Asian stocks continue to slump

Asian stocks declined for a second day, led by financial companies and metals producers, on concern mounting bank losses worldwide will deepen the global recession and squeeze demand for the region’s commodities.The following is excerpts from forex site Bloomberg.com.

Worldwide effects:
HSBC Holdings Plc, Europe’s largest bank, lost 3.7 percent in Hong Kong amid speculation banks globally need to bolster capital. BHP Billiton Ltd., the world’s biggest mining company, fell 2.1 percent after saying it will take a charge after closing a nickel mine. DBS Group Holdings Ltd., Singapore’s No. 1 lender, led the city’s equities lower after the government cut its economic forecast for the second time in three weeks.
It’s uncertain how big loan losses at the banks will be as the economy continues to deteriorate. The average valuation of companies on the measure has fallen about two-fifths in the past year to 10 times reported profit. Financial stocks led U.S. equities lower yesterday as Barack Obama was sworn in as president. The Dow Jones Industrial Average declined 4 percent, its biggest Inauguration Day decline. The concern is that banks around the world are short of capital said one analyst.

Leaders pledge action:
Australian Prime Minister Kevin Rudd said yesterday his government will take “whatever action is necessary” to stabilize financial markets. French President Nicolas Sarkozy also agreed to provide more funds to the country’s biggest lenders; a day after the U.K announced its second financial rescue plan in three months.