Asian Stocks Decline Most in Five Weeks on Economic Outlook

By Chen Shiyin and Ian C. Sayson

Sept. 1 (Bloomberg) -- Asian stocks fell the most in five weeks, led by technology companies and automakers, on concern profits will decline as global economic growth slows.

LG Electronics Inc., the world's No. 3 television maker, dropped 9.6 percent after U.S. consumer spending waned and South Korea's exports grew less than forecast. Hon Hai Precision Industry Co. slumped by the 6.9 percent daily limit in Taipei following its first earnings decrease in seven years. China Merchants Bank Co. lost 5.7 percent in Shanghai on concern the nation's expansion will weaken after manufacturing contracted.

``Investors are still cautious,'' said Olan Caperina, who helps manage about $6.7 billion at BPI Asset Management Inc. in Manila. ``Unless there's a clear indication that global growth won't stall, stocks will pull back whenever there's news of a weakening U.S. economy.''

The MSCI Asia Pacific Index fell 2.1 percent to 122.61 at 3:16 p.m. in Tokyo, poised for its largest drop since July 29. All 10 industry groups retreated.

The regional measure has lost 22 percent this year as the global economy cooled and the world's largest financial companies posted writedowns and credit losses of more than $500 billion.

Japan's Nikkei 225 Stock Average fell 1.8 percent to 12,834.18, paced by Kawasaki Kisen Kaisha Ltd., after prices of shipping raw materials declined and Morgan Stanley downgraded the shares. China's CSI 300 Index dropped 3.8 percent, with Suning Appliance Co. tumbling by the daily limit after the electronics retailer said profit growth slowed.

Korea Air

South Korea's Kospi Index plunged 4.1 percent, the biggest decline in the Asia Pacific region. Korean Air Lines Co. fell the most in six years on concern rising oil prices and a weakening won will dent earnings. Most other regional stock indexes retreated. Malaysia and Vietnam are closed today for holidays.

Futures for the Dow Jones Stoxx 50 Index fell 0.9 percent today in European trading.

U.S. markets are shut today for the Labor Day holiday. Stocks retreated on Aug. 29, paring the biggest monthly gain since April, after the Commerce Department said consumer purchases rose in July at a third of the previous month's pace, while prices surged the most in 17 years. A report released a day earlier had shown gross domestic product expanded faster than economists had expected.

``Investors are getting worried again with a demand slowdown in the U.S.,'' said Seo Jung Ho, a fund manager at UBS Hana Asset Management Co. in Seoul, which has $30 billion in assets.

LG Electronics, which counts North America as its largest overseas market, slumped 9,700 won to 91,800 won, its largest drop since May 2004. Profit from mobile phones will fall in the current period from the second quarter because of lower shipments and higher marketing costs, Tong Yang Investment Bank said today in a report.

Exports, Manufacturing

Hynix Semiconductor Inc., the world's second-largest computer-memory maker, plunged 11 percent to 17,200 won. Honda Motor Co., Japan's second-largest automaker, retreated 3.4 percent to 3,460 yen.

South Korean exports, which make up more than half of gross domestic product, rose 20.6 percent in August from a year earlier, missing the 23.3 percent median estimate of economists surveyed by Bloomberg News.

Hon Hai, which makes iPods for Apple Inc. and Wii game consoles for Nintendo Co., tumbled NT$11 to NT$149, its largest retreat since Jan. 22. Second-quarter net income dropped 24 percent to NT$11.9 billion ($378 million), missing the average estimate of NT$14.9 billion in a Bloomberg News survey of analysts.

In China, manufacturing contracted for a second straight month in August, according to a survey of purchasing managers. Vice Commerce Minister Gao Hucheng said last week that weakness in global demand will weigh on exports for the rest of the year.

China Banks

China Merchants, the nation's fifth-largest bank by market value, lost 1.31 yuan to 21.77. Industrial & Commercial Bank of China Ltd., the world's most profitable bank, declined 3.5 percent to 4.76 yuan. The company predicted slowing growth after posting the fastest earnings increase among the world's banks in the first half.

Suning, China's biggest electronics retailer by market value, tumbled by the 10 percent limit to 36.62 yuan after saying first- half profit slowed. Aluminum Corp. of China Ltd., the country's biggest producer of the metal, fell 4.2 percent to 9.76 yuan after saying first-half profit slumped 65 percent.

Korean Air, South Korea's largest carrier, dropped 15 percent to 33,000 won, its largest slump since September 2001, after crude oil prices rose as much as 2.2 percent to $118 a barrel in New York and the won weakened, driving up dollar- denominated fuel bills.

Asiana, Kawasaki Kisen

Asiana Airlines Inc., South Korea's second-biggest carrier, plunged 11 percent to 3,970 won.

Kawasaki Kisen Kaisha, Japan's third-biggest shipping line, lost 4.9 percent to 744 yen in Tokyo after Morgan Stanley cut its rating to ``equal-weight'' from ``overweight.''

The shares also retreated after the Baltic Dry Index, which tracks the cost of shipping bulk commodities, slumped 1.7 percent on Aug. 29, its eighth straight decline.

Hanjin Shipping Co., South Korea's largest shipping line, tumbled 15 percent to 23,900 won, its biggest drop since March 2003. STX Pan Ocean Co., South Korea's No. 1 bulk carrier, lost 5.6 percent to S$2.36 in Singapore.

To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net; Ian C. Sayson in Manila at isayson@bloomberg.net.