By Chua Kong Ho
Nov. 15 (Bloomberg) -- Asian stocks fell this week, ending a two-week rally, as companies lowered earnings forecasts amid mounting evidence economies are slowing.
Commonwealth Bank of Australia fell 20 percent after saying bad loans may double and Australian business confidence fell to a record low. Citizen Holdings Co. dropped 9.7 percent after cutting its profit forecast. Hana Financial Group Inc. tumbled 36 percent after Fitch Ratings cut its outlook on South Korea banks. China's CSI 300 Index posted the biggest weekly gain since April, led by steelmakers, after the government announced a $586 billion stimulus plan.
``Investors had expected corporate earnings and economic data to be bad, but the figures keep getting worse,'' said Seo Jung Ho, who helps oversee $2.2 billion at UBS Hana Asset Management Co. in Seoul.
The MSCI Asia Pacific Index fell 4.7 percent to 82.10 this week, snapping a two-week rally. Financial and technology stocks had the biggest falls among the 10 industry groups.
Japan's Nikkei 224 Stock Average lost 1.4 percent this week and Australia's S&P/ASX 200 Index dropped 7.5 percent. Most other markets in the region fell.
Asia Pacific equities retreated on mounting evidence economies are slowing. China's industrial output missed estimates, while South Korea's exports increased at the slowest pace in 13 months in October. In the U.S., the Treasury scrapped plans to buy mortgage assets to focus on supporting consumer credit.
Government Responses
Leaders from the Group of 20 nations began a summit in Washington yesterday to coordinate government responses to the worst financial crisis in 80 years.
The MSCI index for Asia Pacific has lost more than half its value since the peak in November 2007 in the rout triggered by a widening global credit crisis that originated in the U.S. subprime mortgage market. That left shares on the gauge valued at 10 times trailing earnings after last month falling to as low as 8.2 times. Prior to the current turmoil, it never dropped below 10, according to Bloomberg data dating back to 1995.
Commonwealth Bank declined 20 percent to A$32.10 this week. Australia's biggest mortgage lender said bad debts may double this year due to lending to companies including Lehman Brothers Holdings Inc. Hana Financial fell 37 percent to 14,550 won. Woori Finance Holdings Co., which controls South Korea's second- biggest bank, dropped 24 percent to 3,500 won.
Increased Costs
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.
Babcock & Brown Ltd. slumped 52 percent to a record low in Sydney on concern it may fail to repay loans.
Citizen, the world's largest watchmaker, fell 9.7 percent to 457 yen, after lowering its annual forecast by a third. Alumina Ltd., which is partnering with Alcoa Inc., tumbled 39 percent to A$1.36, after the companies said they have suspended expansion work on the Wagerup refinery due to the global financial crisis.
Computer makers fell after Intel Corp., whose chips run more than three-quarters of the world's computers, slashed its sales prediction by about $1 billion, citing ``significantly weaker'' demand. Lenovo Group Ltd., China's biggest computer maker, sank 18 percent to HK$1.83.
In China, Baoshan Iron & Steel Co. jumped 22 percent to 5.57 yuan after the government announced a 4 trillion yuan ($586 billion) package to revive growth in the world's fourth-largest economy. Changsha Zoomlion Heavy Industry Science & Technology Development Co., a construction machinery maker, jumped 48 percent to 13.57 yuan.
Complete Spending
China plans to complete the spending by 2010 to support growth in its domestic economy as the rest of the world slows, the Beijing-based State Council said on its Web site Nov. 9. The funds are equivalent to almost a fifth of the nation's gross domestic product.
``The plan is what the market would like to see most: Something concrete that will be good for the economy,'' said Zheng Tuo, who manages $790 million at Bank of Communications Schroders Fund Management Co. in Shanghai.
To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net
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