By Jonathan Burgos
Feb. 10 (Bloomberg) -- Asian stocks fell for a second day, led by materials and consumer companies, as Japanese bond risk at a record and signs of declining profit countered optimism that U.S. stimulus measures will ease the financial crisis.
Kobe Steel Ltd. tumbled 13 percent in Tokyo before saying it may have given improper political contributions. Orix Corp., Japan’s biggest non-bank financial company, slumped 8.9 percent on a lower profit forecast. Nissan Motor Co. jumped 7.3 percent after saying it will cut 20,000 jobs to help restore profit. The U.S. Treasury is due to unveil its plan to rescue the financial system later today following weeks of debate.
“The market is asking too much from the stimulus plans,” said Mark Tan, who helps manage about $3 billion in Asian equities at UOB Asset Management in Singapore. “It may not be as strong as what it should be because of the compromises that have been made.”
About five stocks fell for every four that rose on the MSCI Asia Pacific Index, which lost 0.2 percent to 83.09 at 4:49 p.m. in Tokyo. The gauge has fallen 7.2 percent this year, extending 2008’s record 43 percent decline as the world’s biggest economies sank into recession.
Japan’s Nikkei 225 Stock Average lost 0.3 percent to 7,945.94. Australia’s S&P/ASX 200 Index slipped 0.6 percent. China’s Shanghai Composite Index climbed 1.8 percent as inflation cooled, fanning speculation the central bank may lower interest rates.
IOOF Holdings Ltd. and Australian Wealth Management Ltd., slumped more than 6 percent as funds under management plunged. Li & Fung Ltd., the biggest supplier to Wal-Mart Stores Inc., rose 8.2 percent in Hong Kong after saying it is increasing its market share.
Policy Action
Futures on the Standard & Poor’s 500 Index dropped 1.1 percent after President Barack Obama the U.S. economy is facing a “full-blown crisis.” His comments came just hours after the Senate held a procedural vote that cleared the way for passage of its stimulus bill. The S&P 500 added 0.2 percent yesterday.
Governments worldwide are stepping up efforts to ease the crisis that the International Monetary Fund predicts will cause global growth to almost grind to a halt this year. U.S. Treasury Secretary Timothy Geithner is due to announce today a bank- rescue plan that Obama signaled he would be open to expanding should it fail to restore stability to the financial system.
Stock declines in the past year have dragged the average valuation of companies on the MSCI Asia Pacific Index down by 13 percent to 13 times reported profit, as more signs emerged the global financial crisis was hurting corporate earnings.
Kobe Steel slumped 13 percent to 117 yen, the biggest decline on the MSCI gauge. President Yasuo Inubushi will quit after the company said it may have made improper political contributions, according to statement after markets closed.
Slowing Demand
A measure of material producers on MSCI’s Asian index fell 1.3 percent as copper in New York dropped 1 percent and gold lost 2.4 percent. The industry measure tumbled 51 percent last year as the global slowdown hurt demand for metals.
Orix sank 8.9 percent to 3,180 yen in Tokyo. The company yesterday cut its full-year profit forecast by 86 percent because of the falling value of stockholdings and a drop in property revenue.
The Markit iTraxx Japan index of credit-default swaps, which measures the cost of protecting corporate bonds from default, rose to a record after the central bank’s chief economist said the economy is deteriorating at a pace unseen in the past half century.
Credit markets have seized up in the past year as the financial crisis, which claimed Bear Stearns Cos. and Lehman Brothers Holdings Inc., prompted institutions to halt lending to each other. Losses from the crisis have swelled to more than $1 trillion.
Quick Reaction
Nissan, Japan’s No. 3 carmaker, surged 7.3 percent to 280 yen after the company said it would cut 20,000 jobs in an effort to return to profit. The carmaker will slash labor costs in high-wage countries by 20 percent after forecasting its first loss in nine years.
The company “is reacting quickly to the crisis,” Shinya Naruse, an analyst at Nomura Securities Co. in Tokyo, wrote in a report. “The labor cost cutting and overseas production shift show the company is moving toward improving profitability.” Naruse raised his recommendation on Nissan to “neutral” from “reduce.”
IOOF slumped 6 percent to A$3.12. The company said its funds under management and administration fell 19 percent at Dec. 31 from June 30, due to a slump in equities and listed property trusts. First-half profit excluding acquisition-related revaluations slumped 50 percent from a year earlier.
Utilities Advance
Australian Wealth tumbled 11 percent to 81.5 Australian cents. Funds under management dropped 7 percent as net profit before a one-time charge and non-recurring items fell 30 percent, the company said.
Li & Fung climbed 8.2 percent to HK$16.02. The company is gaining “tremendous market share” as the recession boosts sales of low-priced toys and clothing, President Bruce Rockowitz said.
Kyushu Electric Power Co., the monopoly power supplier to Japan’s southwestern island of Kyushu, gained 1.1 percent to 2,260 yen, on speculation fuel costs will drop after oil traded near a three-week low. Tohoku Electric Power Co. added 1.2 percent to 2,195 yen.
Oil futures in New York lost 1.5 percent to $39.56 a barrel, the lowest settlement price since Jan. 20. Prices added 1.4 percent to $40.11 in after-hours trading.
To contact the reporter for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net.
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