Asian Stocks Decline as Subprime Losses Widen, Yen Strengthens

Asian stocks tumbled, sending a regional index to its biggest drop in three months, on speculation HSBC Holdings Plc and other banks will report increased losses related to U.S. subprime mortgages.

Japan's Nintendo Co., which gets two-thirds of sales abroad, led declines among exporters after the dollar slumped against the yen. PetroChina Co. and Woodside Petroleum Ltd. fell after the price of crude oil dropped. HSBC slumped 2.8 percent after the Daily Telegraph newspaper said it may announce $1 billion of bad debts and Morgan Stanley cut its rating.

``Investors have to reevaluate what shares are worth as the U.S. starts pulling down economies globally,'' said Takashi Kamiya, who helps oversee $16 billion at T&D Asset Management Co. in Tokyo. ``The continued weakness of the dollar is going to cause substantial damage to exporters' earnings.''

The Morgan Stanley Capital International Asia Pacific Index fell 2.9 percent to 158.11 as of 7:03 p.m. in Tokyo, set for its biggest loss since Aug. 17 and the lowest close since Sept. 24. Benchmarks slid in the region, except for Pakistan and Sri Lanka.

Hong Kong's Hang Seng Index led losses after Credit Suisse Group said China will ``delay'' a plan to allow mainland citizens to buy the city's shares. China's CSI 300 Index dropped after the government ordered banks to increase their reserves to cool economic growth. Japan's Topix index sank to a two-year low.

Nintendo, maker of the Wii game console, fell 4.2 percent to 58,800 yen. It loses 3 billion yen ($27 million) in profit from operations for every 1 yen that the currency strengthens against the dollar. Honda Motor Co., Japan's No. 2 automaker, slid 3.6 percent to 3,760 yen. North America accounted for more than half of Honda's sales in the 12 months ended March 2007.

Dollar Weakness

The dollar fell to as low as 109.85 against the yen today, a level not seen since May 2006. A weaker U.S. currency lowers the value of exporters' dollar-denominated sales when converted into local currency. The U.S. is Japan's biggest overseas market.

PetroChina, the nation's largest oil producer, slumped 7.3 percent to HK$14.96. Woodside Petroleum lost 5.9 percent to A$52.09. Oil for December delivery fell as much as 1.5 percent to $94.86 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Futures were recently at $95.61.

U.S. stocks slumped on Nov. 9 after Wachovia Corp., the fourth-biggest U.S. bank, said it may have lost as much as $1.7 billion this quarter on mortgage-related investments. Bank of America Corp. and JPMorgan Chase & Co. the No. 2 and No. 3 U.S. lenders, reported that their fourth-quarter results may be hurt by tightening credit markets.
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