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. Fixed-rate assets - mostly in hire-purchase finance for taxi licences and vehicles, and credit card finance - made up 23 per cent of the group's loan portfolio last year. Dao Heng spokesman Helen Kwan Tseun-yee said only 10 per cent of the group's earning assets belonged to the fixed-rate category, the interest risk of which had been hedged. She emphasised that the group was a net lender in the interbank market, implying that it would receive higher returns on its interbank assets should money market rates continue to rise. The group's financial profile had always been in a good shape, with loans-to-deposits ratio at 67 per cent and capital adequacy ratio at 20.6 per cent at the end of last year, she said.