Asian Stocks Fall for Third Day; Financial Companies Lead Drop

By Kyung Bok Cho and Chua Kong Ho

Nov. 19 (Bloomberg) -- Asian stocks fell for a third day, led by financial companies and commodity producers, as Sumitomo Mitsui Financial Group Inc. planned to raise cash and Oz Minerals Ltd. said earnings may decline.

Sumitomo Mitsui, Japan's third-largest bank, fell 7.9 percent on a plan to raise 400 billion yen ($4.1 billion) to replenish capital as Japan's recession drives up bankruptcies and bad loans. Babcock & Brown Ltd., the worst performer on the MSCI Asia Pacific Index this year, lost 19 percent in Sydney after saying it will hasten jobs cuts to avoid debt default. Oz Minerals, the world's second-largest zinc-mining company, plunged 14 percent after saying falling metal prices may reduce profit.

``Banks will definitely be affected by the global recession, it's a question of how much,'' said James Chua, investment analyst at Phillip Capital Management in Singapore, which oversees about $450 million. ``Commodities look expensive even at these levels.''

The MSCI Asia Pacific Index fell 0.4 percent to 79.62 at 3:42 p.m. in Tokyo, extending a two-day, 3.8 percent drop. Financial stocks were the biggest contributor to the measure's retreat.

MSCI's Asian gauge has plunged 50 percent in 2008 as global financial institutions lost almost $1 trillion since the U.S. subprime-mortgage market collapsed last year.

Shares on the index are valued at 9.7 times trailing earnings, compared with 19.5 times on Nov. 11, when the measure hit a peak of 172.32, Bloomberg data shows.

Futures on the U.S. Standard & Poor's 500 Index declined 0.1 percent. The S&P 500 rose 1 percent yesterday, gaining in the last hour of trading as energy and technology shares rallied.

Nikkei, Kospi

Japan's Nikkei 225 Stock Average lost 0.7 percent to 8,273.22. Mitsubishi Estate Co. led developers lower after concern the property market is slowing.

South Korea's Kospi Index slumped 1.9 percent, capping a seven-day, 12 percent decline, its longest losing streak since July 4. UBS AG cut its target for the measure by 26 percent to 1,250 to reflect ``sharp'' earnings declines.

China's CSI 300 Index surged 6.5 percent, erasing most of yesterday's 7.4 percent slump, as automakers gained on speculation the government will widen assistance to industries hurt by the global financial crisis.

In Tokyo, Sumitomo Mitsui lost 7.9 percent to 314,000 yen. The lender is considering raising 400 billion yen in capital by selling preferred shares before the end of the year, a person familiar with the plan said.

Quarterly Loss

Larger Mitsubishi UFJ Financial Group Inc., which plans to raise more than 900 billion yen selling shares, dropped 6.4 percent to 511 yen. The bank posted a 61 percent decline in quarterly profit on mounting losses from stockholdings and rising costs to get rid of bad loans. Mizuho Financial Group Inc., Japan's second-biggest bank, slid 7.5 percent to 212,500 yen.

Results may get worse, Hironari Nozaki, an analyst at Nikko Citigroup Ltd., wrote in a note. The benchmark Nikkei fell 24 percent in October, the biggest monthly drop on record, while bankruptcies in Japan rose to a three-year high, led by real- estate companies.

Mitsubishi Estate, the country's biggest developer by market value, lost 4.5 percent to 1,222 yen. Nomura Real Estate Holdings Inc., which cut its annual profit target last month, plunged a record 16 percent to 1,355 yen.

``We are seeing a softening in the market for new tenants,'' Toyohisa Miyauchi, executive vice president of Mitsubishi Estate, said in an interview.

Job Losses

Babcock, the Sydney-based owner of wind farms and properties, dropped 19 percent to 25 Australian cents. The company said it will reduce headcount by almost two-thirds while it renegotiates debt agreements with bankers. The stock has tumbled 99 percent this year as it fights to avoid the fate of Allco Finance Group Ltd., a Sydney-based manager of infrastructure funds that collapsed this month.

OZ Minerals slid 14 percent to 63 Australian cents after saying a drop in metal prices and higher output costs may cut full-year profit. Zinc has slumped 49 percent this year and rose 4 percent yesterday in London.

Other commodity producers declined as gold dropped for the second day, losing 1.3 percent to $732.70 an ounce, while aluminum slid to a three-year low.

BHP, the world's biggest mining company, slipped 4.1 percent to A$23.20. Mitsubishi Corp., a Japanese trading company that gets half its profit from commodities, retreated 9.2 percent to 1,118 yen, the lowest level since August 2004.

Tianjin FAW, the Chinese maker of $5,000 compacts, gained 9.9 percent to 3.33 yuan. FAW Car Co., a partner of Mazda Motor Corp., climbed 10 percent to 6.57 yuan.

Automakers in China are seeking government aid and lower sales taxes to help revive waning demand in the world's second- largest vehicle market, said Zeng Qinghong, general manager of Guangzhou Automobile Group Co., a partner of Toyota Motor Corp. and Honda Motor Co.

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