ENGLISH DEYEA NEWS

By JEREMIAH MARQUEZ / AP WRITER | HONG KONG — Asian stock markets dropped Wednesday, following a steep sell-off on Wall Street overnight, as investors reacted with skepticism to the US government's latest plan to heal the country's ailing banking industry.

A Chinese investor watches an electronic board showing stock information at a brokerage house in the financial district of Beijing. (Photo: Reuters)

As in the US, many questioned whether the newest plan, unveiled Tuesday by Treasury Secretary Timothy Geithner, would be enough to extract the bad assets saddling bank balance sheets and free up the credit markets the govern lending to consumers and businesses.

Geithner said the plan would bring the full force of the federal government to bear in partnership with the private sector, raising upward of $1 trillion to aide the financial industry, but investors complained about what they viewed as a lack of detail.

Garry Evans, a chief Asian equity strategist with HSBC in Hong Kong, called the plan "muddled." He said the government was skirting around what many investors have already concluded: that the US may have to nationalize the banks for a period.

"People are not convinced that this plan is what it is needed," Evans said.

"They (US officials) have still philosophically backed away from the ultimate conclusion, which is the government will have to take over financial institutions," he added. "Philosophically that's quite hard for the US government to admit, but the history of banking crises shows that is what governments usually do."

Hong Kong's Hang Send Index tumbled 448.37 points, or 3.2 percent, to 13,432.27, while South Korea's Kospi lost 18.48 points, or 1.5 percent, to 1,180.39. Japanese markets were closed for a public holiday.

In mainland China, Shanghai's main stock measure lost 0.7 percent to 2,249.68.

Elsewhere, Australia's benchmark fell 0.8 percent, Singapore's stock measures shed 0.5 percent and Taiwan's key index sank 0.6 percent.

Asia's retreat was less severe than Wall Street's. US markets plunged overnight as investors soured on the financial rescue and seemed to ignore the Senate's approval of its $838 billion economic stimulus package.

The Dow industrials fell 381.99, or 4.62 percent, to 7,888.88. Broader stock indicators also tumbled, with the Standard & Poor's 500 index down 42.73, or 4.91 percent, to 827.16. It was the biggest drop for the index since the Obama inauguration on January 20.

Wall Street futures were up modestly, suggest US markets could recover some at Wednesday's open.

In oil, light sweet crude for March delivery rose 42 cents to $37.97 a barrel in Asian trade. The contract fell $2.01 to settle at $37.55 overnight.

In currencies, the dollar was little changed at 90.42 yen, while euro traded at $1.2881, down from $1.3903.