Asian Stocks Decline as Japan Slides Into Recession; BHP Falls

By Kyung Bok Cho and Chua Kong Ho

Nov. 17 (Bloomberg) -- Asian stocks fell after Japan slid into recession and crude oil prices fell for a second day, heightening concern a global economic decline is deepening.

Mitsubishi Estate Co., Japan's largest developer by market value, slid 5.4 percent after the nation's economy contracted and the Nikkei newspaper said Tokyo office rents fell for the first time in six years. BHP Billiton Ltd. lost 4.9 percent as crude dropped as low as $55.60 a barrel. Daiichi Sankyo Co. led Japanese drugmakers higher as investors sought companies whose earnings will be shielded from a slowdown, helping the Nikkei 225 Stock Average to rebound from early losses.

``The concern is how deep and protracted this synchronized global recession is going to be,'' said Daphne Roth, the Singapore-based head of equity research at ABN Amro Private Bank, which manages about $30 billion of Asian assets.

The MSCI Asia Pacific Index sank 0.6 percent to 82.57 at 3:03 p.m. in Tokyo. The gauge swung between gains and losses at least eight times today. Japan's Nikkei rose 0.7 percent to 8,522.58. Most markets in the region declined.

Australia's S&P/ASX 200 Index fell 2.5 percent. Babcock & Brown Ltd., which has plunged 98 percent this year, tumbled after saying it may lose $41 million on a venture with GPT Group.

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, the ratio 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.

G-20

Stocks have plunged as the collapse of the U.S. mortgage market sparked $960 billion in losses and writedowns at financial companies and now threatens a global economic recession. The International Monetary Fund said on Nov. 7 the U.S., Europe and Japan may experience the first simultaneous recession in the post-World War II era.

Futures on the U.S. Standard & Poor's 500 Index added 0.3 percent. The S&P 500 fell 4.2 percent on Nov. 14, led by Sears Holdings Corp. and Home Depot Inc., after sales at U.S. retailers dropped 2.8 percent last month, the most since records began in 1992.

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. The Group of 20 nations set a March deadline for recommendations on strengthening accounting standards, derivatives markets and oversight of hedge funds and debt-rating companies.

The G-20 meeting ``was disappointing that they created a sense of panic and urgency without following it up with a set of action points,'' said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which manages about $85 billion.

Tokyo Rents Fall

Mitsubishi Estate dropped 5.4 percent to 1,396 yen. Mitsui Fudosan Co., the biggest Japanese property developer by revenue, slipped 5.2 percent to 1,383 yen.

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. Separately, building owners are lowering rents for new office buildings in Tokyo as an economic slowdown prevents tenants from expanding or moving to new offices, Nikkei reported, citing its own survey.

Daiichi Sankyo, Japan's third-largest drugmaker, added 5.4 percent to 1,964 yen. Osaka Gas Co., the nation's No. 2 distributor of the fuel, climbed 5.4 percent to 374 yen.

``Looking past companies with low earnings hopes and those that depend on deteriorating overseas demand, the remaining choice is defensive stocks,'' said Mitsushige Akino, who oversees about $468 million at Tokyo-based Ichiyoshi Investment Management Co.

Outlook Cut

BHP, the world's biggest mining company and Australia's largest oil producer, slid 4.9 percent to A$25.10. Nippon Mining Holdings Inc., Japan's biggest copper producer and a refiner, retreated 1.6 percent to 254 yen. GS Holdings Corp., which operates South Korea's second-biggest oil refiner, lost 5.4 percent to 22,900 won.

Crude oil dropped as much as 2.5 percent to $55.60 a barrel in after-hours trading, after falling 2.1 percent to close at $57.04 in New York on Nov. 14. In a Nov. 14 report, Macquarie Group Ltd. made what it called ``drastic'' cuts in 2009 price forecasts for copper, aluminum, iron ore and coal, saying a deteriorating global economy is reducing demand.

BHP said on Nov. 14 that customers requested a deferral of iron ore shipments equal to 5 percent of its budget for 2008 as China's economy slows.

Posco, which gets 70 percent of its sales from within South Korea, declined 3 percent to 309,000 won in Seoul. Shinsegae Co., the nation's biggest discount-store chain, lost 3.1 percent to 445,000 won.

Chinese Airlines, Amatil

The IMF may cut its forecast for South Korea's 2009 growth to below 3 percent from its previous estimate of 3.5 percent, Yonhap News reported, citing President Lee Myung Bak.

Commonwealth Bank of Australia, the nation's biggest provider of home loans, fell 2.4 percent to A$31.33. National Australia Bank, the largest bank, slid 4.4 percent to A$18.93.

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. Economists surveyed by Bloomberg News had expected a 0.4 percent gain.

James Hardie Industries NV, the biggest seller of home siding in the U.S., retreated 7.4 percent to A$4.40. The company reported second-quarter earnings dropped 26 percent to $36.2 million amid the worst housing slowdown since the Great Depression, and said it won't pay a first-half dividend.

Chinese Airlines Rise

Babcock, the worst-performing stock on the MSCI Asian index this year, tumbled 15 percent to 41 Australian cents. GPT, an Australian real estate investment trust, dropped 8.9 percent to A$1.02. Babcock said Wachovia Corp. may recall a $112 million loan after its joint venture with GPT failed to pay more collateral.

Coca-Cola Amatil Ltd. jumped 13 percent to A$9.31, the biggest gain since August 2000. Lion Nathan Ltd., Australia's second-largest brewer, offered to buy the Australian bottler of Coke for A$7.6 billion ($4.9 billion) in cash and stock to create the nation's biggest beverages group, Amatil said.

China Eastern Airlines Corp., the country's third-largest carrier, jumped by the 10 percent daily limit to 3.85 yuan in Shanghai. China Southern Airlines Co., Asia's biggest carrier by number of passengers, advanced 10 percent to HK$1.20 in Hong Kong. The companies' parents will each receive a 3 billion yuan ($439 million) capital injection this year from the government, the Oriental Morning Post newspaper said today from Shanghai.

To contact the reporters for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Chua Kong Ho in Shanghai at kchua6@bloomberg.net.