Asian Finance, Material Stocks Drop as Japan’s Economy Shrinks

By Shani Raja

Feb. 16 (Bloomberg) -- Asian finance and materials stocks fell as Japan’s economy shrank the most since 1974 and Group of Seven finance chiefs said the economic slowdown will persist through most of 2009. Technology shares advanced.

Takefuji Corp., a consumer lender, sank 7.8 percent after reversing a profit forecast to a loss and as a government report showed Japan’s gross domestic product to slump 12.7 percent in the fourth quarter. BlueScope Steel Ltd., Australia’s largest steelmaker, fell 4.2 percent after raising less than expected in a share sale. Samsung Electronics Co., the world’s second- largest maker of mobile-phones, rose 1 percent, after saying it aims to increase its market share.

“There’s no magic potion we can all drink and cure the ills that the global economy has at the moment,” said Tim Schroeder, who helps manage A$4 billion at Pengana Capital Ltd. in Melbourne. “The evidence shows any pick-up is going to be muted, and that profitability is not going to recover meaningfully for some time. The momentum is still downwards.”

The MSCI Asia Pacific Index was little changed at 81.73 at 11:38 a.m. in Tokyo. Twenty stocks dropped for every 19 that advanced. The gauge has lost 8.8 percent this year, extending 2008’s record 43 percent tumble, as the credit crisis dragged the world’s biggest economies into recession.

The Nikkei 225 Stock Average fell 0.2 percent to 7,763.03. Australia’s S&P/ASX 200 Index declined 1 percent, while New Zealand’s NZX 50 Index lost 2 percent. Futures on the U.S. Standard & Poor’s 500 Index dropped 0.6 percent.

Brambles Ltd., the world’s biggest supplier of pallets used to move and store goods, slumped 9.2 percent in Sydney as first- half profit declined.

Shrinking Economy

Takefuji dropped 7.8 percent to 583 yen. Pioneer Corp., which last week forecast a record loss, slumped 9.2 percent to 129 yen.

Japan’s economy contracted the most since the 1974 oil shock, according to figures from the Cabinet Office, with gross domestic product falling for a third-straight quarter. The median estimate of 26 economists surveyed by Bloomberg News was for an 11.6 percent contraction.

Brambles lost 9.2 percent to A$5.81 as the slump in first- half profit prompted the company to cut operations in the U.S. and eliminate 750 jobs.

The G-7’s finance ministers and central bankers said in a statement released after talks in Rome on Feb. 14 that they were working to restore confidence in markets and revive the world economy. They predicted the full effect of individual rescue packages will “build over time.”

Samsung Electronics

The policy makers met after reports last week showed Germany’s economy contracted the most in 22 years in the fourth quarter and U.S. consumer confidence neared its lowest since 1981.

BlueScope fell 4.2 percent to A$3.19. The company raised A$113 million ($74 million) from a stock sale to existing shareholders. BlueScope Steel said Dec. 10 it wanted to raise A$250 million.

Samsung Electronics gained 1 percent to 516,000 won. The company said it aims to increase its market share to at least 20 percent this year on higher sales in emerging markets and by focusing on more expensive models.

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