FULLERTON Fund Management, a unit of Temasek Holdings, and Japan's SBI Holdings have launched a new fund to target Asia's financial sector, Fullerton said.

The new fund has already attracted an initial commitment of US$60 million (S$87 million) and plans to raise up to US$100 million by May 2009, it said in a statement.

'Despite Asian banks having limited exposure to US subprime debt, their share prices have declined along with the global sell-off in equities,' said Mr Chan Chia Lin, chief investment officer of Fullerton.

'Our managers seek to identify emerging leaders within the sector as well as fundamentally sound companies that have been mispriced.'

The MSCI Asia-Pacific ex-Japan Financial Sector Index has fallen almost 40 per cent this year, hit by the financial storm in the United States that has badly hurt global banks.

Asian banks have mostly dodged the ravages of the subprime mortgage meltdown, but analysts said they must now contend with depressed markets and a darkening economic picture. -- REUTERS