Asian Stocks Drop for Second Day as Job Cuts Mount; Banks Fall

By Patrick Rial and Chua Kong Ho

Nov. 18 (Bloomberg) -- Asian stocks fell for a second day, led by financial and technology companies, on heightening concern that the global recession is worsening.

Mitsubishi UFJ Financial Group Inc. slumped 6.7 percent, leading the region’s financial stocks to a five-year low, as Citigroup Inc. said it will eliminate about 15 percent of its workforce. Au Optronics Corp., Taiwan’s biggest maker of liquid- crystal displays, lost 3.9 percent after saying it will cut wages. BHP Billiton Ltd. slumped 3.6 percent as Macquarie Group Ltd. cut its 2009 profit forecast and metal prices fell.

“The global recession still has another six to nine months to go and it’s only now that we’re beginning to see the mass layoffs,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors, which has $81 billion, in a Bloomberg Television interview. “The newsflow just remains so bad that share prices just keep getting knocked back down.”

The MSCI Asia Pacific Index lost 3.5 percent to 79.91 as of 4:28 p.m. in Tokyo, extending yesterday’s 0.4 percent drop. The measure is less than five points away from a five-year low reached at the close on Oct. 27. Almost five stocks retreated for each that rose today, with financial stocks accounting for 37 percent of the slump.

Shares on the gauge are valued at 9.8 times trailing earnings and fell to 8.2 times last month, the lowest level since at least 1995, Bloomberg data shows. The index has lost 49 percent this year as the collapse of the U.S. mortgage market sparked $965 billion in losses and writedowns at global financial companies and cost more than 166,000 jobs.

Japanese Developers

Japan’s Nikkei 225 Stock Average slumped 2.3 percent to 8,328.41. Mitsubishi Estate Co. led property developers lower after the Nikkei newspaper said the nation’s condominium market will be weak in 2009.

Woolworths Ltd. led declines in Australia before tomorrow’s lifting of a ban on short selling of non-financial securities. China’s CSI 300 Index posted the region’s steepest slide, losing 7.4 percent, as Jiangxi Copper Co. led commodity producers lower.

Futures on the Standard & Poor’s 500 Index slipped 0.8 percent. Yahoo! Inc. rose as much as 4.4 percent in after-hours trading after saying Jerry Yang will step down from his role as chief executive officer, opening the door for another takeover bid from Microsoft Corp. The S&P 500 slid 2.6 percent yesterday following a record contraction in New York manufacturing and after Citigroup said it will cut 52,000 jobs, or twice the target announced last month.

An index of Asia Pacific finance stocks on MSCI’s benchmark gauge fell 5 percent to the lowest since September 2003. Mitsubishi UFJ, Japan’s biggest bank, slumped 6.7 percent to 546 yen in Tokyo. HSBC Holdings Plc, Europe’s largest lender by market value, declined 3.4 percent to HK$79.15 in Hong Kong after saying it cut 500 jobs in Asia.

‘Complete Meltdown’

In India, ICICI Bank Ltd., the country’s second largest, tumbled 6.3 percent to 362.25 rupees after halving its loan- growth target to 15 percent amid high borrowing costs and a weaker economy. The nation’s growth may slow to 7.5 percent in the year ending March 31 after expanding more than 9 percent in the previous three years, according to the central bank.

“We’re seeing a rebasing of expectations to a much lower growth environment,” said Prasad Patkar, who helps manage about A$1.3 billion at Platypus Asset Management in Sydney. “Markets can adjust to recessions, but a complete meltdown scenario, however small,” remains a possibility, he said.

AU Optronics lost 3.9 percent to NT$18.3 after saying it will cut salaries of executives and directors. Taiwan Semiconductor Manufacturing Co., the world’s biggest contract chip maker by sales, dropped 5.6 percent to NT$38.5. The company said it will hire fewer people than usual.

Hon Hai Precision Industry Co., the world’s largest contract electronics maker, tumbled 6.9 percent to NT$56.8 in Taipei after HSBC said the company’s earnings have peaked and cut the shares to “neutral” from “overweight.”

Lower Profit Forecast

Jiangxi Copper, China’s second-biggest producer of the metal, plunged 10 percent to 10.72 yuan. Zijin Mining Group Co., the country’s No. 1 gold producer, lost 9.9 percent to 3.72 yuan.

In Sydney, BHP dropped 3.6 percent to A$24.20. Macquarie cut its 2009 profit forecast for the world’s largest mining company by 31 percent and its 2010 prediction by 50 percent, citing declines in commodity prices and the likelihood of reduced production. A gauge of six metals traded on the London Metal Exchange sank 3.3 percent yesterday.

Mitsubishi Estate dropped 8.3 percent to 1,280 yen. Mitsui Fudosan Co., the largest Japanese developer, sank 5.9 percent to 1,302 yen. The slump in the nation’s condominium market will likely continue into 2009, the Nikkei reported today.

Woolworths, Australia’s biggest retailer, tumbled 5.9 percent to A$26.25. Telstra Corp., the largest phone company, declined 3.6 percent to A$4.08. The benchmark S&P/ASX 200 index fell to the lowest since August 2004.

Short Selling Ban

A ban on short selling of non-financial securities will be lifted from Nov. 19, the Australian Securities and Investments Commission said this week. Prohibition of covered short sales in financial securities will continue.

Macquarie Group Ltd., the nation’s biggest securities firm, rallied 17 percent to A$24, the biggest gain on MSCI’s Asian index. The company posted a 43 percent drop in profit for the six months to Sept. 30 as falling asset prices forced writedowns. That beat the average estimate of analysts surveyed by Bloomberg.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.