Fuji Seiki Denies Report It May Be in Danger of Bankruptcy

By Jason Clenfield

Feb. 21 (Bloomberg) -- Fuji Seiki Co., a Japanese maker of injection molds for products including ballpoint pens, denied it’s in danger of failing after media reports that language in exchange filings indicated the company may run out of credit.

“We’re not at risk of bankruptcy,” said Tetsuya Saito, head of business planning at the Osaka-based manufacturer, denying a report in the Nikkei newspaper that financing problems could put Fuji Seiki out of business. “Our banks have assured us they will keep lines of credit open.”

Fuji Seiki’s shares fell 8.8 percent to 52 yen on the Jasdaq exchange yesterday, trimming the company’s market value to 332 million yen ($3.6 million). The stock has plunged 76 percent since peaking on May 27 last year at 218 yen.

A decline in capital triggered regulations requiring an audit of Fuji Seiki’s books, Saito said, adding that the audit showed the company is financially viable.

To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net

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New Zealand’s Groser Says Free-Trade Talks With India Planned

By Candice Zachariahs

Feb. 21 (Bloomberg) -- New Zealand and India will begin negotiations to establish a bilateral free-trade agreement later this year, Trade Minister Tim Groser said today.

Groser and his Indian counterpart Kamal Nath agreed to the talks after reviewing a joint study, which concluded there was “considerable potential” to expand trade between the two countries, according to a press release on a New Zealand government Web site. The Asia-Pacific nation exports coal, timber, wool, and hides to India, the statement said.

“We agreed that, subject to the approval processes of both governments, the two countries will look to commence FTA negotiations as soon as possible,” Groser said in the statement. “I expect the negotiations will get under way later this year.”

Securing more trade accords may help underpin demand for New Zealand’s commodity exports amid the deepening global economic slowdown. New Zealand has free-trade deals with China, Singapore and Thailand and is studying similar agreements with Japan and South Korea.

To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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GM’s Opel May Be Next ‘Domino’ After Saab Without a Rescue Plan

By Andreas Cremer and Chris Reiter

Feb. 21 (Bloomberg) -- General Motors Corp.’s decision to push its Saab unit into bankruptcy protection puts pressure on Germany, the U.K. and Spain to come up with funding that the U.S. company says is needed to save the rest of its European business.

Saab filed for creditor protection yesterday after GM said it would cut ties with the Swedish carmaker following two decades of losses. Hours later, Opel supervisory-board member Armin Schild said the Ruesselsheim, Germany-based unit needs a rescue package that may exceed 3.3 billion euros ($4.23 billion).

“The Saab filing creates fear of a domino effect,” said Ferdinand Dudenhoeffer, director of automotive research at the University of Duisburg-Essen. “It increases pressure on Opel because GM has shown it cannot absorb its units’ debts.”

Opel employs 50,000 people across Europe, more than 10 times the number at Saab. About half the workforce is in Germany, where Finance Minister Peer Steinbrueck said yesterday he’s opposed to taking a stake in order to save the division. GM says it needs $6 billion from foreign governments and must reach an agreement to shave $1.2 billion from European labor costs by March 31.

Detroit-based GM said Jan. 11 that, in addition to talks with Germany, it’s also in touch with governments in Spain, where it employs more than 7,200 people, and the U.K., headquarters to Opel’s Vauxhall brand, with a workforce of almost 5,000.

March 31 Deadline

GM has set March 31 for deciding on all its European divisions’ future as the carmaker seeks as much as $16.6 billion in new U.S. federal loans. The U.S. company will end financial support for Saab by Jan. 1. Opel division and Luton, England- based Vauxhall are integral to operations, GM has said.

Opel plants in Bochum and Eisenach, Germany, face the greatest threat, together with another in Antwerp, Belgium, where the division employs another 3,700 people, a person familiar with the situation told Bloomberg this past week.

Saab’s move to seek protection from creditors “creates a sense of urgency” at Opel, said Laurenz Meyer, a lawmaker an economics spokesman with Chancellor Angela Merkel’s ruling Christian Democrats.

