Asian Stocks Drop as Sony Forecasts Annual Loss; BHP Declines

By Shani Raja

Jan. 23 (Bloomberg) -- Asian stocks fell, led by technology companies and commodity producers, after Sony Corp. forecast its first annual loss in 14 years and economists predicted China’s economy will slow further.

Sony, the world’s second-largest consumer electronics maker, plunged 6.7 percent in Tokyo. Canon Inc., the world’s biggest digital-camera maker, sank 4.7 percent after housing and employment numbers pointed to a deepening U.S. recession. BHP Billiton Ltd., the world’s biggest mining company, fell 3.7 percent in Sydney on concern demand for raw materials will fall.

“The bad news about earnings and economies is accumulating,” Soichiro Monji, chief strategist at Daiwa SB Investments Ltd., which manages the equivalent of $53 billion, said in an interview with Bloomberg Television. “Sony’s loss forecast was an order of magnitude greater than what some analysts had estimated.”

The MSCI Asia Pacific Index lost 2.1 percent to 81.21 at 11:30 a.m. in Tokyo, extending the gauge’s slide this year to 9.3 percent. Japan’s Nikkei 225 Stock Average dropped 2.8 percent to 7,823.34, while Australia’s S&P/ASX 200 Index declined 2.0 percent. Most markets open for trading fell.

The MSCI Asia Pacific Index tumbled by a record 43 percent last year as financial crisis dragged the world’s biggest economies into recession. The Bank of Japan yesterday said the nation’s economy will shrink 1.8 percent in the year to March 31 and 2 percent next fiscal year.

China Slowdown

China’s economic slowdown, already the deepest in seven years, is set to worsen, according to economists in a Bloomberg News survey. The nation’s gross domestic product will grow 6.3 percent this quarter from a year earlier, the survey showed. The study was conducted after the government said yesterday the country’s economy expanded 6.8 percent in the fourth quarter.

Economic concerns and disappointing earnings from Microsoft Corp. and Fifth Third Bancorp helped drag the U.S. Standard & Poor’s 500 Index down by 1.5 percent yesterday. Futures on the benchmark measure slipped 0.3 percent today.

Sony slumped 6.7 percent to 1,808 yen after joining Toyota Motor Corp. in forecasting losses as the global recession worsened. Sony said it expects a record 260 billion yen ($2.9 billion) operating loss for the year to March 31, while analysts had estimated a loss of 70 billion yen.

The company “will need some time to fundamentally change the business model,” Koya Tabata, an analyst for Credit Suisse Group, wrote in a report dated yesterday. He maintained his “underperform” rating on the stock.

Economic Turmoil

Canon slumped 4.7 percent to 2,555 yen, while Honda Motor Co. slipped 1.5 percent to 1,984 yen. Australia’s James Hardie Industries NV, the biggest seller of home siding in the U.S., tumbled 4.8 percent to A$4.01.

The U.S. Labor Department yesterday said the number of Americans filing first-time claims for unemployment benefits matched the highest level since 1982 in the week ended Jan. 17. A separate report from the Federal Housing Finance Agency showed U.S. home prices dropped the most on record.

LG Electronics Inc., Asia’s second-largest maker of mobile phones, sank 4.6 percent to 69,200 won. Deutsche Bank AG cut its recommendation on the stock to “hold” from “buy” after LG reported an unexpected record quarterly loss.

BHP slumped 3.7 percent to A$28.06. Santos Ltd., Australia’s third-biggest oil and gas producer, dropped 2.8 percent to A$13.61 after the company said production this year will be little changed.

Measures of raw materials and energy stocks on the MSCI Asia Pacific were the worst performing of the index’s 10 industry gauges last year as commodity prices tumbled.

Crude oil futures in New York dropped 1.8 percent in after- hours trading, taking its slump in the past year to 51 percent. A measure of six metals traded in London including copper and zinc declined 2.3 percent yesterday. The gauge is down 53 percent from a year ago.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.