Asian Stocks Fall on Credit Concern; National Australia Slumps

By Chua Kong Ho and Shani Raja

July 25 (Bloomberg) -- Asian stocks fell for the first time this week, led by financial companies and consumer electronics makers, on renewed concern credit-market losses will widen and the global economic slump will erode earnings.

National Australia Bank Ltd., the country's largest bank, tumbled the most in seven years after saying it set aside more money against possible losses in credit investments. Samsung Electronics Co., Asia's largest maker of flat screens, chips and mobile phones, had the biggest decline in five weeks after profit missed analysts estimates. Canon Inc. dropped after saying profit fell for a second straight quarter.


`The fear is there's a lot more bad news to come,'' said Nader Naeimi, a Sydney-based senior investment strategist at AMP Capital investors, which manages about $108 billion. ``Investors are out there thinking everything's fine and another bank comes out and increases its provision for credit-related losses.''

The MSCI Asia Pacific Index lost 1.6 percent to 134.58 as of 10:22 a.m. in Tokyo, paring this week's gain to 4.2 percent. About five stocks fell for each that rose.

Japan's Nikkei 225 Stock Average fell 1.6 percent to 13,392.64. Australia's S&P/ASX 200 Index dropped 2.7 percent and South Korea's Kospi Index lost 1.5 percent. Futures on the U.S. Standard & Poor's 500 Index dropped 0.1 percent.

MSCI's Asian index rallied 5.9 percent in the first four days this week after Citigroup Inc. and JPMorgan Chase & Co. reported results that topped analyst estimates and oil tumbled 16 percent from a record $147.27 a barrel on July 11.

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 11 percent to A$27.38, the biggest drop since September 2001. 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 Group, which increased bad- debt provisions by 71 percent in April, slumped 5.2 percent to A$18.44, the most since April 7. Mitsubishi UFJ Financial Group Inc., Japan's largest bank by market value, dropped 2.6 percent to 1,005 yen.

Writedowns

``The credit risk has been receding in peoples' minds, but the reality is that it's with us for the next six or twelve months,'' said Angus Gluskie, who helps oversee the equivalent of $500 million at White Funds Management in Sydney.

MSCI's Asian index has retreated 15 percent this year as the world's largest banks and securities firms reported more than $467 billion of writedowns and credit losses, and crude oil prices soared.

Samsung dropped 4.1 percent to 589,000 won, the most since June 19. The South Korea company said second-quarter profit rose 51 percent to 2.14 trillion won ($2.1 billion), lower than the 2.36 trillion won median estimate in a Bloomberg News survey of analysts, as earnings from semiconductors fell and the television division posted a loss.

AU Optronics Corp., Taiwan's largest maker of liquid-crystal displays, fell 4.8 percent to NT$40.40 after its profit missed estimates. The company also 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 fell 2.6 percent to 5,220 yen, the most in a week. 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.

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