GM must specify its plans for Opel before Germany can tailor a rescue package, said Birgit Diezel, finance minister for the state of Thuringia, where Eisenach is located. Germany’s federal government and four states where Opel has factories are looking at options including loan guarantees, direct investment and the recruitment of foreign partners to support the unit, she said.

‘Dramatic’ Situation

“We’re in concrete negotiations with all parties involved,” said Diezel, also a Christian Democrat, adding that Thuringia “will use all options” to secure the future of the Eisenach factory and its 1,900 workers.

“The Saab filing very clearly shows how dramatic the situation is,” said Christoph Stuermer, an analyst at IHS Global Insight research company in Frankfurt.

Opel may also lose out because it had planned to build the new Saab 9-5 sedan, Stuermer said. Still, should Trollhaettan- based Saab survive a three-month “reconstruction” under court supervision, the Swedish company may play a role in a more independent Opel, he said. As GM’s only European brand with market recognition in the U.S., Saab could offer Opel a chance to “re-skin” its products for the world’s biggest auto market.

The Swedish government, too, is keeping GM at arms length, reiterating yesterday that it doesn’t plan to risk taxpayers’ money on Saab. Prime Minister Fredrik Reinfeldt said Feb. 18 the U.S. company’s demands amounted to a “trap” set to pressure the government into granting aid.

To contact the reporter on this story: Andreas Cremer in Berlin at acremer@bloomberg.net; Chris Reiter in Berlin at creiter2@bloomberg.net

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Enel Takes Control of Endesa in EU11.1 Billion Deal

By Adam L. Freeman and Gianluca Baratti

Feb. 21 (Bloomberg) -- Enel SpA agreed to buy a 25 percent stake in Endesa SA from Acciona SA for 11.1 billion euros ($14.2 billion), gaining full control of Spain’s largest hydropower producer.

The purchase by Enel, Italy’s biggest utility, will include the transfer of 2.9 billion euros worth of the Spanish generator’s renewable energy assets to Acciona, Enel said today in an e-mailed statement. Acciona will receive 9.6 billion euros from Enel, with the remaining 1.5 billion euros paid through an early dividend by Endesa. The move gives Enel a 92 percent stake.

Acciona and Enel, which bought the Spanish utility for 42.5 billion euros in October 2007, are ending their joint venture a year early. Enel will secure management power over Endesa, which has plants in Latin America and Europe, while Acciona gets cash and becomes the world’s second-largest renewable energy provider.

“Enel always wanted to get Endesa, but wasn’t allowed to do so without Acciona’s help,” Antonio Lopez Silvestre, a Madrid-based utilities analyst at Fortis Bank SA, said yesterday. “It will now get it a year before planned.”

Under the original terms of the acquisition, Acciona had an option to sell its interest at 43 euros a share from March 2010. Endesa shares traded 1.6 percent higher at 24.21 euros yesterday in Madrid before being suspended.

Utility Debt

Enel, the Rome-based company which became Europe’s most indebted utility when it bought Endesa with Acciona, said it will fund the transaction with 8 billion euros in loans from 12 banks. Enel will collect 4.2 billion from its share of the early Endesa dividend.

Enel was saddled with 55.8 billion euros of debt after the original takeover, and succeeded in cutting that to 51 billion euros by Sept. 30 through asset sales. This deal will cause Enel’s debt to rise again by 11.7 billion euros.

“Enel will feel the weight of carrying so much debt, especially at a time of so much global economic turbulence,” Salvatore Provinzano, an analyst at IlNuovoMercato in Rome, said before the announcement. “Even if it hurts a little, the debt is sustainable because the assets have such a safe return.”

Of the total loan, 5.5 billion euros fall due in 2014 while the remaining 2.5 billion euros mature in 2016.

“The rise in Ebitda will be strong enough to make debt sustainable,” said Emanuele Vizzini, a Milan-based analyst who helps manage about $1 billion at Investitori SGR, including Enel shares. “It’s a price you have to pay to be among the biggest,” Vizzini said before today’s announcement.

