Asian Stocks Decline to Lowest Since November 2005; Banks Fall

By Kyung Bok Cho

Sept. 11 (Bloomberg) -- Asian stocks tumbled, driving the benchmark index to its lowest level since November 2005, on concern credit-market losses will increase and slowing growth will damp demand for the region's exports.

Mitsubishi UFJ Financial Group Inc. and Australia & New Zealand Banking Group Ltd. fell more than 3 percent after Lehman Brothers Holdings Inc. posted a wider loss than analysts estimated. Mazda Motor Corp., which gets more than half of its operating profit in Europe, plunged the most in seven years after the European Commission cut the euro area's growth outlook. Sumitomo Heavy Industries Ltd. retreated 5.3 percent after Japan's machinery orders declined.

The MSCI Asia Pacific Index sank 2.5 percent to 114.83 as of 3:05 p.m. in Tokyo, set for its biggest loss since July 25. The measure has given up gains made in a Sept. 8 rally sparked by the U.S. government's takeover of Fannie Mae and Freddie Mac.

``The rescue of Fannie and Freddie wasn't enough to erase the symptoms of economic slowdown,'' said Lim Chang Gue, who oversees the equivalent of $1.8 billion as head of global investment at Samsung Investment Trust Management Co. in Seoul. ``Some industries would normally see a seasonal bump in demand about now, but this year there just isn't any.''

All 10 industry groups fell today, led by financial stocks.

Japan's Nikkei 225 Stock Average lost 1.9 percent to 12,116.93, led by Mitsubishi UFJ. Taiwan's Taiex Index slumped 3.2 percent on speculation government measures to revive the economy will be insufficient. New Zealand's NZX 50 Index fell the least in the region after the central bank cut its benchmark interest rate by a more-than-expected 50 basis points.

Record Loss

Standard & Poor's 500 Index futures were down 0.5 percent recently. U.S. stocks rose yesterday, with the S&P 500 advancing 0.6 percent to 1,232.04, as investors bought energy shares trading at their cheapest level in 18 months.

Mitsubishi UFJ, Japan's biggest bank, fell 5.1 percent to 823 yen. ANZ, Australia's fourth-largest by market value, slid 3.9 percent to A$16.92.

Lehman said yesterday it posted a $3.9 billion third-quarter loss on $5.6 billion of writedowns, worse than the $2.2 billion loss analysts had predicted. Chief Executive Officer Richard Fuld is striving to convince investors that the No. 4 U.S. securities firm will stem losses as housing prices fall.

Mizuho Financial Group Inc., Japan's second-biggest bank by assets, retreated 5.3 percent to 445,000 yen. Babcock & Brown Ltd., an Australian infrastructure-asset manager that has lost 93 percent this year, fell 16 percent to A$1.98, a record low.

European Slowdown

Lehman's loss pushed global writedowns and credit losses caused by the collapse in the U.S. mortgage market to $511 billion, according to figures compiled by Bloomberg News.

``Global securities firms and investment banks can no longer count on the securitization deals that have kept them profitable in recent years,'' said Yuuki Sakurai, a Tokyo-based general manager at Fukoku Mutual Life Insurance Co., which manages about $54 billion.

Mazda, Japan's fourth-largest automaker, slumped 10 percent to 463 yen in Tokyo, the most since September 2001. Nikko Citigroup today cut its rating on Mazda to ``sell'' from ``hold.''

The European Commission lowered its full-year growth forecast for the 15-nation euro region's economy to 1.3 percent, from 1.7 percent earlier, and signaled the 2009 outlook may also be cut. The euro dropped to the lowest in 13 months against the yen. A weaker euro hurts Japanese exporters by reducing the value of repatriated sales.

Nintendo Co., which got 37 percent of last year's sales from Europe, fell 3.4 percent to 48,150 yen in Osaka.

TPV, Motech

TPV Technology Ltd., the world's biggest contract maker of computer monitors that derives a quarter of its sales from Europe, tumbled 11 percent to HK$2.79 in Hong Kong. The company cut its forecast for shipments this year. Motech Industries Inc., Taiwan's biggest solar-cell maker that got 39 percent of last year's sales from Europe, fell 4.8 percent to NT$160.

Stocks in Taiwan also fell as investors bet a NT$180.9 billion ($5.6 billion) package of spending and tax cuts won't boost the market.

The measures ``will not succeed since they are not altering corporate or economic fundamentals in a meaningful way,'' said Howard Wang, who oversees $10 billion at JF Asset Management Ltd. in Hong Kong.

Sumitomo Heavy, Japan's largest maker of plastic injection- molding gear, dropped 5.3 percent to 469 yen. Fanuc Ltd., the world's biggest industrial-robot maker, lost 2 percent to 7,540 yen in Tokyo.

Capital Spending

Japan's machinery orders declined 3.9 percent in July from the previous month, the Cabinet Office said today. Economists had estimated orders, an indicator of capital spending in the next three to six months, would fall 3.6 percent.

Hitachi Ltd., Japan's third-largest builder of nuclear plants, lost 4.8 percent to 732 yen, the most since March 31. Chubu Electric Power Co. said yesterday it will sue Hitachi because a faulty turbine forced the utility to shut down a power plant. Hitachi said yesterday it is considering how to respond.

Affiliates of South Korea's Kumho Asiana Group gained after the group said it may sell all or part of its life-insurance unit to raise cash. Daewoo Engineering & Construction Co., South Korea's biggest builder, climbed 2.7 percent to 13,250 won. Asiana Airlines Inc., the nation's second-largest carrier, advanced 4.9 percent to 4,610 won.

Daito Trust Construction Co., a Japanese rental property developer, added 11 percent to 5,000 yen, the biggest gain since December. Unison Capital Inc., a Japanese private equity firm, will lead a group in bidding for Daito in a deal worth as much as $9 billion, the Wall Street Journal reported.

To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net.