Your Financial Window

Asian stocks surged the most since January 25 and US futures jumped after the US government announced it was bailing out the country's largest mortgage providers, shoring up global financial markets reeling from some US$500 billion (Bt17.26 trillion) worth of credit losses.

The MSCI AsiaPacific Index climbed 4.4 per cent to 122.04 points in Tokyo, with financial companies accounting for almost half of that gain. It closed last week at its lowest level since June 13, 2006.

William Poole, former president of the Federal Reserve Bank of Saint Louis, said US taxpayers might face a $300billion bill to revive Fannie Mae and Freddie Mac.

International Monetary Fund managing director Dominique StraussKahn said the US government takeover of Fannie Mae and Freddie Mac would help protect that country's economy and financial system.

The Bank of Korea said its investments in senior bonds issued by Fannie Mae and Freddie Mac were safe and that it would have no problem recovering its principal and interest.

Japanese Finance Minister Bunmei Ibuki said the US government's decision to bail out the country's two largest mortgage companies may help stabilise the US economy and financial markets.

"Japan welcomes the US action" on Fannie Mae and Freddie Mac, Ibuki told reporters in Tokyo.

The bailout prompted recommendations on Fannie Mae and Freddie Mac to be downgraded.

Fannie Mae and Freddie Mac were cut to "sell" at Citigroup and lowered at Lehman Brothers Holdings after the US government said it would place the two into conservatorship.

Fannie Mae shares tumbled 60 per cent, while Freddie Mac slumped 57 per cent as US Treasury Secretary Henry Paulson said the government would provide short term funding to the two and purchase debt backed by home loans in the open market.

Citigroup cut its shareprice estimate for Fannie Mae 96 per cent to 32 cents and for Freddie Mac 95 per cent to 31 cents. Both companies were downgraded from "buy".

Lehman Brothers cut its recommendation on both mortgage lenders' shares from "overweight" to "equal weight". The Credit Suisse Group slashed its price estimate on Freddie Mac from $8 to $1 and on Fannie Mae from $10 to $1.