Asian Stocks Drop on Sanyo Earnings, Mounting Growth Concerns

By Patrick Rial
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Aug. 8 (Bloomberg) -- Asian stocks fell, capping a second week of declines, after Sanyo Electric Co.'s operating profit dropped and UBS AG cut its rating on shipping companies.

Sanyo, the world's largest maker of rechargeable batteries, and Mitsui O.S.K. Lines Ltd. slumped in Tokyo. Mitsubishi UFJ Financial Group Inc., Japan's No. 1 bank by market value, and advertiser Dentsu Co. retreated after the government said the country may be in a recession. Telecom Corp., New Zealand's biggest telephone company, fell the most in almost six years after net income dropped.

``There aren't many bullish companies left with the economic outlook so murky,'' said Naoteru Teraoka, who helps oversee $21 billion at Chuo Mitsui Asset Management Co. in Tokyo.

The MSCI Asia Pacific Index declined 0.6 percent to 127.30 as of 10:27 a.m. in Tokyo. For the week, the gauge has lost 2.6 percent. Japan's Nikkei 225 Stock Average sank 0.3 percent to 13,089.30. Most other benchmark indexes slid in the region.

U.S. stocks fell the most in a week yesterday, with the Standard & Poor's 500 Index losing 1.8 percent. American International Group Inc. plunged the most since listing in 1969 after reporting an unexpected loss, while Wal-Mart Stores Inc., the world's largest retailer, dropped after saying sales are likely to slow. Jobless claims in the biggest economy unexpectedly rose.

Sanyo

Sanyo dropped 5.6 percent to 219 yen. The company reported a 24 percent slide in operating profit yesterday due to higher materials costs and falling demand for semiconductors.

Telecom tumbled 9.5 percent to NZ$3.33, the steepest retreat since November 2002. Price competition and declining revenues at its mobile and fixed-line businesses were responsible for a 31 percent decrease in fourth-quarter earnings.

Mitsubishi UFJ fell 4.4 percent to 831 yen, while Dentsu dropped 3.3 percent to 216,800 yen. The company reported an 8.7 percent drop in July sales yesterday.

Japan's Cabinet Office said yesterday the economy ``may be in a recession'' due to slower growth in the U.S. Economists surveyed by Bloomberg expect gross domestic product figures set to be released next week to show that the world's second-largest economy contracted 2.3 percent in the April to June quarter.

Mitsui O.S.K., Japan's second-biggest bulk shipper, plunged 7.5 percent to 1,180 yen, the most since August 2007. Jun Harada, an analyst at UBS AG in Tokyo, lowered his recommendation on Japan's three largest shipping lines, citing dimming prospects for higher rates.

Baltic Index

The Baltic Dry Index, a measure of coal, iron ore and grain shipping costs, extended its losing streak to a 20th day, the longest string of declines since August 2005, amid concern demand in China is slowing.

Hanjin Shipping Co., the largest in South Korea, fell 3.7 percent to 30,100 won. Mitsui Engineering & Shipbuilding Co., Japan's second-largest shipyard, retreated 11 percent to 261 yen after lowering its profit forecast, prompting at least three brokerages to downgrade the shares.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net