Asian stocks fell, driving a regional benchmark gauge toward its lowest close in more than two years, as disagreement among policy makers over how to resolve Europe’s debt crisis dimmed the outlook for exporters and banks.
Esprit Holdings Ltd., a clothier that counts Europe as its biggest market, dropped 4.9 percent in Hong Kong. Samsung Electronics Co., which gets a fifth of its sales in Europe, lost 2.6 percent in Seoul.Mitsubishi UFJ Financial Group Inc. (8306), Japan’s No. 1 listed lender by market value, sank 3.5 percent in Tokyo. Mitsubishi Corp., Japan’s biggest commodities trader, slumped 6.7 percent as oil and metal prices tumbled.
The MSCI Asia Pacific Index fell 1.8 percent to 108.18 as of 12:10 p.m. in Tokyo, extending its biggest quarterly decline in almost three years. The measure is headed toward the lowest close since July 2009 as benchmark indexes worldwide drop more than 20 percent from their peaks, entering a so-called bear market. Asian stocks also fell today after Goldman Sachs Group Inc. cut its forecast for earnings growth in Asia excluding Japan.
“Fear is still in the driver’s seat,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “With Europe sliding into recession, credit markets continue to worsen, and that will affect growth in Asia by reducing export demand. There’s this worry that Europe is going to implode and drag down the U.S. with it.”
Nikkei, Hang Seng
Japan’s Nikkei 225 (NKY) Stock Average fell 1.6 percent. South Korea’s Kospi Index slumped 4.7 percent and Australia’s S&P/ASX 200 was little changed. Hong Kong’s Hang Seng Index fell 0.3 percent.
Futures on the Standard & Poor’s 500 Index rose 0.4 percent today. In New York yesterday, the index fell 2.9 percent, sending the measure to a one-year low, as concern over the Greek debt crisis and a slump in the stock price of Bank of America Corp. offset a rebound in manufacturing and construction spending.
Bank of America slumped 9.6 percent to below $6 in New York trading for the first time in 2 1/2 years as concern about Europe’s debt crisis spurred financial-stock declines on both sides of the Atlantic. Financial shares are under pressure as European regulators struggle to quell concern that their lenders may be hurt by the sovereign-debt crisis.
Exporters Drop
Asian exporters and banks fell today. Esprit slumped 4.9 percent to HK$9.38 in Hong Kong. Samsung slid 2.6 percent to 818,000 won in Seoul, and Honda Motor Co., a Japanese carmaker that gets more than 80 percent of its revenue abroad, slid 4.1 percent to 2,173 yen in Tokyo.
Mitsubishi UFJ Financial Group lost 3.5 percent to 332 yen, leading Asian banks lower. In Sydney, National Australia Bank Ltd., the country’s fourth-largest bank by market value, slid 0.6 percent to A$21.50.
German Finance Minister Wolfgang Schaeuble opposed moves to further scale up the European Financial Stability Facility until the final three countries approve the fund’s latest upgrade. Slovakia, the Netherlands and Malta have yet to ratify an earlier decision to expand the fund to 440 billion euros ($581 billion).
Multiple Fronts
Europe’s financial leaders are fighting on multiple fronts, trying to extinguish the Greek crisis while insulating Italy and Spain and coming up with a formula for banks that the International Monetary Fund says face as much as 300 billion euros in credit risk.
“If we don’t get a resolution in Greece, we may see a disorderly default,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd., which oversees the equivalent of $68 billion in assets. “The politicians are all over the place. Stocks are pricing in a scenario where the financial crisis spreads in Europe, the U.S. economy worsens, and it leads to a deterioration in the global economy.”
Goldman Forecast
Separately, Goldman Sachs cut its forecast for earnings growth in Asia ex-Japan after lowering its outlook for global economic expansion. Per-share earnings may grow 10 percent this year and 7 percent next year, lower than an earlier prediction of 11 percent growth for both years, analysts led by Timothy Moe wrote in a report today. Asia excluding Japan stocks face “downside risk” of 10 percent to 15 percent, they said.
More than $10 trillion was wiped from global equity markets in the third quarter. Benchmark measures for 36 of 45 nations in the MSCI All-Country world Index posted declines of 20 percent or more from their peaks, meeting the common definition of a bear market, according to data compiled by Bloomberg. Besides the U.S., only two other developed markets --the U.K. and New Zealand -- haven’t dropped 20 percent or more from their most- recent highs.
Mitsubishi Corp. slumped 6.7 percent to 1,414 yen in Tokyo after oil prices slid. Inpex Corp., Japan’s No. 1 energy explorer, declined 3.5 percent to 456,000 yen. Cnooc Ltd., China’s largest offshore energy explorer, lost 5.8 percent to HK$11.46 in Hong Kong.
Oil, Copper
Oil for November delivery tumbled 2 percent to $77.61 a barrel, the lowest level in more than a year, in New York yesterday on concern that Greece will default on debt payments, leading to slower global economic growth and lower fuel consumption. Copper futures for December delivery fell below $3 a pound to a 14-month low on signs that demand for industrial metals will wane as economies falter.
The MSCI Asia Pacific Index declined 20 percent this year through yesterday, compared with a 13 percent drop by the S&P 500 and a 19 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.2 times estimated earnings on average, compared with 11.1 times for the S&P 500 and 9.3 times for the Stoxx 600.
The Asia-Pacific index tumbled 16 percent in the third quarter, the biggest drop since 2008. The measure is down about 23 percent from this year’s high on May 2.
(source: Bloomberg)
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04/10/2011 10:23:51 AM | 