By Sarah Jones and Shani Raja
Dec. 23 (Bloomberg) -- Asian stocks fell for a third day after Toyota Motor Corp. forecast a loss and China cut interest rates by less than some economists expected, fanning concerns the global recession will deepen.
Hyundai Motor Co. led automakers lower, falling 10 percent in Seoul as Toyota predicted its first operating loss in 71 years. Bendigo & Adelaide Bank Ltd. lost 5.4 percent after selling shares at a discount to boost capital. PetroChina Co. paced declines among energy producers as crude fell amid concern China’s rate cut will fail to boost demand.
“Investors are cashing in,” said Lim Chang Gue, who helps manage about $42 billion at Samsung Investment Trust Management Co. in Seoul. “We’re continuing to witness negative news flow, all of which is confirming that global economic activity is tapering off quickly.”
The MSCI Asia Pacific excluding Japan Index dropped 2.8 percent to 238.03 at 3:46 p.m. in Hong Kong. Japan’s markets are closed for a public holiday. China’s CSI 300 Index declined 4.9 percent, while South Korea’s Kospi Index fell 3 percent. All other markets retreated except the Philippines and Thailand.
Trading was slower than average with Japan closed two days before Christmas. Stock worth A$2.15 billion ($1.5 billion) traded in Australia today, the lowest since New Year’s eve.
HFA Holdings Ltd., an Australian hedge-fund manager, lost more than half its stock value after halting fund redemptions. Shaw Brothers (Hong Kong) Ltd., controller of the city’s largest broadcaster, rose by a record after its largest stockholder offered to buy the company. New Zealand’s Fletcher Building Ltd. fell after the country’s economy contracted for a third quarter.
Raising Capital
The broader MSCI Asia Pacific Index, which includes Japan, has lost 44 percent in 2008, the worst annual performance in its two-decade history, as the credit crisis dragged the world’s biggest economies into recessions.
Global growth will be 2.2 percent next year, down from 3.7 percent this year, the International Monetary Fund said on Nov. 6. The IMF has said that a growth rate of 3 percent or less is “equivalent to a global recession.”
U.S. stocks fell yesterday, dragging the Standard & Poor’s 500 Index down by 1.8 percent, amid signs of declining earnings. Goldman Sachs Group Inc. said the recession will hurt profit at Monsanto Co., the world’s largest producer of seeds.
“Everyone’s still pretty nervous,” said Chris Hall, who helps oversee about $3.7 billion at Adelaide, South Australia- based Argo Investments. “The big concern for Asia is exports. If your major export markets are in recession, it’s very difficult to sustain economic growth on internal demand alone.”
Debt Downgrade
The decline on the MSCI Asia Pacific Index this year has taken the average valuation of its constituents to 13 times estimated earnings, about a quarter below the level at the start of this year. The S&P 500 is at 12 times profit, while the Dow Jones Stoxx 600 Index, the benchmark gauge for European equities, is at 8.9 times.
Toyota’s American depositary receipts slumped 5.4 percent in New York yesterday after the company said it will post a 150 billion yen ($1.7 billion) loss in the year through March. It previously forecast profit of 600 billion yen. Bridgestone Corp., the world’s largest tiremaker by sales, also slashed its earnings forecast yesterday.
Hyundai Motor, South Korea’s largest automaker, plunged 10 percent to 41,000 won. Kia Motors Corp. dropped 15 percent to 6,710 won. Sales this year will reach about 4.2 million vehicles, missing an earlier projection of 4.8 million, the automakers said yesterday.
Also in Seoul, Hynix Semiconductor Inc., the world’s second-largest computer-memory chipmaker, tumbled 6.2 percent to 7,700 won after its debt rating was cut by Moody’s Investors Service, which cited a “challenging” operating environment.
China’s Rate Cut
Bendigo & Adelaide Bank declined 5.4 percent to A$11.11 after the Australian regional lender sold A$175 million ($120 million) of shares at A$10 apiece to boost capital. The price is a 15 percent discount to yesterday’s close of $11.74.
HFA, which has $5.8 billion in assets, plunged by a record 55 percent to 4.3 Australian cents. The company halted redemptions from three of its funds because of “deteriorating liquidity.”
The financial crisis, the worst since the Great Depression, has caused institutions worldwide to declare $1 trillion of writedowns and losses from credit-related investments.
PetroChina, the nation’s largest oil producer, slumped 4.6 percent to HK$6.50. Crude futures fell 0.6 percent in New York, extending yesterday’s 5.8 percent slump. Woodside Petroleum Ltd., which last year made more than 80 percent of its sales in Asia, slid 1.8 percent to A$32.16.
Shaw Brothers
Chinese stocks also dropped amid concern the central bank’s interest-rate cut will fail to buttress the world’s fourth- largest economy. The People’s Bank of China lowered the one-year lending rate by 0.27 percentage point, less than the 54 basis points expected by Citigroup Inc. and HSBC Holdings Plc.
Citic Securities Co., the nation’s biggest brokerage by market value, sank 7.4 percent to 19.46 yuan in Shanghai. China Mobile Ltd., the world’s biggest phone company by market value, lost 2.7 percent to HK$74.90 in Hong Kong.
“This rate cut is an indication that economic activity in China is slowing much faster than anticipated,” said Roberto Lampl, who manages $4 billion in emerging-market stocks, including Chinese shares, at ING Investment Management in The Hague. “Chinese authorities are using monetary policy to reignite demand because of this weaker-than-expected economic environment.”
Shaw Brothers climbed 56 percent to HK$12.70. A trust controlled by Chairman Sir Run Run Shaw, now holding 74.9 percent of Shaw Brothers stock, will offer HK$13.35 in cash for each remaining share, according to a company filing to Hong Kong’s stock exchange yesterday.
Fletcher Building, New Zealand’s largest building materials supplier, fell 2.1 percent to NZ$5.97. Gross domestic product declined 0.4 percent in the three months ended Sept. 30 from the second quarter, when it fell 0.2 percent, Statistics New Zealand said today.
To contact the reporters for this story: Sarah Jones in Sydney at sjones35@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
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