By Kyung Bok Cho and Satoshi Kawano
Oct. 24 (Bloomberg) -- Asian stocks tumbled after Samsung Electronics Co.'s profit fell, Sony Corp. slashed its earnings forecast and Toyota Motor Corp. sales dropped for the first time in seven years. U.S. futures retreated.
South Korea's Kospi Index plunged 11 percent, its biggest decline since September 2001, as Samsung sank 14 percent. Sony, the world's second-largest maker of consumer electronics, slumped 14 percent and Toyota lost more than 5 percent, sending Japan's Nikkei 225 Stock Average close to the lowest level since 1982. The yen jumped to a 13-year high and Treasuries climbed.
``Financial markets have crashed and are out of control,'' said Yuji Ogino, an executive director at Meiji Dresdner Asset Management Co., which manages the equivalent of $28 billion in Tokyo. ``This crash is different from anything I've experienced since getting into this business in the late 1980s and it's hard to find ways to ride out the situation.''
The MSCI Asia Pacific Index fell 5.9 percent to 80.22 as of 3:03 p.m. in Tokyo, set for its seventh weekly decline in the past eight weeks. More than 900 stocks fell on the 990-member index and seven of the 10 industry groups lost 4 percent or more, led by technology stocks. Standard & Poor's 500 Index futures lost 4.1 percent.
MSCI's Asian index is down 8 percent this week and has plunged 49 percent this year, its worst annual performance since the measure was created in 1987. Stocks tumbled after financial firms' mortgage-related losses swelled, worsening a global credit crisis that eventually toppled banks including Lehman Brothers Holdings Inc.
The Nikkei 225 dropped 9.6 percent to 7,649.08, some 40 points away from its lowest level since 1982. The Kospi capped its worst week since the 1997 Asian financial crisis, dropping 20 percent. Lotte Shopping Co. paced declines after profit missed estimates and South Korea's economy slowed.
Price Cut
HSBC Holdings Plc led declines in Hong Kong after Morgan Stanley cut its price target 25 percent.
Treasuries rose, sending 10-year notes to their biggest weekly gain in a decade, as spreading financial turmoil wiped out more than $10 trillion of global stock-market value this month. India's rupee fell through 50 against the dollar to a record low.
Stock declines have dragged valuations on MSCI's Asian index to 1.1 times book value, cheaper than those in the U.S. and Europe. The S&P and the Dow Jones Stoxx 600 Index trade at 1.8 times book value. Asia's stocks traded as high as 2.6 times book in May 2007, when U.S. stocks were at 2.9 times and Europe was at 2.6 times.
Samsung, Asia's biggest maker of chips, flat screens and mobile phones, dropped 14 percent to 407,500 won in Seoul, its biggest decline since 1995. Third-quarter net income fell 44 percent, as a glut drove down prices of memory and displays.
`Off a Cliff'
``Slowing U.S. and European growth have sent shockwaves through the economies of the developing world,'' said Hiroshi Fujimoto, a fund manager at Shinkin Asset Management Co. in Tokyo, which manages the equivalent of $5.7 billion. ``Exporters are likely to see their sales drop off a cliff.''
Sony, the world's second-largest maker of consumer electronics, slid 14 percent to 1,972 yen in Tokyo. Net income will drop 59 percent from a year earlier in the 12 months to March 31, Sony said yesterday, citing the stronger yen and worsening economic outlook.
The yen climbed to the highest since August 1995 against the dollar as the risk of a global recession prompted investors to slash carry trades, in which they fund purchases of higher- yielding assets with Japanese currency. The yen gained 1.8 percent to 95.51 against the dollar at 12:35 p.m. today, set for its highest level since August 1995. Against the euro, it rose 3.3 percent to 121.77.
Sony's Shadow
Panasonic Corp., the world's biggest consumer-electronics maker, fell 12 percent to 1,346 yen in Tokyo, the most since October 1987. Sharp Corp., Japan's largest maker of mobile phones and liquid-crystal displays, plummeted 14 percent to 631 yen, the lowest level since April 1982.
``Sony's announcement casts a shadow on all electronics shares,'' Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., said in an interview with Bloomberg Television.
Toyota Motor Corp., the world's second-largest automaker, fell 6.4 percent to 3,200 yen. The company said quarterly sales dropped 4.3 percent, the first decline in seven years, as the financial crisis crippled worldwide auto demand.
Lotte, South Korea's biggest department-store operator, lost a record 13 percent to 133,000 won, capping an eight-day, 40 percent plunge. The shares trade at almost a third of the price they were sold in the company's 2006 initial public offering. Lotte said yesterday its quarterly profit declined 19 percent amid slowing sales.
Slowing Growth
South Korea's economy grew 0.6 percent in the last quarter from the previous three months, the weakest pace in four years, the central bank said. The data sparked concern a recession is looming in Asia's fourth-largest economy as consumers cut spending and the global slowdown damps export demand.
HSBC, the world's second-biggest bank by value, tumbled 6.4 percent to HK$94.20 after Morgan Stanley cut its share-price estimate to HK$75. The London-based bank may halve its dividend in 2009, while an appreciation in the dollar could cut earnings by about 15 percent, the brokerage said.
A decline in shipping rates sent China Cosco Holdings Co., the world's biggest operator of dry-bulk ships, down 9 percent to HK$3.63 in Hong Kong. STX Pan Ocean Co., South Korea's biggest, fell 9.9 percent to 77 cents in Singapore.
The Baltic Dry Index, a measure of commodity-shipping rates, declined 5.9 percent yesterday in London, the lowest since Sept. 11, 2002. The gauge has plunged 62 percent since Oct. 3, the last time it rose. Goldman, Sachs & Co. slashed its price estimate for China Cosco by 73 percent to HK$4.30 in a report.
Jiangxi Copper Co., China's second-biggest smelter of the metal, lost 11 percent to HK$3.42 in Hong Kong, set for the lowest close since May 2005. The company said last night the global financial turmoil has hurt sales and raw material purchases, and it may miss production targets.
To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Satoshi Kawano in Tokyo at Skawano1@bloomberg.net
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