By Jonathan Burgos and Patrick Rial
Nov. 5 (Bloomberg) -- Asian stocks fell, dragging the MSCI Asia Pacific Index down for the third time in four days, as South Korea said it’s “unclear” whether the economic rebound will be sustained and New Zealand’s unemployment rate rose.
Samsung Electronics Co., Asia’s biggest maker of chips and mobile phones, lost 2.9 percent in Seoul as the country’s finance ministry said factory production probably slowed in October. Doosan Heavy Industries & Construction Co. sank 8.6 percent after brokerages cut their share-price targets. Telecom Corp. of New Zealand, the country’s largest phone company, dropped 2.4 percent as the nation’s unemployment rate rose to a nine-year high.
The MSCI Asia Pacific Index dropped 0.4 percent to 114.85 as of 7:28 p.m. in Tokyo. The gauge has slumped 5.2 percent from a 13-month high on Oct. 20 amid concerns the withdrawal of stimulus measures will cause the global recovery to falter. The index is still up 63 percent from a five-year low on March 9.
“The market is now reaching the point where monetary stimulus policies stop pushing up asset prices and earnings become the main focus,” said Koichi Kurose, who helps oversee $4.6 billion as chief strategist at Resona Bank Ltd.
Japan’s Nikkei 225 Stock Average declined 1.3 percent to 9,717.44 as the yen rose against all 16 major counterparts amid higher demand for the currency as a refuge.
South Korea’s Kospi Index dropped 1.8 percent and Hong Kong’s Hang Seng Index declined 0.6 percent. New Zealand’s NZX 50 Index fell 0.7 percent, while Australia’s S&P/ASX 200 Index lost 0.7 percent.
Takeover Bids
Sanyo Electric Co. tumbled 20 percent as Panasonic Corp. started a bid for the company at a discount. Among stocks that gained, Acom Co., Japan’s largest consumer lender by value, rose 7.6 percent after Citigroup Inc. upgraded the stock. Transurban Group, owner of toll roads in Australia and Virginia, surged 19 percent on speculation it will receive a higher takeover bid.
Futures on the Standard & Poor’s 500 Index slipped 0.3 percent. The gauge rose 0.1 percent yesterday as the Federal Reserve said it will keep interest rates near zero for “an extended period” and specified for the first time that policy will stay unchanged as long as inflation expectations are stable and unemployment fails to decline.
The Fed is “quite concerned that a premature pullout of the low-interest environment and the withdrawal of stimulus spending will be detrimental to the U.S. economy and the rest of the world,” said Jofer Gaite, a fund manager at the Manila- based Government Service Insurance System, which has $10 billion in assets. “The ongoing recovery is still fragile and the Fed is resorting to all it can to avoid a prolonged recession.”
Balanced Growth
Policy makers around the world are trying to ensure growth doesn’t collapse following the withdrawal of policies introduced to drag the global economy out of its worst slowdown since World War II. Australia yesterday raised interest rates for the second time in four weeks, while the Bank of Japan decided on Oct. 30 to end corporate-debt buying programs.
Stocks in the MSCI Asia Pacific Index are valued at 22 times estimated earnings, compared with 17 times for the S&P 500 and 15 times for Europe’s Dow Jones Stoxx 600 Index.
Samsung Electronics declined 2.9 percent to 712,000 won. South Korea remains “too dependent” on external demand and the country needs to balance between export and local consumption, Finance Minister Yoon Jeung Hyun said.
The government will continue its “macroeconomic policies and try to create more jobs and boost investment and consumption,” the country’s Finance Ministry said in a monthly report today.
Reducing Debt
Doosan Heavy Industries slumped 8.6 percent to 59,700 won, set for its lowest closing level since July 15. Goldman Sachs Group Inc. and Credit Suisse Group AG cut their share-price targets after the company reported a third-quarter net loss.
Korean Air Lines Co., the nation’s biggest carrier, lost 1.8 percent to 43,500 won after the Maeil Business Newspaper reported that creditors had called on the company to increase capital in order to lower debt ratios.
In Wellington, Telecom New Zealand dropped 2.4 percent to NZ$2.48, while Fletcher Building Ltd., the world’s largest maker of laminated building board, lost 1.6 percent to NZ$7.86.
The nation’s unemployment rate rose to 6.5 percent in the third quarter from 6 percent in the previous three months, government statistics showed. Central bank Governor Alan Bollard said a strengthening currency will slow the nation’s recovery from a recession.
In Tokyo, Sanyo tumbled 20 percent to 172 yen after Panasonic offered to buy the company for a price of 131 yen a share. Sanyo stock closed yesterday at 216 yen.
Acom, Takefuji
Goldman Sachs and two other banks that in 2006 bailed out Sanyo, the world’s biggest maker of rechargeable batteries, have agreed to sell a combined 50 percent stake for 403 billion yen ($4.5 billion).
Among stocks that gained today, Acom rose 7.6 percent to 1,596 yen. Citigroup upgraded the shares to “hold” from “sell.” The brokerage raised its rating on Japan’s consumer lenders to “neutral” from “bearish,” saying the government may relax loan restrictions.
Promise Co. and Takefuji Corp. each had their ratings boosted as well. Promise advanced 15 percent to 786 yen and Takefuji climbed 19 percent to 488 yen.
In Sydney, Transurban Group surged 19 percent to A$5.24. The company rejected an unsolicited takeover offer from Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan. The two funds currently hold a combined 28 percent stake in Transurban, according to Bloomberg data.
To contact the reporters for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net.
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