Asian Stocks Slump on Growth Concerns; Orix, BHP Billiton Fall

By Patrick Rial and Shani Raja

April 21 (Bloomberg) -- Asian stocks slumped, led by financial and mining companies, as higher loan-loss reserves at Bank of America Corp. and a drop in commodity prices derailed optimism the global economy is recovering.

Orix Corp., Japan’s largest non-bank financial company, slid 6.1 percent after Nomura Holdings Inc. downgraded the shares. BHP Billiton Ltd., the world’s largest mining company, lost 3.6 percent after oil and metals prices sank. Mitsubishi Corp., Japan’s No. 1 trading company, dropped 5.2 percent after the Nikkei newspaper said falling coal prices will erode profits.

“You’re seeing cold water being poured on the theme of a sharp rebound in growth,” said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. “Last night’s data, along with indications that the rapid run we’ve experienced in the last six weeks may be coming to an end, has fed on itself.”

The MSCI Asia Pacific Index lost 1.9 percent to 88.34 as of 9:52 a.m. in Tokyo, retreating from a more than three-month high. A 27 percent rally through yesterday from a five-year low reached on March 9 had lifted the valuation of companies on the gauge to the highest since November 2007.

Japan’s Nikkei 225 Stock Average tumbled 2.5 percent to 8,701.29, while Australia’s S&P/ASX 200 Index slumped 2.7 percent. All markets open for trading declined.

Futures on the Standard & Poor’s 500 Index lost 0.2 percent. The gauge slid 4.3 percent yesterday, the most since March 2, led by financial companies, after Bank of America said it increased reserves for future loan losses by 57 percent since the end of December.

Yen, Commodities

Prospects for more bank losses spurred demand for the yen as an investment haven. The Japanese currency touched 97.66, a level not seen since March 31, compared with 98.89 at the 3 p.m. close of stock trading in Tokyo yesterday.

Speculation the worst of the global recession has passed drove valuations on the MSCI Asia Pacific Index to 19 times reported profit yesterday, the highest since Nov. 2, 2007. The 14-day relative strength index for the gauge rose to 67.7 yesterday, nearing the 70 threshold that some traders see as a sign to sell.

Financial companies accounted for 26 percent of the MSCI Asia Pacific Index’s decline today. Orix, whose shares have more than doubled in the past month, retreated 6.1 percent to 4,460 yen. Westpac Banking Corp., Australia’s third-largest bank, dropped 3.2 percent to A$19.61.

BHP sank 3.6 percent to A$31.71. Crude oil for May delivery dived 8.8 percent to $45.88 a barrel in New York yesterday, the lowest settlement since March 11. Copper futures for July delivery slid 4.2 percent, the sharpest plunge since Feb. 17.

Mitsubishi Corp., which owns a coal-mining venture with BHP, slumped 5.2 percent to 1,592 yen. Mitsubishi may have a 100 billion yen ($1.02 billion) drop in net income for the year to March 2010 because of falling prices for coking coal, the Nikkei newspaper reported today.

Rivals Mitsui & Co. and Itochu Corp. may also see lower coal prices hurt their profits by 10 billion yen to 30 billion yen, Nikkei said.

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