Asian Stocks Fall, Paring March Rally, on Economic Concerns

By Patrick Rial and Shani Raja

March 31 (Bloomberg) -- Asian stocks fell, paring the regional benchmark index’s rally this month, as the Asian Development Bank cut economic growth forecasts and Australia said its economy will contract this year.

Mizuho Financial Group Inc., Japan’s second-largest publicly traded lender, fell 4.6 percent ahead of a central bank report tomorrow that’s expected to show confidence among the nation’s manufacturers collapsed. National Australia Bank Ltd. slumped 3.3 percent in Sydney as the central bank warned of “difficult times ahead.” Woodside Petroleum Ltd. declined 2.8 percent as oil plunged the most in four weeks.

The MSCI Asia Pacific Index lost 1.2 percent to 81.04 as of 5:38 p.m. in Tokyo, extending yesterday’s 4 percent slump. Prior to declines in the past two days, the gauge had rallied 14 percent through March, as governments from the U.S and Japan widened measures to ease the financial crisis. That would have given the index its best month since October 1998.

“Governments are playing catch-up trying to stabilize the negative repercussions of an unstable banking system,” said Jason Teh, who helps manage $3.5 billion at Investors Mutual Ltd. in Sydney. “The million-dollar question is, has enough been done and what’s the timeframe for the dollars to start trickling through.”

Japan’s Nikkei 225 Stock Average lost 1.5 percent to 8,109.53. Prime Minister Taro Aso said after markets closed that his government will compile a third economic stimulus plan by mid-April. South Korea’s Kospi Index climbed 0.7 percent. Stock markets in Asia rose, except in Australia, New Zealand, the Philippines, Vietnam and Sri Lanka.

Best, Worst Performers

IHI Corp., Japan’s No 3 heavy machinery manufacturer, jumped 3.7 percent after saying an annual net loss was narrower than it had forecast. Compal Electronics Inc., the world’s second-largest maker of notebook computers, surged 3.2 percent in Taipei as it boosted factory employee numbers in China amid rising demand. Baoshan Iron & Steel Co. lost 1 percent in Shanghai after saying product prices will stay low.

Futures on the Standard & Poor’s 500 Index gained 0.9 percent today. The gauge slumped 3.5 percent yesterday, the most in three weeks, as the Obama administration warned some banks will need more government aid and that General Motors Corp. and Chrysler LLC have one last chance to restructure.

Concern about the health of U.S. banks and automakers dragged the MSCI Asia Pacific Index down yesterday, snapping a five-day winning streak that had taken the average valuation of its constituents to 17 times reported profit, the highest since December 2007.

New Stimulus

The MSCI Asia Pacific is still up 7.8 percent this month, the most since December. The rally has pared its decline this year to 9.5 percent, its sixth-straight quarterly decline.

China’s Shanghai Composite Index has been the region’s best performing benchmark gauge in 2009, posting a 30 percent rally in the first three months of the year amid expectations stimulus measures to revive growth. Vietnam’s VN Index posted the worst record, with an 11 percent slump, as the economy expanded this quarter at the slowest pace on record.

Economies in Asia excluding Japan will grow 3.4 percent this year, less than a 5.8 percent estimate in early December, the Asian Development Bank said in a report today. Japan’s statistics bureau said today the nation’s jobless rate rose to 4.4 percent last month, the highest level in three years.

Mizuho slumped 4.6 percent to 188 yen. Tokio Marine Holdings Inc., the nation’s biggest casualty insurer, dropped 5.9 percent to 2,395 yen.

Crude Oil Surges

Japan’s Prime Minister Aso will lay out a third economic stimulus package at a press conference this afternoon, Chief Cabinet Secretary Takeo Kawamura said. The ruling Liberal Democratic Party yesterday recommended the government adopt an economic aid plan that includes infrastructure investment and aims to create 2 million jobs by 2012.

An index that measures confidence among large makers of cars and electronics will slide to minus 55 from minus 24 in December, economists predict the Bank of Japan’s Tankan survey will show tomorrow. That would be the lowest since 1975 and the biggest drop since the bank started the survey. A negative number means pessimists outnumber optimists.

National Australia Bank, the nation’s biggest by assets, sank 3.3 percent to A$20.10. Stockland, the country’s biggest housing developer, tumbled 6.4 percent to A$3.09.

“There are limits on how much we can insulate ourselves from what is happening abroad, and therefore there are probably still some difficult times ahead,” Australia’s central bank Deputy Governor Ric Battellino said today. Gross domestic product is “likely to fall in 2009,” he said.

‘Difficult Times Ahead’

Woodside Petroleum dropped 2.8 percent to A$38.10. Macarthur Coal Ltd., the world’s biggest exporter of pulverized coal used in steelmaking, fell 6.6 percent to A$3.38. BHP Billiton Ltd., the world’s largest mining company, slipped 2 percent to HK$31.91.

Crude oil for May delivery fell 7.6 percent to $48.41 a barrel in New York yesterday, the lowest settlement in almost two weeks. Still, crude has climbed 45 percent since falling to a four-year low in December. A measure of six metals traded on the London Metal Exchange, including copper and zinc, retreated 2.7 percent yesterday, the steepest slide since Feb. 20, amid concern the global slowdown will slash demand for raw materials.

IHI jumped 3.7 percent to 112 yen. The company said its net loss will probably be 13 billion yen ($133 million) for the year ending today, compared with its earlier estimate of a 25 billion yen loss, as the Japanese currency weakened more than the company had expected.

Compal climbed 3.2 percent to NT$24.30. The company added an additional 9,000 production-line workers for a current total of 26,000, Chang Chih-ming, a spokesman for the Taipei-based company, said. Output is running at about 80 percent of capacity, compared with around 60 percent in the fourth quarter, he said.

Baoshan Steel fell 1 percent to 5.74 yuan after saying it expects product prices to remain low as mills haven’t cut production fast enough to cope with the drop in demand.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.