Asian stock markets fall sharply after Goldman Sachs charged with fraud

By Jeremiah Marquez, AP
Monday, April 19, 2010

Asian stocks fall after Goldman charged with fraud

HONG KONG — Asian stock markets tumbled Monday, following Wall Street’s slide after investment bank Goldman Sachs was charged with fraud.

Major markets fell around 2 percent or more as selling hit a broad range of industries across the region. Oil prices dropped and the dollar gained against the yen and the euro, signs traders were trimming their buying of riskier assets.

On Friday, U.S. markets retreated after the Securities and Exchange Commission said Goldman Sachs & Co. defrauded investors by failing to disclose key information about mortgage investments it sold as the housing market was collapsing in 2008.

The news led to speculation that Goldman and other large banks could face stepped-up prosecution in connection with deals that contributed to the world financial crisis, dragging on the massive profits banks have earned the last year with the help of government support.

“The market is questioning whether this is the only case or whether there will be more,” said Conita Hung, head of equity markets with Delta Asia Financial Group in Hong Kong. “The market is still quite sensitive to conditions and prospects for the financial industry.”

Japan’s Nikkei 225 stock average lost 1.8 percent to 10,900.56 and Hong Kong’s Hang Seng index dropped 1.6 percent to 21,515.19. South Korea’s Kospi retreated 1.6 percent.

In China, investor sentiment was further bruised by news the government was ordering banks to stop making loans in certain cities for those buying their third home, the latest action to prevent rampant speculation that could create an asset bubble. Shanghai’s key index plummeted 3.5 percent to 3,018.91.

Stock markets in Australia Taiwan and Singapore were also sharply lower.

Financial names came under intense selling pressure in Asia, with Japanese banking shares among the heaviest casualties. Sumitomo Mitsui Financial Group Inc. plunged 4.4 percent and Mitsubishi UFJ Financial Group Inc. was down 3.3 percent. HSBC dropped 2.1 percent in Hong Kong.

Oil prices continued to slide with benchmark crude for May delivery down $1.25 to $81.99 a barrel.

In currencies, the dollar was trading at 92.01 yen from 91.93 yen late Friday. The euro fell to $1.3458 from $1.3476.

Friday in the U.S., the Dow fell 125.91, or 1.1 percent, to 11,018.66. The Standard & Poor’s 500 index dropped 19.54, or 1.6 percent, to 1,192.13, while the Nasdaq composite index fell 34.43, or 1.4 percent, to 2,481.26.

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