Asia Stocks Fall for Fifth Week in Six on Global Growth Concern

By Hanny Wan and Chua Kong Ho

July 19 (Bloomberg) -- Asian stocks declined for the fifth week in six, driving the benchmark index to the lowest level since October 2006, on concern the weakening global economy will erode profits.

Cnooc Ltd., China's largest offshore oil producer, tumbled after crude headed for its worst week in three years. Wipro Ltd., India's third-largest software-services provider, slumped after saying customers cut spending. Mitsubishi UFJ Financial Group Inc. fell in Tokyo and Cathay Financial Holding Co. dropped in Taipei after they disclosed holdings of debt at embattled U.S. mortgage lenders Fannie Mae and Freddie Mac.

``Growth is slowing and not just in the U.S.,'' said Daphne Roth, Singapore-based vice president of equity research at ABN Amro Private Bank, which oversees about $20 billion in Asian assets. ``A lot of money has been put into the commodities space and with the underlying demand slowing, it makes sense to exit.''

The MSCI Asia-Pacific Index lost 3.3 percent to 129.16 as all 10 of its industry groups declined. The benchmark gauge has retreated 18 percent this year as more than $435 billion in credit-related losses prolong the global economy's slump and rising commodity prices stoke inflation.

Japan's Nikkei 225 Stock Average declined 1.8 percent to 12,803.70, falling for a sixth week. South Korea's Kospi index lost 3.7 percent in its seventh weekly decline. That's the longest losing streak since June 1996. Fifteen days of declines on Pakistan's Karachi Stock Exchange 100 Index led to hundreds of investors stoning the building on July 17 and shouting anti- government slogans.

Oil Producers

Cnooc plunged 9.6 percent to HK$11.88 this week. Inpex Holdings Inc., Japan's biggest oil explorer, slumped 8.9 percent to 1.13 million yen.

Crude oil futures dropped 11.2 percent to $128.88 a barrel in New York in the biggest weekly decline since December 2004, after Federal Reserve Chairman Ben S. Bernanke said risks to growth and inflation have risen in the U.S. and a report showed China's economy grew at the slowest pace since 2005 last quarter.

BHP Billiton Ltd., the world's largest mining company, dropped 9.2 percent to A$36.65 this week. Rio Tinto Group, the third largest, retreated 8.3 percent to A$115.50.

Strategists at Merrill Lynch & Co. and Morgan Stanley said investors should sell commodities stocks because a slowing global economy will cut demand for raw materials such as copper, nickel and corn.

Wipro, Satyam

Wipro tumbled 12 percent to 363 rupees. The company predicted demand in the fiscal first half would remain weak as some telecom customers cut spending. Wipro manages computer networks, offers engineering services and operates call centers for clients including Cisco Systems Inc. and Boeing Co.

Satyam Computer Services Ltd., India's fourth-largest computer-services provider, slumped 14 percent to 383 rupees, after leaving its forecast unchanged for the 12 months to March 31, 2009.

The two companies join Infosys Technologies Ltd. in signaling an uncertain sales outlook for the fiscal year as banks and financial-services companies cope with the collapse of the U.S. subprime mortgage market.

Mitsubishi UFJ, Japan's largest bank by market value, lost 4.1 percent to 951 yen. Sumitomo Mitsui Financial Group Inc. fell 1.4 percent to 824,000 yen.

Agency Debt

Mitsubishi UFJ held 3.3 trillion yen ($31 billion) in bonds issued by U.S. government-backed companies including Fannie Mae and Freddie Mac as of March 31, the company said July 15. Sumitomo Mitsui said it owned 219.8 billion yen in such bonds.

Cathay Financial, Taiwan's biggest publicly traded financial services firm, declined 9.1 percent to NT$60. The Taipei-based company revealed July 15 it has NT$200 billion ($6.6 billion) in debt linked to the U.S. mortgage lenders.

The U.S. Treasury and Federal Reserve were forced to assemble a rescue plan for Fannie and Freddie on July 13 to stem a collapse of confidence in the two companies, which own or guarantee about half of the $12 trillion in U.S. home loans during the country's worst housing recession in 25 years.

``The stocks were beaten down in the week due to worries about the stability of the large U.S. government-sponsored mortgage companies,'' said Brett Hemsley, an analyst at HSBC Holdings Plc in Tokyo.

To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net