Asian Stocks Fall for 5th Day as Recession Deepens; Honda Drops

By Kyung Bok Cho and Shani Raja

Nov. 21 (Bloomberg) -- Asian stocks fell for the fifth day after oil plunged below $50, Taiwan and Singapore forecast further contractions, and U.S. unemployment claims approached a 26-year high as the global slowdown deepens.

Woodside Petroleum Ltd., Australia's No. 2 oil producer, slumped 7.2 percent as crude declined to its lowest since May 2005. Canon Inc. and Nintendo Co., which get at least three- quarters of their sales from overseas markets, slid more than 4 percent. Honda Motor Co., earning more than half its sales in North America, dropped 4.8 percent after saying it will cut production there further.

``Markets are progressively pricing in a deeper and more prolonged recession,'' said Prasad Patkar, who helps manage about $800 million at Platypus Asset Management in Sydney. ``A depression is too ugly to contemplate. It's an ultra-low probability, but not zero probability.''

The MSCI Asia Pacific Index slumped 1.8 percent to 73.81 at 10:22 a.m. in Tokyo, set for its lowest close since Aug. 19, 2003. The gauge is set to lose 11 percent this week, the second-biggest weekly decline on record.

The index has plunged 53 percent in 2008 as global financial companies' losses and writedowns from the collapse of the U.S. subprime-mortgage market passed $950 billion. Rallies have fizzled -- most recently a 25 percent gain posted in the seven trading days following Oct. 27 -- as the economies of the U.S., Japan and the euro-zone enter recession.

Japan's Nikkei 225 Stock Average lost 2.8 percent to 7,487.09. The Bank of Japan will conclude its policy meeting today, with interest rates expected to remain unchanged.

Benchmark indexes in Taiwan and Singapore lost more than 2 percent after the nations said their economies will contract as exports decline.

Resources Fall

South Korea's Kospi index was on course for its longest losing streak since September 2000 as it fell for the ninth day. KB Financial Group Inc. led declines after UBS AG said the economy will shrink 3 percent next year, compared with a previous forecast for an expansion.

U.S. stocks tumbled yesterday, with the Standard & Poor's 500 Index dropping 6.7 percent to its lowest in 11 years, as economic data pointed to a worsening recession and lawmakers postponed a vote on a plan to salvage the auto industry. Futures on the S&P 500 advanced 0.9 percent.

Woodside dropped 7.2 percent to A$28.43. Crude oil for December delivery plunged 8.7 percent to $49.42 a barrel in New York and touched $48.55 in after-hours trading, the lowest since May 2005. Futures have dropped 67 percent since reaching a record $147.27 on July 11.

Rio Tinto Group, the world's third-largest mining company, slipped 4 percent to A$54.99. A measure of six metals traded on the London Metal Exchange, including copper and zinc, slipped 3.5 percent to the lowest since July 2005.

Evidence of Recession

Contract iron ore prices, at a record after six years of gains, may decline as much as 20 percent next year as demand in China stalls and cash prices slump, Standard Chartered Plc said in a report.

Canon, the world's biggest camera maker, declined 4 percent to 2,505 yen in Tokyo. Nintendo, the largest maker of handheld video-game consoles, fell 4.1 percent to 25,900 won in Osaka.

U.S. government data yesterday showed initial jobless claims climbed to a higher-than-forecast 542,000 in the week ended Nov. 15, while the Conference Board's index of leading economic indicators fell for a third time in four months. Manufacturing in the Philadelphia area shrank in November at the fastest pace in 18 years, according to an index tracked by the Federal Reserve Bank of Philadelphia.

Taiwan, Singapore

Taiwan's economy will sink into a recession this year after exports slumped, following its first contraction since 2003, the government said yesterday. Singapore, which is already in recession, today lowered its growth forecast for a fourth time this year and said the economy may contract in 2009.

Cathay Financial Holding Co., Taiwan's largest listed financial-services company, dropped 3.7 percent to NT$28.90. Jardine Matheson Holdings Ltd., which owns office buildings, supermarkets and hotels across Asia, lost 5.6 percent to S$17.46 in Singapore.

Falling demand has forced companies to reduce production or cut prices. Honda, Japan's second-largest carmaker, retreated 4.8 percent to 1,814 yen after it said yesterday it will trim production at U.S. plants by 18,000 more cars, bringing total cuts to 50,000 units since August.

KB, owner of South Korea's biggest bank, tumbled 9.2 percent to 22,300 won. The stock is set to lose 31 percent this week. Daewoo Engineering & Construction Co., the nation's biggest builder, retreated 6.3 percent to 7,160 won.

`Credit Bubble'

``Korea's credit bubble is popping at the seams even as policymakers now attempt to shore up the system,'' Duncan Wooldridge, UBS's chief Asia economist in Hong Kong, wrote in a note yesterday. Slowing exports, rising unemployment and expanding household debt are risks to the economy, he said.

Orix Corp., a Japanese financial services provider, fell 15 percent to 5,240 yen, the lowest since April 2003. The company said yesterday it will sell 150 billion yen ($1.6 billion) in convertible bonds to pay back debt.

To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.