Investment Plan

For Acciona, which said Feb. 4 it would rein in spending unless it sold the stake, the transaction will help fund a 6.77 billion-euro, three-year investment plan. The transfer of Endesa’s renewable assets will make it the world’s second- largest wind-power operator after fellow Spaniard Iberdrola Renovables SA, according to a company presentation this month.

“They are getting financing at a time when financing is hard to find,” Antonio Lopez Silvestre, a Madrid-based utilities analyst at Fortis Bank SA, said yesterday. “They are also getting the renewable assets they wanted.”

The Madrid-based builder that is trying to expand in alternative energy will gain 2,105 megawatts of renewable energy assets in Spain and Portugal, including 682 installed megawatts of conventional hydropower, Enel said.

Acciona is not the only Spanish builder seeking asset sales to reduce debt and fund investment. Sacyr Vallehermoso SA, the country’s fifth-biggest construction company, agreed in December to sell highway operator Itinere Infraestructuras SA to a Citigroup Inc. fund in a transaction valued at 7.9 billion euros to cut borrowing.

Spain’s largest power producer is Iberdrola SA.

To contact the reporters on this story: Adam L. Freeman in Rome at afreeman5@bloomberg.net; Gianluca Baratti in Madrid at gbaratti@bloomberg.net

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Japan’s 20-Year Bonds Post Biggest Decline in a Month on Supply

By Theresa Barraclough

Feb. 21 (Bloomberg) -- Japan’s 20-year bonds posted their biggest weekly decline in a month on concern Prime Minister Taro Aso will sell more debt to fund plans to revive an economy heading for its worst recession since World War II.

The benchmark 20-year yield yesterday rose to the highest level in a week after Finance Minister Kaoru Yosano said the government needs to use “all possible means” to revive growth, fanning concern spending will increase. Japanese stocks slid and the yen weakened against the dollar as a government report this week showed the world’s second-largest economy shrank last quarter the most since the 1974 oil crisis.

“Concern over increases in debt supply is stopping people from buying as there is added risk to investment,” said Tomohiko Katsu, deputy general manager of the capital market division at Shinsei Bank Ltd. in Tokyo.

The yield on the 1.9 percent bond due December 2028 rose 4.5 basis points this week to 1.91 percent according to Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price fell 0.650 yen to 99.856 yen. The yield climbed as high as 1.93 percent yesterday, the most since Feb. 10.

Ten-year yields increased 1.5 basis points, or 0.015 percentage point, this week to 1.275 percent. Ten-year bond futures for March delivery advanced 0.14 this week to 139.50 at the Tokyo Stock Exchange.

The difference in yield, or spread, between U.S. 10-year notes and similar-dated Japanese debt widened to 1.56 percentage points on Feb. 19, from 1.03 percentage points at the beginning of the year, suggesting increasing debt supply is a bigger concern for the U.S. market.

Record Debt Sales

The U.S. plans to sell a record $94 billion of two-, five- and seven-year notes next week. Prime Minister Aso in December announced plans to inject as much as 12 trillion yen ($127.6 billion) into Japanese banks.

“The tug-of-war situation in the market between the deterioration of the economy versus supply concern will not ease by the end of March,” said Nobuto Yamazaki, an executive fund manager at Diam Asset Management in Tokyo.

Japan’s government lowered its assessment of the economy for a fifth month on Feb. 19, leading to speculation it will unveil more spending measures. “The economy is worsening rapidly amid severe conditions,” the Cabinet Office said in its report for February.

Yen, Stock Losses

The yen fell against the dollar this week on speculation demand for the currency as a haven will wane. The yen declined as former Finance Minister Shoichi Nakagawa quit, spurring concern the government’s 10 trillion yen stimulus plan will stall in parliament.

