Asian Stocks Drop for a Third Day, Led by Tokyu Land; BHP Gains

By Chen Shiyin and Shani Raja
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Aug. 14 (Bloomberg) -- Asian stocks fell, led by financial companies, after developer Urban Corp. filed for bankruptcy and Merrill Lynch & Co. said the credit crisis is far from over. Commodity producers gained after oil and metal prices rose.

Tokyu Land Corp. dropped 5.5 percent after Urban became the fifth publicly traded Japanese property company to file for court protection in the past month. Mitsubishi UFJ Financial Group Inc. declined 1.9 percent after Merrill's chief strategist Richard Bernstein said investors are underestimating the scale of the credit losses. BHP Billiton Ltd., the world's largest mining company, surged 5.2 percent, pacing the biggest advance among Asian commodity producers since April 21.

``The macro environment looks like it's worsening,'' said Jason Teh, who helps manage the equivalent of $5.7 billion at Investors Mutual Ltd. in Sydney. ``You've got Europe slowing, Japan slowing, and a question mark over China. Something has to give.''

The MSCI Asia Pacific Index lost 0.4 percent to 125.73 at 2:09 p.m. in Tokyo, a third day of declines and set for the lowest close since September 2006. The gauge has slumped 20 percent this year as inflation accelerated, growth slowed and global financial companies posted writedowns and credit losses of more than $500 billion.

Japan's economy shrank 2.4 percent last quarter, while China's industrial-output growth cooled in July to the slowest pace since February 2007. A report today may show that Europe's economy contracted for the first time in almost a decade.

Brokerage Downgrades

Japan's Nikkei 225 Stock Average dropped 0.2 percent to 12,993.35. Hong Kong's Hang Seng Index retreated for a fifth day, set for its longest losing streak in seven months. Hong Kong Exchanges & Clearing Ltd., which operates Asia's third-largest stock market, fell after JPMorgan Chase & Co. and Macquarie Group Ltd. downgraded the shares. Most other benchmark indexes in the region declined.

Australia's S&P/ASX 200 Index added 1 percent. Raw-material producers account for 27 percent of the measure's total weighting.

U.S. stocks fell for a second day yesterday after earnings from Deere & Co., the largest maker of tractors, disappointed investors and the Commerce Department reported the first decrease in chain-store sales in five months. Standard & Poor's 500 Index futures rose 0.1 percent.

Tokyu Land fell to 462 yen, on course for its lowest close since May 2005. NTT Urban Development Co. slumped 4.6 percent to 146,600 yen. Joint Corp., a condominium builder, plunged 18 percent to 196 yen, set for its lowest close in at least eight years.

Urban Bankruptcy

Urban, Japan's worst-performing real-estate stock this year, said yesterday it sought protection from creditors, following filings by builders Zephyr Co. and Kyoei Sangyo Co. last month.

Kenedix Inc., a real-estate investment company, sank by its daily limit of 8.8 percent to 51,900 yen after saying first-half net income declined 45 percent.

Mitsubishi UFJ, Japan's biggest publicly traded bank, declined to 824 yen. Mizuho Financial Group Inc., the third- largest, slipped 1.3 percent to 462,000 yen. Industrial & Commercial Bank of China Ltd., the world's biggest by market value, dropped 1.3 percent to HK$5.18 in Hong Kong.

Merrill's Bernstein said yesterday buying bank shares is risky as ``the problems in the financial sector appear to us to be far from over.'' The credit crisis is not limited to U.S. banks with subprime loan-related securities, he added in a note to clients.

Commodity Producers

BHP jumped to A$38.66, on course for its largest gain since May 14. Rio Tinto Group, the third-biggest mining company, added 5.5 percent to A$117.75. Mitsubishi Corp., Japan's No. 1 trading company, rallied 2.3 percent to 2,885 yen.

A measure of six metals traded on the London Metal Exchange rose 3.2 percent yesterday, its largest gain since March 27. Crude oil for September delivery advanced 2.7 percent to $116 a barrel, the largest gain since July 30, and futures climbed as much as 0.8 percent to $116.94 today.

Santos Ltd., Australia's third-largest oil and gas explorer, jumped 4.8 percent to A$17.82. Woodside Petroleum Ltd., the nation's second-biggest, gained 5.4 percent to A$54.94. Cnooc Ltd., China's largest offshore oil explorer, rallied 6.3 percent to HK$11.08 in Hong Kong.

The rally in commodity prices coincided with a rebound in the Baltic Dry Index, which tracks transport costs of raw commodities on international trade routes. The gauge gained 1.5 percent yesterday, ending a 23-day, 25 percent slump.

`Longer-Term Outlook'

Measures tracking materials companies and shipping lines on MSCI's Asian index have dropped 12 percent and 8.4 percent respectively in the past month, the worst performances among the broader measure's 10 industry groups.

``Global growth may have slowed, but it hasn't stopped, which is why people are looking to pick up oversold commodities shares and shippers on their longer-term outlook,'' said Hideyuki Ookoshi, who helps oversee $365 million at Chiba- Gin Asset Management Co.

Nippon Yusen K.K., Japan's biggest shipping line, added 2.7 percent to 883. Mitsui O.S.K. Lines Ltd., the second-largest, advanced 4.7 percent to 1,293 yen. STX Pan Ocean Co., South Korea's largest bulk carrier, surged 9.7 percent to S$2.49 in Singapore trading.

David Jones Ltd., Australia's No. 2 department store chain, surged 9.3 percent to A$3.99, the most since Jan. 24, after saying second-half earnings rose as much as 25 percent. The Sydney-based retailer had previously forecast earnings growth of between 8 percent and 13 percent.

Korean Air Lines Co., South Korea's biggest carrier, declined 3.9 percent to 43,700 won, its third straight drop. The company said its second-quarter loss widened to 288.9 billion won ($278 million) from 214.4 billion won a year earlier because of record jet-fuel prices and a weaker won.

Hong Kong Exchanges fell 4.5 percent to HK$98.80, the lowest since June 2007. Chairman Ron Arculli said the trend of falling trading volumes at bourses is a ``fairly common'' one globally.

By contrast, ASX Ltd., operator of Australia's largest stock exchange, gained 3.5 percent to A$36.03 after saying second-half net income climbed 6.1 percent on increased trading volume and new share listings.

To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.