Asian Stocks Decline on Bank Earnings Concern; Caltex Tumbles

By Shani Raja

Feb. 20 (Bloomberg) -- Asia stocks fell, led by banks and technology companies, on concern rising bad-loan costs will hurt bank earnings and as orders for semiconductor equipment slumped.

National Australia Bank Ltd., the nation’s biggest lender by assets, dropped 2.6 percent after Goldman Sachs Group Inc. cut its recommendation on the stock. Samsung Electronics Co. declined 1.3 percent as North American semiconductor-equipment orders fell to their lowest level since 1991. Caltex Australia Ltd., the nation’s largest oil refiner, tumbled 9.4 percent after saying full-year profit plunged 95 percent.

“We’ll see more write-offs and bad debts as the recession deepens,” said Jason Teh, who helps manage $3.5 billion at Investors Mutual Ltd. in Sydney. “It’s still so uncertain when the cycle will turn.”

The MSCI Asia Pacific Index dropped 0.6 percent to 77.23 as of 10:15 a.m. in Tokyo, with two stocks falling for each one that rose. The measure has slumped 14 percent this year, extending 2008’s record 43 percent tumble, as the credit crisis sent the world’s biggest economies into recession.

The Nikkei 225 Stock Average fell 0.7 percent to 7,504.61. Australia’s S&P/ASX 200 Index lost 1.2 percent. In New York, the Dow Jones Industrial Average dropped 1.2 percent to the lowest close since October 2002, while the Standard and Poor’s 500 Financials Index slipped to the lowest level since January 1995.

Rising Defaults

Credit-card defaults may peak at 11 percent of loans by the end of the year, Goldman Sachs analyst Brian Foran said in an e- mail, cutting his 2009 earnings estimate for card issuer American Express Co. by almost 40 percent. Earlier this month, Fitch Ratings said loan failures climbed to 7.5 percent, the highest level since 2005.

Amid rising bankruptcies, the Bank of Japan yesterday said it will buy corporate bonds for the first time to stem a shortage of credit. The announcement came as Tokyo-based Aomi Construction Co. said it filed for bankruptcy protection because of the failure of a customer.

National Australia Bank slid 2.6 percent to A$17.93 after it was reduced to “hold” from “buy” at Goldman, which cited the prospect of rising bad debts. Separately, National Australia said today that Ahmed Fahour, who headed the company’s Australian and Asian banking units, will leave the lender.

In Tokyo, Mizuho Financial Group Inc., Japan’s second- largest bank, lost 2 percent to 192 yen. Bigger rival Mitsubishi UFJ Financial Group Inc. dropped 1.4 percent to 433 yen.

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