The Nikkei 225 Stock Average fell 4.7 percent this week and the broader Topix index posted its lowest close in 25 years yesterday. Japan’s bonds often move in the opposite direction to stocks. Benchmark 10-year yields had a correlation of 0.74 with the Nikkei this month, according to data compiled by Bloomberg. A value of 1 means the two moved in lockstep.

Benchmark bonds handed investors a return of 0.2 percent this month through Feb. 19, according to indexes compiled by Merrill Lynch & Co. The Nikkei lost 4 percent in the same period.

Demand for 20-year securities may stay subdued before the Ministry of Finance sells 900 billion yen of the debt next week, according to Calyon Securities, one of the 24 primary dealers required to bid at government debt sales.

20-Year Auction

“The next focus is the 20-year JGB auction next week,” said Susumu Kato, chief economist in Tokyo at Calyon. “Until then, there will be some kind of adjustment of positions.”

Japan’s yield curve, a graph that plots the yields of bonds of the same quality but with different maturities, inverted on Feb. 19 as 30-year rates fell below 20-year yields for the first time since 2000.

Twenty-year debt yesterday yielded half a basis point below 30-year securities, after yielding one basis point more on Feb. 19, according to data compiled by Bloomberg. Longer-term securities normally yield more than shorter-term ones to compensate investors for the extra risk of holding them until they mature.

To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net.

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Asian Stocks Post Biggest Weekly Drop Since October on Economy

By Patrick Rial

Feb. 21 (Bloomberg) -- Asian stocks posted the biggest weekly decline since October as the weakening global economy assailed corporate profits.

Mitsubishi UFJ Financial Group Inc., Japan’s largest listed bank, plunged 9.1 percent after the nation’s economy contracted at the fastest pace since 1974. Woori Finance Holdings Co., controlling South Korea’s second-largest bank, slumped 17 percent after rising bad loans forced it to apply for state funds. Elpida Memory Inc., Japan’s largest memory chipmaker, tumbled 27 percent after Standard & Poor’s slashed the company’s debt rating, citing its liquidity risk.

“There’s no magic potion we can all drink and cure the ills that the global economy has at the moment,” said Tim Schroeder, who helps manage about $2.6 billion at Pengana Capital Ltd. in Melbourne. “The evidence shows any pickup is going to be muted, and that profitability is not going to recover meaningfully for some time.”

The MSCI Asia Pacific Index plunged 7.0 percent this week to 76.03, the steepest slide since the period ending Oct. 24. The gauge has plunged 15 percent in 2009 and is less than 2 percent from a six-year low.

Japan’s Topix Index dropped 3.3 percent as it tumbled to the lowest since January 1984. All of the region’s benchmark equity indexes slumped, except in Pakistan. South Korea led the region’s declines as financial and heavy industry companies sent the Kospi Index to an 11 percent slide.

Falling Estimates

MSCI’s Asian index slumped by a record 43 percent last year as the credit crunch tipped the world’s largest economies into recession, forcing companies to cut jobs amid falling profits. Earnings estimates for companies in the gauge have been slashed 44 percent since the beginning of 2009, bringing them to the lowest level since Bloomberg began compiling the data in 2005.

Mitsubishi UFJ lost 9.1 percent to 429 yen. Pioneer Corp., Japan’s No. 3 audio-visual equipment maker, dropped 25 percent to 106 yen after announcing 10,000 job cuts as the global recession forced the company to exit the television business. Brewer Sapporo Holdings Ltd. retreated 20 percent to 334 yen after Warren Lichtenstein’s Steel Partners gave up a bid to acquire a one-third stake.

The Japanese economy contracted at a 12.7 percent annual rate in the final three months of 2008, the most since the 1974 oil shock, according to figures from the Cabinet Office. A plunge in exports accounted for most of the decline.

South Korean Banks

Woori Finance dropped 17 percent to 6,070 won. The bank said it plans to raise more than 2 trillion won ($1.4 billion) from a state-backed recapitalization fund as the nation’s slowing economy pushes bad loans higher. Rival Hana Financial Group Inc. declined 18 percent to 16,700 won. Shinhan Financial Group Ltd. tumbled 14 percent to 22,900 won.

