11/16 00:54 Asian Stocks: Taiwan Tumbles, Led by Banks; Japan's Toyota Down By Brett Cole

Taipei, Nov. 16 (Bloomberg) -- Taiwan's key stock index posted its biggest decline in a month, paced by lenders such as China Development Bank after the central bank said non-performing loans are higher than official figures show, underscoring concerns about the health of the financial system.

The TWSE Index fell 282.89, or 4.9 percent, to 5454.13, bringing its five day slump to 10.4 percent. Banks were the second biggest drag on the index, making up a fifth of its decline. In the past, the government has said bad loans made up 4.5 percent of total loans, though analysts believe it's more than double that figure.

``The Central Bank of China has a credibility problem due to the large gap between the reported figure of non-performing loans and any reasonable estimate of reality,'' said John Caparusso, an analyst at Salomon Smith Barney Securities Taiwan Ltd. Caparusso estimates banks' non-performing loans could be as high as 15 percent of total loans. y

In other markets, Japan's Nikkei 225 stock average fell 1.1 percent, led by Toyota Motor Corp. after the carmaker said first- half profit fell more than expected. Singapore's Straits Times Index added 1.2 percent, led by Singapore Telecommunications Ltd. on hopes it may bid for British Telecommunications Plc's Asian ventures. Hong Kong's Hang Seng Index rose 0.1 percent, led by China Mobile (Hong Kong) Ltd. after some U.S. companies reported better-than-expected earnings, easing concern about slowing profit growth.

China Development Industrial Bank, Taiwan's biggest bank by market value, fell 3.7 percent to NT$26. Hua Nan Commercial Bank, the island's second-biggest lender, fell the 7 percent daily limit to NT$22. First Commercial Bank, the third biggest, fell 6.6 percent to NT$21.10.

Chen Shih-meng, deputy governor of Taiwan's central bank, said at a conference sponsored by the People First Party that banks' bad debts are rising and lenders have only just begun to take charges for them on their balance sheets, the China Post reported. Chen wasn't immediately available for comment.

The government's plan to encourage more lending may also increase banks' non-performing loans, analysts said.

``One point of concern is the announced policy measures to stimulate the economy and rebuild confidence by lending to so- called traditional industries'' such as construction or textile companies, said Terry Chan, financial institutions ratings director for Standard & Poor's in Hong Kong. ``This could slow the resolution of the problem.''

Japan

Japan's Nikkei 225 stock average fell 159.34 to 14,639.80, while the broader Topix index lost 1.3 percent to 1384.49.

Toyota tumbled 4 percent to 4,120 yen, a seven-week low. Although the carmaker clocked up record sales of 2.65 million vehicles in the first half, an on-year gain of 6 percent, its net earnings suffered from implementing new accounting rules that required it to set aside funds to cover pension shortfalls.

For Toyota, ``people feel this is as good as it gets,'' said Alex Muromcew, who helps manage $600 million in stocks globally for Loomis Sayles & Co. in San Francisco. Muromcew cited Toyota's declining sales growth in the U.S., its largest export market.

Toyota's first-half profit fell a larger-than-expected 21 percent. Seven analysts surveyed by Bloomberg had forecast an average decline in profit of 17 percent.

DDI Corp., Japan's second-largest telephone company by sales slid 2.9 percent to 499,000 yen, its seventh day of losses, as slowing mobile phone subscriber growth drove its interim earnings lower. DDI cut its forecast for cellular phone users at one of its cell phone units.

Singapore

Singapore's Straits Times Index rose for the second day this week, gaining 22.59 to 1980.27. Singapore Telecommunications, the dominant phone company, rose 3.3 percent to S$2.84 on optimism it will purchase British Telecommunications' Asian ventures and gain a foothold in other Asian markets.

Europe's second largest telecommunications company said it's reviewing its stakes in Asian ventures such as Malaysia's Maxis Communications Bhd., Hong Kong's SmarTone Telecommunications Holdings Ltd. and India's Bharti Cellular Ltd.

Banks rose after United Overseas Bank Ltd. said it will sell its stake in the Far Eastern Bank building as it starts to offload its non-banking assets. That raised optimism other lenders may sell their non-banking business ahead of the government's three- year timeframe set in June.

