Asian Stocks Tumble as Japan Machinery Orders, U.S. Sales Drop

By Patrick Rial and Masaki Kondo

Jan. 15 (Bloomberg) -- Asian stocks fell, dragging the regional stock benchmark to the lowest in five weeks, after Japanese machinery orders and U.S. retail sales dropped at more than double the pace economists expected.

Fanuc Ltd., the world’s largest maker of industrial robots, lost 5.8 percent after Japan’s orders for machines sank 16.2 percent, the most on record. Samsung Electronics Co., the world’s largest television maker, fell 5.8 percent after U.S. retail sales declined 2.7 percent last month. KB Financial Group Inc., which operates South Korea’s largest bank, plunged 6.5 percent after Deutsche Bank AG reported a record loss and the Korean won neared a one-month low.

“Waning demand is pushing electronics and car makers to make huge production cuts,” said Yasuhiro Onakado, chief economist at Tokyo-based Daiwa SB Investments Ltd., which manages $53 billion. “There’s no recovery in sight.”

The MSCI Asia Pacific Index declined 3 percent to 84.25 as of 10:15 a.m. in Tokyo, set for the lowest close since Dec. 9. The benchmark has given up about a third of the gains it made since falling to a five-year low on Nov. 20. All 10 industry groups lost ground today. The cost of protecting bonds from default in the Asia-Pacific region rose.

Japan’s Nikkei 225 Stock Average tumbled 4.3 percent to 8,079.09, led by Konica Minolta Holdings Inc. after Merrill Lynch & Co. slashed its rating on the maker of film. Equity benchmarks throughout the region declined.

Growth in the global economy will slow to 2.2 percent this year, a rate “equivalent to a global recession,” the International Monetary Fund 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.

Machinery Orders

U.S. stocks retreated the most in six weeks yesterday. with the Standard & Poor’s 500 Index losing 3.4 percent. Futures on the gauge fell 0.7 percent in trading today.

The Markit iTraxx Australia index of credit-default swaps widened 10 basis points to 320 as of 11:40 a.m. in Sydney, Westpac Banking Corp. prices show. The Markit iTraxx Japan index rose 10 basis points to 304.5 at 9:55 a.m. in Tokyo, according to Credit Suisse Group AG.

Fanuc fell 5.8 percent to 5,570 yen. Hitachi Construction Machinery Co., the world’s largest maker of giant excavators, sank 6 percent to 1,040 yen. Advantest Corp., the world’s biggest maker of equipment used to test computer memory chips, suffered a 7.5 percent rout to 1,243 yen.

Japan’s machine orders, an indicator of capital spending in the next three to six months, slid 16.2 percent from October, the biggest decline since the current survey began in 1987. Economists had expected an 8 percent slump.

Retail Sales, Rio

Samsung dropped 5.8 percent to 274,000 won. Canon Inc., the world’s largest seller of digital cameras, lost 4.4 percent to 2,815 yen after Merrill Lynch lowered the stock to “underperform.”

Konica Minolta, a maker of printers and film for liquid- crystal displays, slumped 7.6 percent to 633 yen. The company’s film facilities aren’t running at full capacity as liquid-crystal display makers cut back on production during the slump, Ryohei Takahashi, an analyst at Merrill who lowered the stock to “neutral,” wrote in a report.

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

Deutsche Loss

KB Financial tumbled 6.5 percent to 36,250 won. Mizuho Financial Group Inc., Japan’s third-largest listed bank by assets, retreated 4.3 percent to 243 yen. Fubon Financial Holding Co., Taiwan’s second-largest listed financial services company by market value, declined 6.4 percent to NT$20.35.

Deutsche Bank, Germany’s biggest lender, yesterday reported a record loss in the fourth quarter because of mounting provisions for debt backed by bond insurers and cash injections into money-market funds.

South Korea’s Kospi Index lost 3.9 percent, led by financial shares as the nation’s currency approached the lowest level in a month against the dollar, raising the cost of servicing foreign- currency debt. 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.

Rio Tinto Group, the world’s third-largest mining company, plunged 8.5 percent to A$37.17, after appointing steel executive Jim Leng to replace Chairman Paul Skinner, and confirming that it will shut its Anglesey Aluminium Metals Ltd. venture in Wales.

Hyundai Motor Co. slid 6.3 percent, while Kia Motors Corp. lost 5 percent after South Korea’s biggest carmakers had their debt ratings cut to junk levels by Fitch Ratings as the deepening global curbs auto sales.

To contact the reporters for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.