Mortgage - Home Loan, Commercial Loan

By Darren Boey and Kazue Somiya

Oct. 16 (Bloomberg) — Asian stocks dropped the most in four weeks after losses reported by Nomura Holdings Inc. and Citigroup Inc. renewed concern a U.S. housing slowdown will stunt earnings growth at financial companies.

Mitsubishi UFJ Financial Group Inc. posted its biggest decline since May last year and National Australia Bank Ltd. slipped to a one-week low. Federal Reserve Chairman Ben S. Bernanke said yesterday the housing slump will be a “significant drag” on U.S. growth into next year.

“Nomura’s announcement of additional losses due to subprime securities shows this is not just limited to the U.S.,” said Terunobu Kinoshita, who helps manage $785 million at Fund Creation Co. in Tokyo.

J. Front Retailing Co., Japan’s largest department store operator, retreated the most since listing on Sept. 3 after reporting operating profit that missed its forecast. HSBC Holdings Plc led Hong Kong’s Hang Seng Index down from a record.

The Morgan Stanley Capital International Asia-Pacific Index fell 1.2 percent to 166.87 at 3:17 p.m. in Tokyo, the most since Sept. 18. Shares tied to the finance industry contributed the most to the drop. The Nikkei 225 Stock Average lost 1.3 percent, while the broader Topix index declined 1.9 percent. All markets slid, except in Taiwan, China, Thailand and Sri Lanka. Indonesia is closed for a holiday.

PetroChina Co., which yesterday surpassed General Electric Co. as the world’s second-largest company by market value, gained on record oil prices. Taiwan’s Asustek Computer Inc. climbed after a newspaper reported the company received orders for a million notebook computers.

Pretax Loss

U.S. stocks yesterday fell the most in five weeks as Citigroup Inc., the largest U.S. bank, warned that subprime mortgages will continue to plague financial markets. The company’s Chief Financial Officer Gary Crittenden said late payments on home loans may worsen in the fourth quarter.

Mitsubishi UFJ, Japan’s biggest publicly traded bank, slid 6 percent to 1,059 yen, its biggest drop since May last year. National Australia, the country’s largest lender, lost 1.3 percent to A$41.27, its lowest since Oct. 8. HSBC Holdings dropped 1.2 percent to HK$150.90 in Hong Kong. The bank, Europe’s largest, made 31 percent of its 2006 revenue in North America.

Nomura, Japan’s largest brokerage, said yesterday it will post its first quarterly pretax loss in more than four years after losing 73 billion yen ($622 million) on U.S. home loans. The pace of the collapse in residential mortgage-backed securities was quicker than expected, Chief Executive Nobuyuki Koga said.

The stock lost 0.5 percent to 2,070 yen after sliding 3.9 percent earlier. Goldman Sachs Group Inc. upgraded its rating on Nomura to “buy” from “neutral.” The risk of additional losses from U.S. residential mortgages is “almost nil,” Tokyo-based analyst Takehito Yamanaka wrote in a report yesterday.

Oil Producers Gain

While credit markets have improved, a full recovery will take time “and we may well see some setbacks,” Bernanke said in a speech to the Economic Club of New York yesterday.

Commonwealth Bank of Australia, the nation’s second largest, fell 0.8 percent to A$58.90. The stock was cut to “neutral” from “buy” at UBS AG, which cited recent stock gains.

“We have a long way to go in terms of recovery from the housing crisis,” said Richard Wallace, who helps manage $138 million at Wallace Funds Management in Sydney. “There are still clouds on the horizon and the market will continue to pull back.”

J. Front Retailing, formed by the merger of Daimaru Inc. and Matsuzakaya Holdings Inc., slumped 9.1 percent to 1,066 yen. The company said yesterday operating profit, or sales minus the cost of goods sold and administrative expenses, for the first half was 4 percent lower than it had forecast.

Money Flow

PetroChina, the country’s largest oil producer, climbed 1 percent to HK$18.96 in Hong Kong, set to close at a record. Inpex Holdings Inc., Japan’s No. 1 oil explorer, gained 2.4 percent to 1.3 million yen. Singapore Petroleum Co., which owns oil fields in Cambodia, Indonesia, Vietnam and Australia, rose 5.5 percent to S$8.60.

Crude oil futures rose 2.9 percent to $86.13 a barrel in New York yesterday, after reaching a record high of $86.71.

“Unquestionably the place to be is in commodity plays right now,” said Hiromichi Tsuyukubo, who helps manage about $800 million at Myojo Asset Management Japan Co. in Tokyo. “The housing market is going to prevent the Fed from raising rates and that will feed into price gains for metals and other commodities as the money starts to flow.”

PetroChina chairman Jiang Jiemin said the company may make its trading debut in Shanghai next month. On Sept. 24 it won regulatory approval to sell as many as 4 billion yuan-denominated so-called A shares.

Asustek, Shipbuilders

Asustek, the world’s largest maker of boards that connect computer parts, climbed 1.3 percent to NT$93.90. The company received orders to make a million notebook computers that cost less than $400 each for retail shops in Taiwan, China and the U.S., the Commercial Times reported today.

Chairman Jonney Shih will hold a press conference after the market closes in Taipei today, according to an Asustek statement.

“Electronic manufacturing is the core strength of Taiwan,” said Phil Chen, who manages $154 million at Grand Cathay Securities Investment Trust Co. in Taipei. “Investors can find great values in those makers.”

South Korea’s Daewoo Shipbuilding & Marine Engineering Co., the world’s third-largest shipyard, rose 7.4 percent to 64,000 won on expectations a backlog of orders will spur earnings growth this quarter. The company yesterday reported third-quarter profit rose to the highest in four years.

Separately, Samsung Heavy Industries Co., the world’s second- largest shipyard, climbed 0.7 percent to 55,100 won. The company said it will build eight vessels worth $1.37 billion, its biggest order this year.