I FEEL a bit like the guy in Benjamin Button film who got struck by lightning seven times and lived to tell the tale.
Like many investors, I am hoping to find green shoots of recovery, as foreign money trickles back into funds investing in Asian equities.
I even had an article published this morning which had a table to give a breakdown of the inflow of funds into the various markets.
But the regional stock market rout this morning proves that this may yet be another false dawn luring investors to their doom, if they had not already been damned by previous bear traps.
So what ails the regional markets, or rather, regional banks which were hard hit by the selldown this morning?
Leading regional lenders sharply lower is HSBC Holdings which fell at one point by more than 2 per cent to HK$57.60 – or just above its recent lows of HK$55.
What spooks the Asian bellwether is the accelerating rot in the UK lending market where rival Lloyds Banking Group had the dubious honour in competing with Royal Bank of Scotland for record losses after warning that another lender, HBOS, which it took over on January 19, had suffered a £10bn loss in 2008.
Also spooking sentiment was an update by Morgan Stanley analyst Michael Helsby that HSBC would need US$20 billion to US$35 billion to shore up its capital base. By his reckoning, the bank had to inject US$10 billion into its various units last year, leaving an impaired capital cushion at the bank’s capital structure.
The strength of the US currency – even as the Obama administration fumbles in its attempts to convince investors that it has the correct fix for the ailing US economy – is also causing turmoil in Asian currency markets today.
As Hong Kong’s de facto central bank, HSBC has always enjoyed top-notch ratings.
Will it suffer from a further erosion of investors' confidence if the Hong Kong dollar peg to the US currency is clouded once again by uncertainties?
Currency market turmoil is also creating havoc for South Korean banks, as the Korean won plunges by 4.7 per cent in one week.
South Korean lenders had one of their numbers – Woori Bank – to thank for their woes.
Last week, Woori apparently shook Asian credits markets to their core, after failing to honour what was supposed to be a gentleman’s agreement to buy back US$400 million worth of sub-ordinated bonds which it issued five years ago.
Although Woori is merely following lenders such as Deutsche Bank in refusing to retire cheap fundings, it doesn’t sit down well with investors who fear that Asian lenders are catching the contagion which is afflicting beleaguered global lenders.
Amidst all these commotion, Singapore’s largest lender, DBS Group Holdings must surely be thanking its lucky stars that it chose to release its fourth quarter results last Friday at what now turned out to be a lull in the continuing financial storm.
In contrast to the woes facing other regional lenders, the declines experienced by Singapore banks seem almost trifling by comparison.
As I write, DBS and United Overseas Bank have fallen by eight cents each to $8.12 and $11.00, while OCBC is down seven cents at $4.93.