No smoke without fire

The worsening situation in the US subprime mortgage market has spread to Asia, with several financial firms exposed via mortgage-backed securities or collateralised debt obligations. Is this a temporary technical dislocation in the credit markets or the start of something more serious? Rob Davies investigates


Thousands of miles removed from the US, share prices of Asian financial institutions have tumbled. Firms such as Taiwan's Shin Kong Financial Holdings have seen a 20% share price drop in the past two months, while Australian non-conforming mortgage lender RAMS Home Loans saw a 19% drop in a single day. And several Japanese firms, including Mitsubishi UFJ and Mizuho Financial Group, in August reported combined losses of Yen18.7 billion ($161 million) linked to investments backed by subprime

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