Asia's Stocks, Index Futures Decline on Credit, Demand Concerns

By Masaki Kondo

Oct. 10 (Bloomberg) -- Asian stock index futures fell on concern credit turmoil will bring down companies beyond the financial industry through slumping consumer spending and higher borrowing costs.

U.S.-traded receipts of Honda Motor Co. retreated 8.1 percent from the closing share price in Tokyo yesterday as auto sales are estimated to drop in the U.S. Mizuho Financial Group Inc. fell 9.9 percent after New City Residence Investment Corp. became Japan's first failure of a listed real-estate investment trust. Westpac Banking Corp. lost 6.1 percent after lending rates in London climbed to a 10-month high.

``The money market is suffocated,'' said Yoku Ihara, head of equity research at Retela Crea Securities Co. in Tokyo. ``Even if investors want to buy stocks, they don't have cash.''

New Zealand's NZX 50 Index, the first market in the Asia- Pacific region to begin trade, slumped 3 percent to the lowest since November 2004. Australia's S&P/ASX 200 Index futures fell 4.4 percent to 4,113.

Nikkei 225 Stock Average futures expiring in December closed at 8,615 in Chicago, lower than 9,200 earlier in Osaka and down from 9,245 in Singapore. The Bank of New York Japan ADR Index, which tracks American depositary receipts of Japanese companies, slid 6.2 percent.

Market researcher J.D. Power & Associates yesterday said U.S. car sales will fall 16 percent to 13.6 million units this year as consumers delay buying cars. In September, U.S. auto sales dropped 27 percent, the most since 1991, as tighter credit prevented potential buyers from getting loans.

The London interbank offered rate for three-month loans rose to 4.75 percent, the highest since Dec. 28. So-called Libor is the most widely used benchmark for short term interest rates.

REIT Failure

Yesterday, the Nikkei lost 0.5 percent to 9,157.49 in Tokyo, while the broader Topix index gained 0.7 percent to 905.11.

New City Residence filed for bankruptcy protection with liabilities totaling 112.4 billion yen ($1.13 billion). The Tokyo Stock Exchange REIT Index fell by more than 50 percent to the lowest since its inception in March 2003.

Suring costs to dispose of non-performing assets prompted UBS AG to lower its ratings on Mizuho and Chuo Mitsui Trust Holdings Inc. to ``neutral'' from ``buy.'' Analyst Nana Otsuki also cut 12-month price estimates for Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. by as much as 33 percent.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net