Asian Stocks Drop on Concern Obama Bank Plan Won’t Ease Crisis

By Jonathan Burgos and Shani Raja

Feb. 11 (Bloomberg) -- Asian stocks fell, led by banks and commodity companies, on concern U.S. President Barack Obama’s plan to revive the economy and financial system may not be enough to ease the recession.

National Australia Bank Ltd., the nation’s biggest by assets, lost 1.3 percent, after U.S. Treasury Secretary Timothy Geithner said the recovery plan will “take time” to bear fruit. BHP Billiton Ltd., the world’s largest mining company, fell 2.8 percent in Sydney on concern commodity demand will drop. Neptune Orient Lines Ltd., Southeast Asia’s biggest container carrier, slumped 3.2 percent in Singapore after forecasting a loss.

“It’s almost as if the market seems to be unhappy with any solution that doesn’t involve full nationalization of the banks,” said San Francisco-based Robert Horrocks, who helps manage about $4.7 billion including Asian equities at Matthews International Capital Management LLC. “You’re starting to see some life in the credit markets, but most of the leading indicators are still pointing downwards.”

The MSCI Asia Pacific Index that excludes Japan fell 2 percent to 232.20 at 9:51 a.m. in Singapore. The gauge that includes Japan has fallen 7.6 percent this year, extending 2008’s record 43 percent decline as the world’s biggest economies sank into recession.

Japan’s stock market, the world’s second largest, is closed today for a holiday. All other markets open for trading dropped, led by a 1.3 percent drop in South Korea’s Kospi Index. The S&P/ASX 200 Index lost 0.8 percent.

Rio Tinto Ltd., BHP’s smaller rival, rose 2.3 percent on speculation Aluminum Corp. of China, the nation’s biggest producer of the metal, may invest as much as to $20 billion.

Falling Demand

U.S. stocks fell yesterday, sending the Standard & Poor’s 500 Index to its biggest decline since Obama’s inauguration, while Treasuries rallied and the dollar rose on skepticism that the government’s bank rescue will work. Futures on the S&P 500 added 0.4 percent today.

Treasury Secretary Timothy Geithner pledged up to $2 trillion in government financing for programs aimed at spurring new lending and addressing banks’ toxic assets. The plan includes limits on bank dividends and acquisitions.

National Australia Bank fell 1.3 percent to A$18.50 after a report showed Australian consumer confidence slumped in February as rising unemployment and falling property prices eroded households’ view of the economic outlook for the next 12 months. Australia New Zealand Banking Group Ltd., Australia’s fourth- biggest lender, slipped 2.1 percent to A$12.19.

BHP Billiton slid 2.8 percent to A$32.42 as metal and oil prices fell in New York, with copper sliding 1.6 percent and crude oil slumping 5.1 percent. Oil futures rose 1.2 percent to $38 a barrel in after-hours trading.

Rio Investment?

Samsung Electronics Co., the world’s No. 1 memory-chip maker, fell 1.2 percent to 514,000 won in Seoul. The stock paced declines among technology companies amid concern demand for computer components and consumer electronics products made in Asia will decline.

Hyundai Motor Co., the biggest South Korean carmaker, dropped 1.7 percent to 50,700 won in Seoul. The stock was cut to “equal-weight” from “overweight” at Morgan Stanley, which said access to auto financing in the country remains difficult.

Neptune slumped 3.2 percent to S$1.20 after forecasting a fourth-quarter loss as the global recession damps demand for transporting Asian-made goods.

Rio Tinto rose 2.3 percent to A$50.09. Aluminium Corp. of China is in talks to buy bonds that will convert into Rio shares and purchase stakes in Rio mines, a person with knowledge of the matter told Bloomberg News. An announcement is planned for Feb. 12 when Rio publishes its annual earnings, the person said.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.