By Patrick Rial and Kyung Bok Cho
June 23 (Bloomberg) -- Asian stocks slumped to the lowest in three months after a rebound in oil prices and renewed predictions of asset writedowns rekindled concern economic growth will slow.
Bridgestone Corp., the world's largest tiremaker by sales, dropped for a third day. Australia & New Zealand Banking Group Ltd. led financials lower as Citigroup Inc. prepared to cut jobs and UBS AG forecast the U.S. bank will write down more assets. Toyota Motor Corp. tumbled to the lowest in a month as the dollar weakened and the U.S. auto market showed further signs of deteriorating.
``People's fears about inflation are materializing as commodity prices rise,'' said Yang Jeung Won, chief investment officer in Seoul at Samsung Investment Trust Management Co., which oversees the equivalent of $7.8 billion in equities. ``Financials are going to teeter on shaky ground for a while to come.''
The MSCI Asia Pacific Index lost 1.1 percent to 138.52 as of 11:30 a.m. in Tokyo, the lowest since March 24. Japan's Nikkei 225 Stock Average fell 1.2 percent to 13,779.81. Indexes declined throughout the region, except in Vietnam.
More than $8 trillion in stock market value has been wiped out this year as a 41 percent jump in oil raises costs for consumers and businesses. Higher commodities prices are also hampering central bank efforts to keep interest rates low as financial institutions' access to credit dries up.
Valad Property Group led Australian shares lower after the company cut its earnings forecast amid the U.S. housing recession. Valad joins Mirvac Group and APN/UKA European Retail Property Group, who last week cut forecasts in the wake of the U.S. subprime rout.
More than $398 billion in asset writedowns and credit losses stem from the collapse of the U.S. subprime-mortgage market, according to data compiled by Bloomberg.
Citigroup Job Cuts
Oil rebounded from the lowest in a week, climbing 2 percent to $134.62 in New York on June 20 and recently traded at $135.70. The weakening dollar has spurred a flight to commodities and other assets that will retain their value in an inflationary environment.
Benchmarks in the U.S. and Europe fell to the lowest in three months on June 20, dragged down by the gain in oil and after analysts predicted banks will post more credit-market losses.
Australia & New Zealand Banking declined 1.9 percent to A$18.43. Mitsubishi UFJ Financial Group Inc., the biggest publicly traded lender in Japan, lost 1.5 percent to 990 yen. T&D Holdings Inc., the nation's largest publicly traded life insurer, dropped 6 percent to 6,590 yen.
Citigroup may add another $8.7 billion in asset writedowns this quarter to the $42 billion it has already announced, according to UBS AG. Citigroup may also begin a round of previously announced job cuts this week, a person familiar with the situation said.
Elsewhere, Lehman Brothers Holdings Inc. predicted UBS and Deutsche Bank AG could produce a total of $8.5 billion in asset write-offs for the second quarter.
Banks, Bridgestone
``The resurgence of risks related to the credit crunch is the most important factor in the market,'' Tomochika Kitaoka, a Tokyo- based strategist at Mizuho Securities Co., said in an interview with Bloomberg Television.
Bridgestone, which loses almost $250 million in operating profit for every $10 gain in the price of oil according to Nikko Citigroup Ltd., declined 3.1 percent to 1,801 yen. Bridgestone expects net income to fall 32 percent this fiscal year on surging costs for petroleum-based materials and rubber. About 60 percent of materials used in tires are oil based, according to the Japan Automobile Tyre Manufacturers Association.
LG Electronics Inc., Asia's second-largest mobile-phone maker, dropped 2.7 percent to 124,500 won. Mitsui Chemicals Inc., Japan's largest chemical maker by sales, slumped 3.3 percent to 566 yen.
Tumbling Sales
Toyota, the world's largest automaker by value, led a drop by automakers, falling 2.4 percent to 5,280 yen. Denso Corp., Japan's largest auto-parts maker, slid 3.6 percent to 3,750 yen. Hyundai Motor Co., South Korea's largest automaker, fell 2.1 percent to 76,600 won.
Prices in the U.S. for used large pickups and sports utility vehicles tumbled at least 21 percent in May, according to Atlanta- based Manheim Consulting estimates, lowering the attractiveness of new vehicles as well. Toyota generates over half of its profit from the U.S.
Auto shares also slumped after Standard & Poor's said it may lower credit ratings on the three largest U.S. auto producers due to the effect higher fuel prices are having on the industry.
The dollar dropped to as low as 107.11 against the yen in trading today, a level not seen since June 11. The weaker dollar reduces the value of sales generated in the world's largest economy.
Valad, an Australian real estate investment trust, lost 4.2 percent to 80 cents. The company cut its earnings forecast for this quarter by 11 percent, citing ``challenging'' conditions created by the U.S. subprime crisis.
Perpetual Ltd., an Australian fund management company, posted the biggest decline among the MSCI Asian index's 990 members, plunging 11 percent to A$42.50. Its rating was downgraded to ``underweight'' from ``equal-weight'' by Morgan Stanley.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net. Kyung Bok Cho in Seoul at kcho7@bloomberg.net
Posts
No comments:
Post a Comment