Asian Stocks Drop to a Two-Week Low; Inpex, Fortescue Decline

By Patrick Rial and Masaki Kondo

Nov. 12 (Bloomberg) -- Asian stocks fell to a two-week low after Inpex Corp. cut its profit forecast and Fortescue Metals Group Ltd. said iron-ore shipments may drop, pointing to a worsening outlook for global economies.

Inpex, Japan’s largest energy explorer, and Cnooc Ltd. retreated more than 3 percent as oil traded near a 20-month low. Fortescue, Australia’s third-largest iron-ore producer, plunged 11 percent. Hana Financial Group Inc. tumbled 11 percent in Seoul after Fitch Ratings cut the outlook on South Korean banks’ and securities companies’ foreign currency debt ratings.

“Investors are waiting for a sign of recovery in the global economy,” said Hisakazu Amano, head of fund management at T&D Asset Management Co., which oversees about $39 billion in Tokyo. “If falling commodity prices fail to stimulate demand, resource- dependent companies can’t avoid a drop in earnings.”

The MSCI Asia Pacific Index retreated 1.5 percent to 85.78 as of 4:03 p.m. in Tokyo, set for its lowest close since Oct. 29 and extending yesterday’s 3.6 percent slump. More than two shares dropped for each that advanced, while only one of the 10 industry groups advanced.

The gauge has lost half its value since its Nov. 1, 2007, record as credit-market turmoil slowed global growth, denting demand for Asian exports. The Asian index trades at 12 times estimated earnings, compared with a low of 8.9 times on Oct. 27 as cuts to profit forecasts have made shares appear more expensive.

The International Monetary Fund said last week the U.S., Europe and Japan may experience the first simultaneous recession in the post-World War II era. China’s exports in October rose at the slowest pace in four months, government figures showed yesterday. The country on Nov. 9 pledged to spend 4 trillion yuan ($586 billion) to bolster its economy, a move that followed a string of interest-rate cuts worldwide in the past month.

U.S. Futures Gain

Japan’s Nikkei 225 Stock Average slipped 1.3 percent to 8695.51. Hong Kong’s Hang Seng Index sank 1 percent, led by Cnooc, China’s biggest offshore oil and gas producer.

Futures on the Standard & Poor’s 500 Index rose 1.3 percent. The gauge lost 2.2 percent yesterday as General Motors Corp. sank to the lowest price since 1943 as the world’s largest automaker crept toward bankruptcy.

“There’s over a million people employed in the U.S. auto industry, so if GM goes under, that’s going to have a major effect on consumer spending,” said Katsuhiko Kodama, a senior strategist at Toyo Securities Co.

Inpex lost 5.4 percent to 510,000 yen after lowering its full-year profit outlook by 15 percent. Cnooc slid 2.1 percent to HK$6.02. Boart Longyear Ltd., a provider of drilling services to mining companies, slumped a record 17 percent to 31.5 cents in Sydney, taking its tumble this year to 87 percent.

Temporary Shutdown

Crude oil for December delivery was down as much as 1.3 percent to $58.55 a barrel in after-hours trading in New York on speculation the International Energy Agency will cut its 2009 oil-demand forecast because of slowing economic growth.

Energy companies have tumbled 58 percent and materials producers slid 54 percent this year, the biggest declines among the 10 industry groups on MSCI’s Asian index.

Fortescue Metals plunged 11 percent to A$2.03, the lowest since March 2007. The stock has lost 73 percent this year. The company said shipments may drop this year because of weak demand and a temporary shutdown of its mine processing plant and port. BHP Billiton Ltd., the world’s largest mining company, lost 1.7 percent to A$28.30 after saying iron ore exports from Western Australia fell 7.6 percent in October.

China, the world’s largest-iron ore consumer, probably won’t increase imports in 2009 for the first time in 11 years because of slowing steel demand, Zou Jian, chairman of the China Metallurgical Mining Enterprise Association, said yesterday.

South Korean Ratings

Rio Tinto Group, the world’s third-largest mining company, lost 1.7 percent to A$75.20 after saying it is continuing with a $315 million order for three ships in spite of a slowdown in demand for commodities.

A measure of six metals traded on the London Metal Exchange declined 4.2 percent yesterday to the lowest level since September 2004.

In South Korea, Hana Financial sank 11 percent to 19,800 won. Woori Finance Holdings Co., which controls South Korea’s second-biggest bank, retreated 7.9 percent to 6,220 won, the lowest since October 2003.

Fitch Ratings revised down its long-term foreign-currency issuer default ratings outlooks for South Korean financial institutions to “negative” from “stable,” citing the risk of higher credit costs.

Global Losses

Financial companies globally have written off more than $900 billion since the financial crisis erupted in 2007. That has led to the loss of more than 148,000 jobs in the financial industry since the middle of last year, according to data compiled by Bloomberg.

Sumitomo Mitsui Financial Group Inc., Japan’s third-largest listed bank, declined 3.9 percent to 400,000 yen. The Markit iTraxx Japan index of credit-default swaps rose 10 basis points, indicating corporate debt is perceived as being more risky. Tokyo Shoko Research Ltd. said yesterday bankruptcies in Japan rose to a five-year high in October.

Alibaba.com Ltd., China’s biggest trading Web site for companies, surged 14 percent to HK$5.47 after saying third- quarter profit rose 49 percent. More Chinese companies began using Alibaba’s Web site to find domestic buyers as overseas demand evaporated.

Softbank Corp., which holds a 29 percent stake in the parent company of Alibaba.com, soared 16 percent to 1,445 yen. The stock has more than in doubled in the last two weeks.

Indian Investment

NTT DoCoMo Inc. led the region’s telecommunications stocks higher, advancing 1.3 percent to 159,800 yen. Japan’s largest mobile-phone operator plans to make an investment in India’s Tata Teleservices Maharashtra Ltd., according to a company official who asked not to be identified before the official announcement. Tata, which sells Virgin Mobile services in India, rose 13 percent to 18.80 rupees.

GPT Group jumped 13 percent to A$1.19 after Stockland, Australia’s largest housing developer, acquired a 12.7 percent stake in the real estate trust, becoming the company’s largest shareholder.

Also in Sydney, Asciano Group rallied 67 percent to A$1.15, rebounding from a 60 percent drop yesterday, after the coal transporter said it didn’t need to secure major financing for 18 months and had no plans to sell stock.

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