Shares in Dao Heng Bank Group and Dah Sing Financial Holdings were pummelled yesterday amid concerns that the two groups' earnings would be hard hit by the renewed round of volatility in the money markets.
Dao Heng saw its share price plunge 13.1 per cent to $17.80 before recovering to $18.30, still down 10.7 per cent on the day, while Dah Sing dropped 11 per cent to end at its day low of $14.95.
Brokers blamed the falls on perceptions that the two - which have a significant proportion of their loan portfolios exposed to fixed-rate assets - would earn less, or might even post losses because of the higher cost of funds.
Others said despite the slump, their operations were in good shape, and investors were simply selling the shares to cut their exposure to the region.
Both firms yesterday dismissed the claims that they would suffer losses on their fixed-rate asset holdings.
Dah Sing financial controller Gary Wang said a significant portion of the floating-rate funding the group used to finance its fixed-rate assets had been hedged against interest rate movements.
