Asian Stocks Drop on Earnings, Credit-Loss Concerns; Banks Fall

By Chen Shiyin and Patrick Rial

Aug. 21 (Bloomberg) -- Asian stocks fell, led by financial companies, after Babcock & Brown Ltd. posted its first profit decline and amid speculation credit-market losses will widen.

Babcock & Brown, the region's worst-performing stock this year, plunged 22 percent in Sydney after a slump in its listed funds dragged its first-half profit lower. Sumitomo Mitsui Financial Group Inc., Japan's No. 2 bank by market value, slipped 1.5 percent after HSBC Holdings PLC downgraded the stock. Santos Ltd., Australia's third-biggest oil and gas producer, jumped 6.3 percent after it posted a 59 percent gain in first-half profit and as crude oil prices rose for a third day.

``Investors can't shake the concern that profits are going to be dragged lower due to the external economic picture,'' Juichi Wako, a strategist at Nomura Holdings Inc, said in an interview with Bloomberg Television. ``Oil producers and trading companies look like some of the better bets to be in at the moment.''

The MSCI Asia Pacific Index lost 0.5 percent to 122.83 as of 10:01 a.m. in Tokyo, with more than three shares retreating for each that advanced. Financial companies were the biggest drag among the measure's 10 industry groups.

The Asian benchmark index has slumped 22 percent this year as soaring inflation assailed global economies and the world's largest financial companies posted writedowns and credit losses of more than $500 billion.

Japan's Nikkei 225 Stock Average slipped 0.7 percent to 12,789.51. Australia's S&P/ASX 200 Index dropped 1.1 percent, the region's largest retreat, with QBE Insurance Group Ltd. dropping after reporting lower first-half profit.

U.S. stocks advanced yesterday, led by energy and metals shares, after Goldman Sachs Group Inc. predicted oil will gain 29 percent through the end of the year. The Standard & Poor's 500 Index climbed 0.6 percent.

To contact the reporter for this story: Chen Shiyin in Jakarta at schen37@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net.