The cost for South Korean banks to borrow dollars in the swap market rose to a record, increasing the burden on banks with as much as $160 billion of external debt maturing over the next two years.

Elpida lost 27 percent to 512 yen after S&P lowered the company to B+ from BB-, citing the continual drain on cash as losses on memory chips erode the company’s financial position. Hynix Semiconductor Inc., the world’s second-largest computer- memory chipmaker, fell 15 percent to 7,880 won in Seoul. The stock was slashed to “underweight” from “neutral” by J.J. Park at JPMorgan on the view that demand for memory won’t recover in the second half of this year, pushing prices lower even as companies cut supply.

Danamon Rallies

PT Bank Danamon Indonesia, backed by Temasek Holdings Pte and Deutsche Bank AG, rallied 19 percent to 2,650 rupiah. The lender plans to raise 4 trillion rupiah ($332 million) selling shares in a rights offer, a move that Macquarie Group Ltd. said will help fuel medium-term growth.

OZ Minerals Ltd., the world’s second-largest zinc mining company, surged 18 percent to 65 cents in Sydney after being suspended since November following a A$2.6 billion ($1.7 billion) takeover bid from China Minmetals Corp.

To contact the reporter responsible for this story: Patrick Rial in Tokyo at prial@bloomberg.net

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Thailand May Urge Banks to Lend Money to GM, Foreign Automakers

By Daniel Ten Kate and Arijit Ghosh

Feb. 21 (Bloomberg) -- Thai Prime Minister Abhisit Vejjajiva said his government may help foreign automakers including General Motors Corp. by nudging commercial banks that are reluctant to lend as a global recession deepens.

“What might be helpful is some kind of credit facilities which would be done through a commercial bank system,” Abhisit said in an interview late yesterday in Jakarta, where he is on a two-day visit. “The government is not in a position to provide” cheap loans, he said.

GM is seeking as much as $16.6 billion in new loans from the U.S. and another $6 billion from Canada, Germany, the U.K., Sweden and Thailand to sustain operations. Earlier this month Thailand recapitalized a state agency that shares credit risk with commercial banks in an effort to spur 100 billion baht ($2.8 billion) in lending to small businesses.

GM’s Thailand unit needs the money to move forward with a 15-billion-baht diesel-engine plant announced last year. The plant and another pickup truck line are “no longer feasible” without government help and are “suspended indefinitely,” the company said on Feb. 18.

“The reason we’ve worked with the government is that commercial banks on their own are pretty cautious these days,” Steve Carlisle, the company’s head of Southeast Asia operations, said in a telephone interview yesterday. “We all need to get together and make a good assessment of what the future holds and what’s the right thing to do in supporting industry.”

Manage Cash

Detroit-based GM has received $13.4 billion in loans since December. Conditions attached to the funds have constrained the company’s ability to manage cash globally as it had done in the past, forcing its foreign units to restructure or seek help from their host governments, GM said in a Feb. 18 filing.

“The discussion is not quite as far along in Thailand as it is in other places,” Carlisle said. “What we are encouraging is demand stimulus on one hand and on the other hand some assistance with loans to fund future product programs.”

The company will make a decision on whether to proceed with its diesel-engine plant by the end of the third quarter, Carlisle said. The factory’s opening has been pushed back to May 2011.

“If we can’t fund it then we’re going to have to look into other alternatives,” Carlisle said.

Thai Unit

GM’s Thai unit cut 790 jobs this year and slashed production by 56 percent to just under 50,000 units. The company may see sales drop “a bit more” than the 15 percent decline estimated for Thailand’s auto industry, Carlisle said.

Thailand’s government plans to meet with automakers to design a rescue package for the industry, Abhisit said. The private sector has proposed excise tax cuts that would reduce vehicle prices by as much as 50,000 baht and help for consumers to access car loans, Carlisle said.

“I don’t think an excise tax reduction is going to have a dramatic impact on demand,” said John Bonnell, director of forecasting for JD Power & Associates’ Asia-Pacific operations. “It may stimulate demand somewhat, but any way we look at it, it will be a tough year.”

