By Shani Raja
Feb. 20 (Bloomberg) -- Asian stocks fell, dragging the regional benchmark index to a three-month low, as the deepening global recession raises bad-loan costs and hurts profits. Japan’s Topix index closed at its lowest in 25 years.
National Australia Bank Ltd., the nation’s biggest by assets, declined 2.1 percent after Goldman Sachs Group Inc. cut its recommendation and Australia & New Zealand Banking Group Ltd.’s chief executive officer said bad debts are spreading. Qantas Airways Ltd. lost 4.3 percent in Sydney as Moody’s Investors Service cut its debt rating and oil prices climbed. Bridgestone Corp., the world’s No. 1 tiremaker, fell 7.4 percent in Tokyo after saying profit will fall 71 percent this year.
“The whole food chain is starting to feel the pain,” said Theo Maas, who helps manage about $3.2 billion at Fortis Investment Partners in Sydney. “Margins are coming down rapidly and there’s definitely worse to come. There is really no risk appetite for any investment at the moment.”
The MSCI Asia Pacific Index dropped 2.3 percent to 75.96 as of 3:45 p.m. in Tokyo, set to close at the lowest since Nov. 20. The gauge lost 7 percent this week, taking its slump this year to 15 percent. The measure tumbled by a record 43 percent in 2008, as the worsening credit crisis sent the world’s biggest economies into recession.
Japan’s Topix fell 1.6 percent to 739.53, the lowest close since January 1984. Hong Kong’s Hang Seng Index dropped 2.5 percent. All benchmark indexes in the region declined except in China, Pakistan and Sri Lanka.
Caltex Australia Ltd., the nation’s largest oil refiner, tumbled 8.3 percent after saying full-year profit plunged 95 percent. Samsung Electronics Co., the world’s largest memory- chip maker, lost 2.7 percent in Seoul as semiconductor-equipment orders in North America fell to their lowest level since 1991.
Rising Defaults
Futures on the Standard & Poor’s 500 Index dropped 1 percent. U.S. stocks declined yesterday, sending the Dow Jones Industrial Average to a six-year low, as Hewlett-Packard Co. cut its profit forecast and concern about rising credit-card defaults dragged financial shares to the lowest level since 1995.
National Australia Bank slid 2.1 percent to A$18.01 after its rating was cut to “hold” from “buy” at Goldman Sachs on 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.
ANZ Bank, Australia’s fourth-biggest lender, fell 1.2 percent to A$12.45 as CEO Michael Smith said bad debts in Australia are spreading from “high-risk” businesses and customers to “mainstream” clients.
“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.”
Government Action
In Tokyo, Mizuho Financial Group Inc., Japan’s second- largest bank, lost 4.1 percent to 188 yen.
The Bank of Japan yesterday said it will buy corporate bonds from financial institutions and extend lending programs to prevent a shortage of credit. It was the latest in a series of government measures across the world to stem the worst global slowdown since World War II.
Stock declines in the past year brought about by the deepening financial crisis wiped almost $30 trillion from the value of global equities. The average valuation of companies on MSCI’s Asian gauge has dropped 10 percent to 13 times reported profit in that time.
Qantas, Australia’s largest carrier, slumped 4.3 percent to A$1.675 after Moody’s lowered its long-term debt rating to Baa2, the second-lowest investment grade, from Baa1 because of plunging air-travel demand.
Slumping Orders
Shares of airlines also fell on concern fuel costs will rise after oil prices surged 14 percent yesterday in New York. Cathay Pacific Airways Ltd. lost 2 percent to HK$8.10 in Hong Kong. Singapore Airlines Ltd. dropped 1.2 percent to S$10.02.
Bridgestone sank 7.4 percent to 1,251 yen after saying net income will probably fall 71 percent to 3 billion yen ($32 million) this year as demand for new cars wanes.
Caltex plunged 8.3 percent to A$8.80. The Sydney-based company said net income sank to A$34 million ($22 million) in the year ended Dec. 31 as production fell and lower crude-oil prices cut the value of stockpiles.
Samsung dropped 2.7 percent to 467,500 won. Taiwan Semiconductor Manufacturing Co., the world’s largest maker of customized chips, slid 3.3 percent to NT$43.90.
North American orders for semiconductor equipment dropped to $285.6 million last month from $1.14 billion in January 2008, the trade group Semiconductor Equipment & Materials International said. Orders dropped 51 percent from December.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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