By Shani Raja
Sept. 25 (Bloomberg) -- Asian stocks dropped the most in almost two weeks after Nomura Holdings Inc. announced a record $5.6 billion share offering and sales of existing U.S. homes unexpectedly declined.
Nomura, Japan’s largest brokerage, tumbled 16 percent. Mitsubishi UFJ Financial Group Inc., the nation’s biggest publicly traded bank, slid 5.4 percent. Toyota Motor Corp., which gets 31 percent of its sales in North America, dropped 2.6 percent. The dollar and yen rose against the euro as some investors sought haven amid speculation Group of 20 leaders will agree to regulate riskier investments.
The MSCI Asia Pacific Index fell 1 percent to 117.45 as of 4:41 p.m. in Tokyo. The gauge dropped 0.8 percent this week. It has surged 66 percent from a five-year low on March 9 on speculation improved global growth will boost corporate earnings.
“Investors are feeling twitchy,” said Shane Oliver, head of investment strategy with AMP Capital Investors Ltd., which manages about $78 billion. “There’s been some disappointing economic data and talk of exit strategies. The market worries that the withdrawal of stimulus will be premature, and that the recovery will be threatened when the punchbowl gets taken away.”
Japan’s Nikkei 225 Stock Average slumped 2.6 percent, while South Korea’s Kospi retreated 0.1 percent. Australia’s S&P/ASX 200 Index gained 0.3 percent, with Australia & New Zealand Banking Group Ltd. rising 1.3 percent after agreeing to its biggest acquisition since 2003.
Public Funds
Japan Airlines Corp. fell 7.6 percent as Prime Minister Yukio Hatoyama said public funds may be needed to support the carrier. Emeco Holdings Ltd., an Australian earthmoving company, tumbled 11 percent after ending takeover talks. New Zealand’s Fisher & Paykel Appliances Holdings Ltd. slumped 12 percent on a loss forecast. Among gainers today, Aiful Corp. surged 17 percent in Tokyo after Nikko Citigroup Ltd. upgraded the stock.
Futures on the Standard & Poor’s 500 Index rose 0.5 percent. The gauge dropped 1 percent yesterday after a report from the National Association of Realtors showed sales of existing U.S. homes dropped 2.7 percent last month, while economists had anticipated an increase. Separately, the Federal Reserve said it will cut the size of two programs meant to boost credit markets.
“I wouldn’t be surprised if we’d seen the peak of the market for this year because the economic news isn’t going to improve very much,” Marc Faber, the publisher of the Gloom, Boom & Doom report, said today in an interview with Bloomberg Television.
Stimulus Measures
Signs that government stimulus measures worldwide were reviving economies hit by the credit crisis have driven the MSCI World Index up by 63 percent from a 13-year low on March 9. The MSCI Asia Pacific Index’s rally since then has lifted the average price of the gauge’s members to 1.6 times book value from 1 at this year’s low.
The G-20 nations today conclude a two-day meeting in Pittsburgh on measures to help prevent the risk-taking that triggered the financial crisis. U.S. officials said they were uniting behind a plan to tighten capital requirements. The dollar today gained versus 15 of its 16 major counterparts, while the yen headed for a weekly advance against the euro.
“Worries the G-20 may impose stricter financial market regulations are causing risk aversion,” said Toshihiko Sakai, head of trading for foreign exchange and financial products at Mitsubishi UFJ Trust & Banking Corp. in Tokyo. “There’s safe- haven buying of the dollar and the yen.”
Share Sale
Nomura plans to sell a record 511.3 billion yen ($5.6 billion) of stock to fund expansion in the U.S. The Tokyo-based brokerage will sell about 800 million shares, equivalent to almost 30 percent of the stock outstanding, according to documents filed to the Ministry of Finance.
Nikko Citigroup Ltd. downgraded Nomura to “sell” from “hold.” Mitsubishi UFJ slumped 5.4 percent to 493 yen. Sumitomo Mitsui Financial Group Inc., Japan’s second-largest bank, dropped 4.2 percent to 3,120 yen.
“Investors are increasingly wary major financial companies will enter another round of equity sales,” said Tsutomu Yamada, at Tokyo-based kabu.com Securities Co.
ANZ Bank, Australia’s fourth biggest bank, rose 1.3 percent to A$23.79, after agreeing to buy ING Groep NV’s stake in their life insurance and wealth-management venture. National Australia Bank Ltd., the nation’s No. 1 by assets, climbed 1.8 percent to A$30.42.
“There’s no doubt Australian banks are carrying less risk than many global banks and that they do have some scope to be acquirers,” said Angus Gluskie, who manages about $300 million at White Funds Management Pty. in Sydney.
‘Less Risk’
Japan Airlines sank 7.6 percent to 133 yen. The airline may need to raise 150 billion yen in capital by Nov. 31 and a further 100 billion yen by March 31 to continue operating, Nikkei English News reported, without citing anyone.
Aiful surged 17 percent to 119 yen. Japan’s second-largest consumer lender by assets, which said yesterday it plans to cut jobs and close branches to reduce costs, climbed after Nikko Citigroup raised it to “hold” from “sell,” as concerns over near-term funding “dissipate.”
The company has been shut out of credit markets by the global financial crisis and is increasing provisions for repayments of interest overcharges. Bank of Japan board meeting minutes released today showed that members last month remained concerned that small companies are struggling to borrow.
Losses and Writedowns
The global credit crunch, worsened by the collapse of Lehman Brothers Holdings Inc. a year ago, has caused more than $1.6 trillion of writedowns and losses at the world’s biggest financial institutions. The MSCI Asia Pacific Index slumped by a record 43 percent in 2008.
Toyota, the world’s No. 1 automaker, dropped 2.6 percent to 3,710 yen. Honda Motor Co., which gets 47 percent of its sales in North America, lost 1.8 percent to 2,815 yen after the unexpected decline in home sales, which also caused commodity prices to fall.
BHP Billiton Ltd., the world’s biggest mining company, dropped 1 percent to A$37.34, after losing as much as 2.4 percent earlier on declining oil and metal prices. Rio Tinto Group, the third largest, slumped 1.5 percent to A$59.98. Inpex Corp., Japan’s largest oil explorer, lost 2.9 percent to 783,000 yen. Crude oil dropped 4.5 percent in New York yesterday to $65.89 a barrel, the lowest settlement since July 29, while copper slid 3.5 percent.
‘The Market’s Overbought’
“We’ve been saying for a while that the market’s overbought,” said Rob Patterson, who helps manage $3.3 billion at Argo Investments Ltd. in Adelaide. “There’s been a fair push with this rally, and it’s due for a rest.”
Emeco tumbled 11 percent to 84 Australian cents in Sydney, after the company ended takeover talks and a proposed offer by a financial investment firm was withdrawn. Fisher & Paykel Appliances slumped 12 percent to 65 New Zealand cents, after the nation’s largest maker of cookers and refrigerators forecast a full-year loss on weaker than expected U.S. sales.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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