Vehicle sales amounted to about 8 percent of Thailand’s exports last year, according to the Finance Ministry. Thailand is the world’s fourth-largest maker of light commercial vehicles.

To contact the reporters on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net; Arijit Ghosh in Jakarta at aghosh@bloomberg.net

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Asian Currencies: Korean Won, Taiwan Dollar Decline on Exports

By Lilian Karunungan

Feb. 21 (Bloomberg) -- Asian currencies had their biggest weekly drop in four months, led by South Korea’s won and Taiwan’s dollar, on concern tumbling exports will drag more local economies into recession.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, slid to its lowest level since Nov. 21. The won declined below 1,500 per dollar for the first time since November and Taiwan’s currency sank to its lowest in more than five years. Reports this week showed Singapore’s exports fell the most in at least 22 years and Taiwan’s economy shrank at the fastest pace on record.

“We have seen some liquidity crunch in the U.S. dollar,” said Tetsuo Yoshikoshi, senior economist at Sumitomo Mitsui Banking Corp. in Singapore. “The economies in this region have been weakening quite sharply. That is the basic reason why Asian currencies are quite weak.”

The won declined 6.8 percent this week to 1,506 per dollar in Seoul, this year’s biggest drop, according to Seoul Money Brokerage Services Ltd. Taiwan’s dollar slid 2.2 percent to NT$34.808, dropping for a second week. It had touched NT$34.850, the lowest level since April 2003.

The Malaysian ringgit fell 2.3 percent for the week to 3.6890, the lowest in more than two years. Citigroup Inc. forecast the currency will slide to 3.8000 by the end of June, the level it was pegged at for about seven years before a fixed exchange rate ended in July 2005.

Exports, GDP

Singapore’s non-oil domestic exports dropped 35 percent from a year earlier in January, while Taiwan’s economy shrank 8.4 percent in the fourth quarter of 2008, official figures show. Both economies, along with Japan, the U.S. and Europe, are in recession. South Korea’s economy, which shrank the most in a decade last quarter, is deteriorating, Finance Minister Yoon Jeung Hyun said Feb. 18.

Thailand and Malaysia will announce data for gross domestic product next week, with economists surveyed by Bloomberg News forecasting a contraction for Thailand and the slowest pace of growth since 2001 for Malaysia. Taiwan and Vietnam will issue data on exports.

Policy makers at the Bank of Thailand also meet next week, with analysts in a separate survey expecting them to cut the benchmark interest rate by 50 basis points to 1.5 percent.

Asia Currency Fund

The won has plunged 16 percent this year, making it the worst performer among the 10 most-traded Asian currencies outside Japan. None of the currencies has gained.

“The won has come under pressure with concerns about dollar funding in Korea and repaying of short-term debt,” said Callum Henderson, head of global currency strategy at Standard Chartered Plc in Singapore. “There’s a significant amount of short-term debt coming due, but compared to the fourth quarter last year, it’ll be less of a problem this time around.”

South Korean banks’ demand for dollars is decreasing as foreign-currency debt maturing every month this year is at least 50 percent lower than in the fourth quarter, the central bank said this week.

Finance ministers from the 10-member Association of Southeast Asian Nations and their three northern neighbors will meet in Thailand tomorrow to expand a pool of foreign-exchange reserves to protect their currencies. Some officials said they will increase the funds by 50 percent to $120 billion to protect their currencies.

Elsewhere, the Indonesian rupiah slid 1.6 percent this week to 11,960, a sixth straight week of losses. The Philippine peso dropped 2.5 percent to 48.30, the biggest weekly decline in more than eight years. The Thai baht fell 1.6 percent, to 35.71. Vietnam’s dong was little changed at 17,482.50 from 17,484.50 last week.

To contact the reporter on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net.

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Asian Stocks Post Biggest Weekly Drop Since October on Economy

By Patrick Rial

Feb. 21 (Bloomberg) -- Asian stocks posted the biggest weekly decline since October as the weakening global economy assailed corporate profits.

