Asia Stocks Fall for Second Week, Led by Commodities Producers

By Chua Kong Ho

Sept. 13 (Bloomberg) -- Asian stocks fell for a second week, led by commodity producers on concern slowing global growth will curb demand, overshadowing a rally by financial companies after Fannie Mae and Freddie Mac were seized by the U.S. government.

Cnooc Ltd., China's largest offshore oil producer, slumped 10 percent as crude extended its retreat. China Mobile Ltd. dropped 7 percent after a report outlined measures by the government to reduce its dominance. Banks surged, led by Mitsubishi UFJ Financial Group Inc., after the U.S. government took over the nation's two largest mortgage companies, boosting confidence in financial markets.

``This is not a good time to make new investments in risky assets like stocks,'' said Hiroshi Morikawa, senior strategist at Japan's MU Investments Co., which manages about $14 billion. ``I will keep my money in cash or bonds because of the uncertainties in the global economy.''

The MSCI Asia Pacific Index dropped 0.6 percent to 116.19, a second straight weekly decline. All but one of the 10 industry groups retreated, led by energy and utility companies. A measure of financial stocks gained 4 percent.

The broader regional gauge has dropped 26 percent this year as a global economic slowdown and more than $500 billion in writedowns and credit losses at the world's largest financial companies hurt profit.

Japan's Nikkei 225 Stock Average was little changed for the week, while Hong Kong's Hang Seng Index slid 2.9 percent.

Fannie, Freddie

Asian stocks surged on Monday after the U.S. government took over Fannie Mae and Freddie Mac, shoring up confidence in global financial markets. Speculation that embattled U.S. investment bank Lehman Brothers Holdings Inc. may find a buyer boosted confidence more bank failures can be avoided.

Mitsubishi UFJ, Japan's largest publicly traded bank, advanced 11 percent to 858 yen, paring its decline this year to 18 percent. Sumitomo Mitsui Financial Group Inc. jumped 17 percent to 686,000 yen. Australia & New Zealand Banking Group Ltd., the fourth-largest Australian bank by value, rose 6.1 percent to A$17.25.

``It draws a line under the recent problems,'' said Nader Naeimi, a Sydney-based senior investment strategist at AMP Capital Investors, which manages about $108 billion. ``It's very positive for the banking sector in particular, which has been beaten down quite badly.''

A measure of 46 companies in MSCI's Asia Pacific Energy Index retreated 5 percent this week, led by PT Bumi Resources, Asia's biggest thermal coal exporter, with a 19 percent slump to 3,600 rupiah.

Commodities Drop

Asia's benchmark coal price at Australia's Newcastle port, the world's largest coal-export harbor, had sunk 17 percent as of Sept. 5 from the record on July 4, according to the globalCOAL NEWC Index. Crude oil fell 4.8 percent, a second weekly decline.

Cnooc fell 10 percent to HK$9.37. Woodside Petroleum Ltd., Australia's No. 2 oil and gas producer, slid 6 percent to A$52.61.

Among other commodity producers, PT Astra Agro Lestari, Indonesia's biggest publicly listed plantation company, plunged 21 percent to 12,750 rupiah this week as palm oil futures dropped 3.6 percent in Kuala Lumpur. Zijin Mining Corp., China's biggest gold miner by value, declined 19 percent to HK$3.52 as bullion fell to its lowest in almost eleven months.

``Many funds that specialize in mining and commodity stocks are going bankrupt in the U.S.,'' said Ahmad Fuad Rahmany, chairman of Indonesia's Capital Market and Financial Supervisory Institutions Agency. ``So they are selling some of their shares, including here.''

China Mobile

China Mobile, the world's biggest wireless carrier by users, dropped 7 percent to HK$76.30, the lowest since June 15, 2007. The Nanfang Daily reported on Sept. 11 that the Chinese government will allow China Mobile users in Tianjin and Shenzhen to keep their phone numbers starting next month, when switching to rival service providers. Users moving to China Mobile would have to change numbers.

Belle International Holdings Ltd., China's biggest retailer of women's shoes, slumped 25 percent to HK$5.70, after brokerages including UBS AG cut their price estimates on weaker sales prospects. Hidili Industry International Development Co., southwestern China's largest producer of coking coal, tumbled 25 percent to HK$5.39, on concern prices of the fuel will decline as mines reopen amid weak demand from steelmakers.

To contact the reporter for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net