HONG KONG, Sept 30, (APP/AFP) – Asian markets tumbled Friday, tracking a sell-off in New York as worries about the future of German banking giant Deutsche Bank hammered financial stocks.
A report that several hedge funds had withdrawn their investments in the lender over worries about its viability after US authorities slapped it with a $14 billion penalty over its sale of mortgage-backed securities prior to the 2008 financial crisis.
There are fears the fine could batter the already fragile firm, fuelling talk that it would become another Lehman Brothers, the Wall Street titan whose downfall precipitated the global downturn six years ago.
Deutsche Bank plunged almost seven percent in New York and the losses were reflected in Asia, with Japan’s Mitsubishi UFJ Financial Group diving more than two percent and HSBC down almost one percent in Hong Kong. Sydney-listed Commonwealth Bank sank one percent, as did Westpac.
“Deutsche certainly weighs on sentiment, and the declines are concerning,” James Woods, a strategist at Rivkin Securities in Sydney, told Bloomberg News.
“Being named the number one bank for global systemic risk, it’s entwined with everyone.”
The sell-off dragged broader markets down, a day after an oil-fuelled rally following OPEC’s surprise announcement that it would cut production.
Tokyo ended the morning down 1.6 percent, while Hong Kong was 1.2 percent off, Sydney fell 0.8 percent and Seoul lost 0.8 percent. Singapore tumbled more than one percent and there where sharp losses in Wellington, Taipei and Manila.
However, Shanghai rose 0.2 percent ahead of a week-long national holiday.