``If they sell these assets, there'll be some inflow of cash,'' said Joseph Wat, a fund manager at Invesco Asset Management Ltd., which manages $11 billion in Asia. The banks could then use the money to buy another bank in the region or ``even if they find nothing else to buy, they will probably return the cash to their shareholders, which is positive.''

Oversea-Chinese Banking Corp., Singapore's third-largest bank by assets, added 2.7 percent to S$11.60. United Overseas Bank Ltd., Singapore's second-largest bank by assets, gained 1.6 percent to S$12.70. Overseas Union Bank Ltd., the fourth largest lender, rose 1.8 percent to S$8.35.

Hong Kong

Hong Kong's Hang Seng Index rose 17.67 to 15,145.07, led by telecommunications and computer-related stocks.

China Mobile, China's No. 1 publicly traded mobile telephone company, rose 1.2 percent to HK$50.50. Legend Holdings Ltd., China's No. 1 computer maker, rose 2.4 percent to HK$6.45.

Limiting the index's gains, some property developers and banks fell as the U.S. Federal Reserve said it remains wary of inflation, dashing hopes of an early reduction of interest rates.

``Economic figures had earlier pointed to a slowing U.S. economy so investors started to expect rates may be cut, but the Fed's caution on inflation shows it's too early to expect a rate cut,'' said Ben Kwong, a director at KGI Asia Ltd.

Sun Hung Kai Properties Ltd., Hong Kong's second-largest real estate developer by market value, fell 0.8 percent to HK$63.75. Bank of East Asia Ltd., Hong Kong's third-largest publicly traded bank, fell 1.4 percent to HK$17.95.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=blk&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=AOhN2khXfQXNpYW4g

-- Carl Jenkins (somewherepress@aol.com), November 16, 2000

Answers

11/15 22:58 Taiwan Says Bad Loans Exceed Government Estimates; Stocks Fall By Brett Cole

Taipei, Nov. 16 (Bloomberg) -- Taiwan's central bank said for the first time that the island's bad debt exceeds government estimates, heightening concern that sour loans could hobble economic growth.

Stocks plunged and the currency fell after local newspapers reported that Chen Shih-meng, deputy governor of the central bank, said non- performing loans are higher that estimated. Lenders have only recently started to account for such debt, which is on the rise, he said.

The Finance Ministry has drafted laws to allow foreign and local institutions to buy bad loans that the government estimates make up 5.4 percent of total loans. Analysts say flexible rules on classifying bank loans means the actual level could be more than double that size.

``The Central Bank of China has a credibility problem due to the large gap between the reported figure of non-performing loans and any reasonable estimate of reality,'' said John Caparusso, an analyst at Salomon Smith Barney Securities Taiwan Ltd.

Central bank officials couldn't be reached for comment on the report. The Finance Ministry says non-performing loans are loans on which payment and principal due monthly has not been paid for six months and loans of a year or less on which no payment of principal has been made for three months.

Taiwan's key TWSE stock index fell as much as 4.4 percent to 5,482, with banks making up almost a quarter of the decline. The Taiwan dollar fell in tandem with stocks, dropping 0.2 percent to NT$32.243, taking its five-day loss to 0.6 percent.

While Taiwan's lenders survived the Asian financial crisis without the large-scale failures seen in Korea, Thailand and Indonesia, the island is widely seen as over-banked and analysts say bad loans are rising.

Taiwan has been among Asia's most resilient economies, riding out the Asia crisis with two years of growth at about 5 percent in 1998 and 1999. Yet the success of its electronics exporters has masked problems in other industries.

The property market has yet to recover from a collapse in the early nineties following a stock market crash. Textiles, building materials and chemicals manufacturers were squeezed by stiffer competition after the region's currency devaluations.

That led to cash shortages at construction and property companies, which also threaten to undermine their creditors.

Bankers say mergers will help. Aside from numerous credit cooperatives and other small financial institutions, Taiwan has 52 commercial banks, according to Moody's Investors Service.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial% 20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=b lk&bt=ad_position1_topfin&middle=ad_frame2_topfin&s=AOhNbdxZbVGFpd2Fu

-- Carl Jenkins (somewherepress@aol.com), November 16, 2000.