Mitsubishi UFJ Financial Group Inc., Japan’s largest listed bank, plunged 9.1 percent after the nation’s economy contracted at the fastest pace since 1974. Woori Finance Holdings Co., controlling South Korea’s second-largest bank, slumped 17 percent after rising bad loans forced it to apply for state funds. Elpida Memory Inc., Japan’s largest memory chipmaker, tumbled 27 percent after Standard & Poor’s slashed the company’s debt rating, citing its liquidity risk.

“There’s no magic potion we can all drink and cure the ills that the global economy has at the moment,” said Tim Schroeder, who helps manage about $2.6 billion at Pengana Capital Ltd. in Melbourne. “The evidence shows any pickup is going to be muted, and that profitability is not going to recover meaningfully for some time.”

The MSCI Asia Pacific Index plunged 7.0 percent this week to 76.03, the steepest slide since the period ending Oct. 24. The gauge has plunged 15 percent in 2009 and is less than 2 percent from a six-year low.

Japan’s Topix Index dropped 3.3 percent as it tumbled to the lowest since January 1984. All of the region’s benchmark equity indexes slumped, except in Pakistan. South Korea led the region’s declines as financial and heavy industry companies sent the Kospi Index to an 11 percent slide.

Falling Estimates

MSCI’s Asian index slumped by a record 43 percent last year as the credit crunch tipped the world’s largest economies into recession, forcing companies to cut jobs amid falling profits. Earnings estimates for companies in the gauge have been slashed 44 percent since the beginning of 2009, bringing them to the lowest level since Bloomberg began compiling the data in 2005.

Mitsubishi UFJ lost 9.1 percent to 429 yen. Pioneer Corp., Japan’s No. 3 audio-visual equipment maker, dropped 25 percent to 106 yen after announcing 10,000 job cuts as the global recession forced the company to exit the television business. Brewer Sapporo Holdings Ltd. retreated 20 percent to 334 yen after Warren Lichtenstein’s Steel Partners gave up a bid to acquire a one-third stake.

The Japanese economy contracted at a 12.7 percent annual rate in the final three months of 2008, the most since the 1974 oil shock, according to figures from the Cabinet Office. A plunge in exports accounted for most of the decline.

South Korean Banks

Woori Finance dropped 17 percent to 6,070 won. The bank said it plans to raise more than 2 trillion won ($1.4 billion) from a state-backed recapitalization fund as the nation’s slowing economy pushes bad loans higher. Rival Hana Financial Group Inc. declined 18 percent to 16,700 won. Shinhan Financial Group Ltd. tumbled 14 percent to 22,900 won.

The cost for South Korean banks to borrow dollars in the swap market rose to a record, increasing the burden on banks with as much as $160 billion of external debt maturing over the next two years.

Elpida lost 27 percent to 512 yen after S&P lowered the company to B+ from BB-, citing the continual drain on cash as losses on memory chips erode the company’s financial position. Hynix Semiconductor Inc., the world’s second-largest computer- memory chipmaker, fell 15 percent to 7,880 won in Seoul. The stock was slashed to “underweight” from “neutral” by J.J. Park at JPMorgan on the view that demand for memory won’t recover in the second half of this year, pushing prices lower even as companies cut supply.

Danamon Rallies

PT Bank Danamon Indonesia, backed by Temasek Holdings Pte and Deutsche Bank AG, rallied 19 percent to 2,650 rupiah. The lender plans to raise 4 trillion rupiah ($332 million) selling shares in a rights offer, a move that Macquarie Group Ltd. said will help fuel medium-term growth.

OZ Minerals Ltd., the world’s second-largest zinc mining company, surged 18 percent to 65 cents in Sydney after being suspended since November following a A$2.6 billion ($1.7 billion) takeover bid from China Minmetals Corp.

To contact the reporter responsible for this story: Patrick Rial in Tokyo at prial@bloomberg.net

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