-year low and prices declined in a third of the nation's cities. BHP Billiton Ltd., the world's biggest mining company, slumped as concerns about slower global growth dragged commodities prices lower.
``Blood is hitting the streets, everyone seems to be panicking, and there's reason to panic,'' said Patrick Chang, who helps manage $4.5 billion at CIMB-Principal Asset Management Bhd.
in Kuala Lumpur. ``There's been so much blow-up, we don't know when it's going to end. Liquidity is drying up.''
The Morgan Stanley Capital International Asia-Pacific Index lost 4 percent to 139.71 as of 12:56 p.m. in Tokyo, set for its biggest decline since May 2004 and wiping out gains for the year.
About 20 stocks retreated for each that gained today as benchmarks slid across the region.
Japan's Nikkei 225 Stock Average dropped 3.5 percent to 15,900.49, poised for its lowest close since November. Sony Corp.
led Japanese exporters lower after the yen strengthened to the highest against the dollar since March. South Korea's Kospi plunged the most in five years following a one-day holiday yesterday when the MSCI Asia index lost 2.5 percent.
Risk Averse
The Standard & Poor's 500 futures were 0.5 percent lower today. U.S. stocks fell yesterday on speculation Countrywide Financial Corp., the nation's biggest mortgage lender, may be forced into bankruptcy. The S&P 500 Index erased its gains for the year, dropping 1.4 percent.
Mizuho, Japan's second-biggest bank, slumped 5.9 percent to 637,000 yen. Woori Finance Holdings Co., South Korea's third- biggest financial services company by market value, dropped 4.6 percent to 21,000 won. National Australia Bank Ltd., the country's No. 1 lender, fell 2.8 percent to A$37.30.
Rams Home Loans Group said it was unable to refinance A$6.17 billion ($5 billion) of short-term U.S. loans because of a ``lack of market liquidity'' caused by a global credit rout. It plunged
42 percent to 79 Australian cents, 68 percent lower than the price at its initial share offering last month.
The MSCI Asia-Pacific Financial Index dropped 3.6 percent today, taking its one-month loss to 15 percent, the worst performance among the broader measure's 10 industry groups.
Overreaction?
Countrywide may go bankrupt if creditors force the company to sell assets at depressed prices or investors lose confidence in its ability to raise cash, Merrill Lynch & Co. said. KKR Financial Holdings LLC, a unit of Henry Kravis's buyout firm Kohlberg Kravis Roberts & Co., said it may lose up to $290 million from a drop in the value of mortgage-backed bonds it owns.
``Panic has been triggered by concern that the upward trend of the past three to four years has been broken,'' said Park Seh Ick, who helps manage $1.3 billion at Hanwha Investment Trust Management Co. in Seoul. ``People are overreacting.''
Stocks also dropped on signs investors are fleeing equities for less risky assets. Two-year Treasury yields held near the lowest in 22 months as a global stocks slide fed demand for the relative safety of government debt.
Fund managers are the most risk averse in a year, with 38 percent saying their willingness to take on investment risk is ``lower than normal'' because of the subprime crisis, a Merrill Lynch & Co. survey showed.
Toyota, James Hardie
Toyota, the world's No. 1 automaker by value, slumped 4.1 percent to 6,570 yen. James Hardie Industries NV, the biggest supplier of home siding in the U.S., lost 4.8 percent to A$7.30 in Australia. Samsung Electronics, which gets more than 80 percent of its revenue overseas, fell 4.7 percent to 583,000 won.
The National Association of Home Builders/Wells Fargo index of builder confidence slid to 22 from 24 in July, its sixth month of decline, the U.S. group said. A reading below 50 means most respondents view conditions as poor. A National Association of Realtors report said the median price for a single-family home fell in 50 of the 149 metropolitan areas it studied.
Yen, Metals
Sony, the maker of the Vaio computer and PlayStation game console, lost 3.6 percent to 5,320 yen. Honda Motor Co., Japan's second-biggest automaker, slid 4.9 percent to 3,730 yen.
The yen strengthened to as high as 116.25 to the dollar today, the highest since March 19. A stronger yen decreases the value of Japanese exporters' dollar-denominated sales when converted into local currency.
BHP declined 3.7 percent to A$31.97. Sumitomo Metal Mining Co., Japan's No. 1 nickel producer, lost 4.7percent to 2,250 yen.
Zinifex Ltd., dropped 4.2 percent to A$14.48 in Australia.
A measure of six metals traded on the London Metal Exchange fell 1.5 percent yesterday to the lowest since March 9. Copper declined 1.4 percent, nickel fell 2.9 percent, and zinc lost 2 percent.
So-called cyclical stocks, whose profit growth is leveraged on an expanding global economy, were among the hardest hit.
Hyundai Heavy Industries Co., the world's biggest shipbuilder, plunged 7.8 percent to 294,000. Nippon Steel Corp., the world's No. 2 steelmaker by output, slid 5.5 percent to 779.
--With reporting by Kazue Somiya in Tokyo. Editor: M. Scott
(jha/agi)
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