Asian Stocks Decline as Japan, Hong Kong Slide into Recession

By Kyung Bok Cho and Masaki Kondo

Nov. 17 (Bloomberg) -- Asian stocks fell after Japan and Hong Kong slid into recession and the Group of 20 nations delayed agreeing on specific measures to combat the global crisis.

Mitsubishi UFJ Financial Group Inc., Japan's biggest bank, lost 3.9 percent after the nation's economy contracted 0.4 percent in the third quarter. Posco, which gets 70 percent of its sales from within South Korea, declined 5.5 percent after Yonhap News reported the International Monetary Fund may cut its forecast for the country's 2009 growth. James Hardie Industries NV, the biggest seller of home siding in the U.S., retreated 11 percent in Sydney after profit declined 26 percent amid the worst housing slowdown since the Great Depression.

The MSCI Asia Pacific Index sank 1.9 percent to 81.56 at 9:22 a.m. in Tokyo, its lowest in 2 1/2 weeks.

Japan's Nikkei 225 Stock Average slipped 2.6 percent to 8,242.05. Australia's S&P/ASX 200 Index fell 3.2 percent after Babcock & Brown Ltd., which has plunged 98 percent this year, said it may lose $41 million on a venture with GPT Group. BHP Billiton Ltd., the world's biggest mining company and Australia's biggest oil producer, lost 5 percent as crude oil for December delivery dropped as much as 2.5 percent to $55.60 a barrel.

Shares on the MSCI index are valued at 10 times trailing earnings and fell to as low as 8.2 times last month. Prior to the current market turmoil, it never dropped below 10, according to Bloomberg data dating back to 1995. The gauge has lost more than half its value since the peak in November 2007.

Futures on the Standard & Poor's 500 Index slid 0.1 percent. The S&P 500 fell 4.2 percent on Nov. 14, led by Sears Holdings Corp. and Home Depot Inc., after sales at retailers declined 2.8 percent last month, the most since records began in 1992.

G20 Meeting

A slump in demand is spreading from North America to emerging markets, prompting Toyota Motor Corp. to cut its global sales forecast for 2009 to less than 9 million vehicles from 9.7 million, the Tokyo Shimbun reported yesterday. The company will announce the revised forecast next month, the newspaper said.

Japan's economy, the world's second largest, slipped into recession for the first time since 2001 as companies cut back spending, the Cabinet Office said today. Hong Kong's economy shrank 0.5 percent in the third quarter from the previous three months as exports declined, the government said on Nov. 14.

Australian retail sales, adjusted to remove the effect of inflation, increased 0.1 percent from the June quarter when they fell 0.2 percent, the Bureau of Statistics said in Sydney today. The median forecast of 15 economists surveyed by Bloomberg New was for a 0.4 percent gain.

On Nov. 15, leaders from the biggest developed and emerging nations urged a ``broader policy response,'' citing the potential for additional interest-rate cuts and fiscal stimulus, after meeting in Washington. The G20 set a March deadline for recommendations on strengthening accounting standards, derivatives markets and oversight of hedge funds and debt-rating companies.

To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.