Exposure to Fannie and Freddie drags Asia down 16 July '08

Stocks in Asia plunged yesterday as investors reacted to news that the largest banks in the region had billions of dollars invested in debt securities issued by crisis-hit US mortgage giants Fannie Mae and Freddie Mac.

Reports of depositors queuing to withdraw their money from failed US mortgage lender IndyMac Bank on Monday also revived fears that more US banks could collapse, sending shivers through the wider financial sector.

In Japan, the Nikkei-225 index ended 2 per cent lower as banking and insurance stocks tumbled after local business daily The Nikkei reported that the country's three biggest banks, including Mitsubishi UFJ Financial Group, had some 4.7 trillion yen (S$60 billion) worth of exposure to debt securities issued by Fannie Mae and Freddie Mac as at end-March.