Asian Stocks Fall Most in Six Weeks on Credit, Profit Concerns

By Chua Kong Ho and Shani Raja

July 25 (Bloomberg) -- Asian stocks fell the most in six weeks, snapping a four-day rally, after National Australia Bank Ltd. said credit losses may surge and Samsung Electronics Co.'s profit missed estimates.

National Australia, the country's biggest bank, and Australian & New Zealand Banking Group, the third largest, plunged the most since the October 1987 stock market crash, dragging financial shares to their biggest drop since March. Samsung, Asia's largest maker of flat screens, tumbled in Seoul. AU Optronics Corp. slumped in Taipei after earnings fell short of estimates and Canon Inc. retreated in Tokyo after profit dropped.

The MSCI Asia Pacific Index lost 2.4 percent to 133.53 as of 3:34 p.m. in Tokyo, the most since June 12 and extending its decline this year to 15 percent. About six stocks fell for each that rose. The index rallied 5.9 percent in the first four days of this week as concerns eased that bank losses will expand and oil tumbled from a record.

``The fear is there's a lot more bad more news to come,'' said Nader Naeimi, a Sydney-based senior investment strategist at AMP Capital investors, which manages about $108 billion. ``Volatility is high; one day investors feel good and the next day you get a writedown. There's a lack of trust at this stage.''

All Asian benchmark indexes dropped. Japan's Nikkei 225 Stock Average fell 2 percent to 13,334.76. Australia's S&P/ASX 200 Index slumped 3.4 percent, the region's biggest loss. Futures on the U.S. Standard & Poor's 500 Index erased 0.2 percent.

Housing, Ford

The S&P 500 dropped 2.3 percent in the U.S. yesterday. Financial shares tumbled the most in eight years after a report showed sales of previously owned homes fell to the lowest level in a decade and investor Bill Gross predicted losses from the housing slump could reach $1 trillion. Ford Motor Co., the world's third-largest carmaker, plunged after reporting a loss twice as big as analysts estimated.

National Australia slumped 13 percent to A$26.56, the biggest loser by percentage on MSCI's Asian index. The Melbourne- based company said it has set aside funds amounting to 90 percent of the value of its A$1.2 billion ($1.1 billion) of collateralized debt obligations. National Australia took a A$181 million provision in March.

Australia & New Zealand Banking, which increased bad-debt provisions by 71 percent in April, plunged 8.7 percent to A$17.75. Mitsubishi UFJ Financial Group Inc., Japan's largest bank by market value, sank 5.4 percent to 976 yen.

Today's 4 percent decline in Asian financial shares follows a 9 percent advance in the previous four days after Citigroup Inc. and JPMorgan Chase & Co. reported results that topped analyst estimates and Deutsche Bank AG said financial companies are overcoming credit losses.

`Worrying Investors'

MSCI's measure of Asian financial stocks has tumbled 18 percent this year as the world's largest banks and securities firms reported more than $467 billion of writedowns and credit losses.

``The latest economic numbers coming out of the U.S. are worrying investors,'' said Jack Chang, chief investment officer at the Taiwan unit of HSBC Global Asset Management, which oversees $400 billion worldwide. ``Confidence is getting hit because these problems could hurt earnings, slow demand for exports and sales.''

Samsung and Au Optronics slumped, dragging technology shares down the most in two weeks, after their earnings missed estimates.

Samsung dropped 6.2 percent to 576,000 won, the most since June 2004. Net income in the second quarter climbed 51 percent to 2.14 trillion won ($2.1 billion), missing the 2.36 trillion won median estimate in a Bloomberg analyst survey, as profit from chips unexpectedly fell and losses at the consumer electronics division more than doubled.

Production Cut

AU Optronics, Taiwan's largest maker of liquid-crystal displays, fell 4.4 percent to NT$40.60. The company announced yesterday second-quarter profit of NT$20.4 billion ($670 million), 10 percent less than the median analyst estimate of NT$22.6 billion. The company said it will cut production to 90 percent of capacity this quarter, from full output last quarter, as demand for screens used in televisions slows.

Canon dropped 4.9 percent to 5,100 yen, the biggest decline since April 14. Japan's largest office-equipment maker said yesterday second-quarter profit fell 13 percent to 107.8 billion yen ($1 billion) in the three months ended June 30 as a stronger yen eroded the value of sales in the U.S.

In Singapore, Chartered Semiconductor Manufacturing Ltd., which makes chips that go into Microsoft's Corp.'s Xbox 360 game console, lost 5.8 percent to S$0.65, the most since May 13, after forecasting a third-quarter loss on higher cost of materials.

In Hong Kong, Datang International Power Generation Co. slumped 7.3 percent to HK$4.71 after the unit of China's second- biggest electricity producer said first-half profit may fall by more than 70 percent due to rising fuel costs.

Hitachi Kokusai Electric Inc., a Japanese phone and microchip equipment maker, plunged 11 percent to 830 yen, the most since September 1990, after cutting its profit forecast by half as customers slow capital spending.

To contact the reporters for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.