Asian Stocks Fall Most in Eight Weeks on Worsening Recession

By Chen Shiyin

Jan. 17 (Bloomberg) -- Asian stocks fell, sending the region’s benchmark index to its largest drop in eight weeks, as a slump in Japanese machinery orders and U.S. retail sales renewed concern the global recession is deepening.

Advantest Corp., the world’s biggest maker of memory-chip testing equipment, lost 11 percent as machine orders sank by a record. Samsung Electronics Co., the No. 1 television maker, retreated 4.9 percent after U.S. retail sales declined for a sixth month. Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal, dropped 18 percent in Hong Kong as U.S. rival Alcoa Inc. posted the first quarterly loss in six years.

“The global economy is continuing to deteriorate,” said Rob Patterson, who manages about $2 billion at Argo Investments Ltd. in Adelaide. “If the U.S. economy is slowing, it means they’re importing less from countries like China, and that China is buying fewer commodities. It’s not helpful to anyone.”

The MSCI Asia Pacific Index slid 5.8 percent to 84.68, the largest five-day loss since the period ended Nov. 21. Energy companies posted the biggest declines on the MSCI index, which fell a record 43 percent last year as the global economy sank into recession, hurting demand and forcing companies to cut jobs as profits slump.

Japan’s Nikkei 225 Stock Average lost 6.9 percent, its second straight weekly drop. Benchmark indexes retreated across the region, apart for Sri Lanka and China, where the Shanghai Composite Index added 2.6 percent. Haitong Securities Co. paced gains on speculation the central bank will cut interest rates for the sixth time since September to spur economic growth.

Advantest, Hitachi Construction

Advantest declined 11 percent to 1,262 yen, its third straight weekly loss. Hitachi Construction Machinery Co., the world’s largest maker of giant excavators, tumbled 18 percent to 1,007 yen.

Japan’s machine orders, an indicator of capital spending in the next three to six months, decreased 16.2 percent in November from the previous month, the Cabinet Office said on Jan. 15, the biggest decline since the current survey began in 1987. Economists had estimated an 8 percent slump.

U.S. retail sales also dropped for a sixth month, with a 2.7 percent drop in December, the longest stretch of declines since the tallies began in 1992, the Commerce Department said on Jan. 14. That’s more than twice the decline economists had estimated.

Samsung slid 4.9 percent to 469,000 won in Seoul, halting two weeks of gains. Westfield Group, the world’s No. 1 shopping center owner by market value, slipped 12 percent to A$12.20 in Sydney, a record low.

In South Korea, KB Financial Group slumped 4.5 percent to 35,350 won. Vice Finance Minister Bae Kook Hwan said the country’s economic growth in 2009 is likely to fall short of central bank and International Monetary Fund predictions.

Recession

Growth in the global economy will slow to 2.2 percent this year, a rate “equivalent to a global recession,” the IMF said in November. Companies in the MSCI Asia benchmark reported an aggregate 32 percent drop in profit in the latest quarter, according to data compiled by Bloomberg.

“The market looks like it’s pointing down for now as investors are afraid of what could happen next,” said Hiroshi Chano, who helps manage the equivalent of $7.3 billion at Yasuda Asset Management Co. in Tokyo. “The market is really not very cheap when examined from an earnings standpoint.”

Signs of the deepening recession sent crude oil prices down 12 percent to $35.95 a barrel in New York this week, the biggest decline in more than a month. Copper also tumbled for the first time in three weeks.

Chalco, BHP

Aluminum Corp. of China, or Chalco, slumped 18 percent to HK$3.67 in Hong Kong. BHP Billiton Ltd., the largest mining company, slid 5.7 percent to A$29.88 in Australia as crude oil and metal prices retreated amid signs of slowing demand. The company is also Australia’s largest oil and gas producer.

PetroChina Co., China’s largest oil explorer, dropped 13 percent to HK$6.12 in Hong Kong, the most since the week ended Oct. 24. Cnooc Ltd., China’s biggest offshore oil producer, sank 11 percent to HK$6.64.

PT Bumi Resources, Asia’s biggest exporter of power-station coal, tumbled 19 percent to 510 rupiah, on concern it’s overpaying for a planned $565 million acquisition of three companies.

Haitong, China’s second-biggest brokerage by market value, rallied 17 percent to 10.91 yuan. Industrial Bank Co., a Chinese lender partly owned by a unit of HSBC Holdings Plc, soared 17 percent to 17.93 yuan.

China Rates

China has cut interest rates and unveiled in November a 4 trillion yuan ($585 billion) spending plan to bolster economic expansion. Premier Wen Jiabao pledged on Jan. 11 to announce additional support measures before the legislature meets in March.

“The market is expecting a further easing of monetary policies from the government after a spate of bad economic data,” said Wu Kan, a fund manager in Shanghai at Dazhong Insurance Co., which oversees the equivalent of $285 million.

To contact the reporter responsible for this story: Chen Shiyin in Singapore at schen37@bloomberg.net