Asian Stocks Drop on AIG; Chuo Mitsui, Neptune Fall on Earnings

By Patrick Rial and Kyung Bok Cho

Aug. 7 (Bloomberg) -- Asian stocks fell for the third time this week, led by financial companies after writedowns on mortgage and derivative assets wiped out American International Group Inc.'s profit for a third quarter.

Chuo Mitsui Trust Holdings Inc., a Japanese bank, snapped two days of gains after bad loans slashed first-quarter profit by half. AIG, the world's biggest insurer by assets, had a $5.36 billion loss. Neptune Orient Lines Ltd. and Daikin Industries Ltd., the No. 2 maker of air conditioners, slumped after higher raw materials costs and slower growth reduced earnings. South Korean shares slumped after the nation's central bank unexpectedly raised interest rates.

``There are still a lot more writedowns to come, so financials will struggle with their earnings,'' said Christian Jin, who oversees $1.2 billion as head of global investment at CJ Asset Management Co. in Seoul. ``Asian earnings momentum will be lackluster for the time being with a slower U.S. economy, slower exports and higher costs.''

The MSCI Asia Pacific Index lost 0.4 percent to 128.60 as of 10:53 a.m. in Tokyo. The benchmark has tumbled 19 percent this year, outpacing a 14 percent decline by MSCI's measure of global equities.

Japan's Nikkei 225 Stock Average slipped 1.1 percent to 13,111.72. Shares climbed in Australia and New Zealand.

Losses stemming from the collapse of the U.S. mortgage market have resulted in more than $492 billion in asset writedowns and credit losses among the world's largest financial institutions.

Bank Earnings

U.S. stocks advanced 0.3 percent to a six-week high yesterday. Fourth-quarter profit at Cisco Systems Inc., the world's largest maker of networking equipment, beat analysts' estimates, sparking a rally in technology shares.

Chuo Mitsui slumped 3.2 percent to 610 yen. Sumitomo Mitsui Financial Group Inc., Japan's second-largest bank by market value, slid 3.2 percent to 716,000 yen.

Woori Finance Holdings Co., which controls South Korea's second-largest bank, tumbled from a one-month high, dropping 3.7 percent to 15,750 won. John Wadle, a Hong Kong-based analyst at UBS AG, lowered his price estimate on the shares by 12 percent, saying the company will be forced to increase loss provisions as the number of non-performing loans rises.

AIG dropped 7.7 percent in extended trading after writing down the value of assets including credit-default swaps by $11.64 billion.

Higher Rates

Samsung Electronics Co., the world's biggest computer- memory maker, lost 0.7 percent to 583,000 won, reversing an earlier gain. Hyundai Motor Co., South Korea's largest automaker, fell 1.3 percent to 70,300 won.

The Bank of Korea raised its benchmark interest rate by a quarter point to 5.25 percent, the highest in almost eight years, to curb inflation.

Neptune Orient, Southeast Asia's largest container-shipping company, lost 5.5 percent to S$2.60, the lowest level in more than a year, after posting its first profit decline in five quarters because of higher fuel costs.

Daikin Industries plunged by the daily limit of 11 percent to 4,010 yen in Tokyo after saying slower growth in Europe caused a drop in first-quarter operating profit and prompted the company to lower its earnings forecast.

Sankyo Co., a maker of pachinko gambling machines, lost 8.3 percent to 5,860 yen after analysts including Nikko Citigroup Ltd.'s Soichiro Fukuda said the company's fourfold increase in operating profit was lower than expected.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Kyung Bok Cho in Seoul at kcho7@bloomberg.net