Asian Stocks Fall for Fourth Week as Global Recession Deepens

By Jonathan Burgos

March 7 (Bloomberg) -- Asian stocks fell for a fourth week, led by finance companies and automakers, amid mounting concerns that losses from the financial crisis will increase.

HSBC Holdings Plc, Europe’s largest bank, slumped 24 percent, the most since Oct. 24, after announcing a $17.7 billion stock sale. Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, tumbled 12 percent as Citigroup Inc.’s stock fell below $1 for the first time. Honda Motor Co., which makes half of its revenue in North America, sank 10 percent after U.S. auto sales tumbled.

“People haven’t yet understood the full depth of the financial crisis,” said Yoshinori Nagano, a senior strategist at Daiwa Asset Management Co., which oversees about $96 billion of assets. “Should regulators assess banks’ assets under stricter conditions, quite a few of these companies may be effectively insolvent.”

The MSCI Asia Pacific Index lost 4.3 percent to 71.95 in the past five days. The four-week drop is the longest series of declines since October. The gauge, which has slumped 19 percent this year, on March 3 fell to its lowest level since August 2003.

The Nikkei 225 Stock Average fell 5.2 percent this week, while Australia’s S&P/ASX 200 Index dropped 6 percent. Hong Kong’s Hang Seng index slumped 7 percent.

AMP Ltd., Australia’s biggest pension-plan provider, tumbled 21 percent this week as it sought to raise funds. Manila Electric Co. climbed 40 percent on speculation its major shareholders are vying for control of the utility. Elpida Memory Inc., Japan’s biggest memory-chip maker, dropped 8 percent on concern a possible rescue plan for the company may be delayed.

Government Support

Governments from China to the U.S. and Australia have sought to introduce policies this year to ease the financial crisis and revive growth. Central banks in India and the Philippines cut rates this week.

China’s Shanghai Composite Index gained 5.3 percent as Premier Wen Jiabao said the country’s economic growth target of 8 percent for this year is within reach. He pledged to increase spending to bolster the world’s third-largest economy.

“The global recession demands rapid responses,” said Hiroshi Morikawa, a strategist at Tokyo-based MU Investments Co., which manages about $14 billion. “China is one of the few spots in the world where we can see signs of recovery.”

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 by 48 percent since the beginning of 2009, data compiled by Bloomberg shows.

Fund Raising

HSBC slumped 24 percent to HK$43.50, the lowest since September 1996. The company fell the most in 20 years on March 3 after announcing a $17.7 billion share sale to strengthen its balance sheet after earnings last year tumbled.

Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, dropped 12 percent to 401 yen as bank of Japan Deputy Governor Hirohide Yamaguchi said the central bank may need to expand its purchases of corporate debt to prevent a credit shortage as the recession deepens.

Shares of Citigroup, once the world’s biggest bank by value, tumbled to as low as 97 cents in the week in New York trading amid concern the shares can recover after more than $37.5 billion in losses and a government rescue.

“Citi below $1 shows we are still far from the exit of this U.S.-originated global financial crisis,” Kiyoshi Ishigane, a senior strategist at Tokyo-based Mitsubishi UFJ Asset Management Co., which oversees about $61 billion., said in an interview with Bloomberg Television.

Bright Spots

Honda Motor dropped 10 percent to 2,150 yen after its U.S. sales fell 38 percent last month. Toyota Motor Corp., the world’s largest automaker, slumped 8.8 percent to 2,900 yen. The company, facing the first loss in 59 years, suffered a record 40 percent drop in sales last month to the U.S., its biggest market.

AMP tumbled 21 percent to A$3.83, the lowest since August 2003. The company said on March 3 it’s seeking to raise A$300 million ($192 million) through a notes offer.

Manila Electric Co. climbed 40 percent 126 pesos. San Miguel Corp. Vice Chairman Ramon Ang said this week his company hasn’t added to the stake it agreed to buy last year. San Miguel said it would purchase 27 percent of the utility in October and took four seats on its board in January.

Elpida Memory Inc., Japan’s biggest memory-chip maker, slumped 8 percent to 544 yen after the Nikkei newspaper said a possible rescue package involving Taiwan’s government may be arranged later than the company projected.

Elpida had hoped to gain a package with Taiwan’s government by the end of March, the Nikkei reported today.

To contact the reporter for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net;

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Kamath Expects Indian Economy to Grow at 7% This Fiscal Year

By Douglas Wong

March 7 (Bloomberg) -- India’s economy may grow at 7 percent this financial year and the next, said K.V. Kamath, chief executive officer of ICICI Bank Ltd., the nation’s second- largest lender.

Kamath based his estimate on expectations by members of the Confederation of Indian Industry earlier this month that the January-March quarter would produce faster expansion than the preceding three-month period, he said in Mumbai last night.

India’s growth is slowing amid the global recession as export markets dry up, making it harder to meet the government estimate of 7.1 percent for the year to March 31, following the slowest expansion in five years in the third quarter.

Asia’s third-largest economy will start showing signs of recovery from October as the government “sharply steps up” spending and stimulus packages begin to help improve domestic demand, Home Minister Palaniappan Chidambaram, the country’s finance minister until November, said yesterday in Mumbai.

India will return to 7 percent growth in the second half of 2009, Chidambaram said.

The nation’s economy will need to grow between 7.6 percent to 7.7 percent in the quarter to March 31 to reach 7.1 percent for the fiscal year, which looks like a “stiff” target, Chidambaram said.

India’s central bank cut interest rates for the fifth time since October on March 4. The Reserve Bank of India reduced the benchmark repurchase rate to a record low of 5 percent from 5.5 percent and the reverse repurchase rate to 3.5 percent from 4 percent.

Interest Rates

Reserve Bank Governor Duvvuri Subbarao is lowering policy rates to revive investment and spur consumption. The $1.2 trillion economy is slowing as exports decline and access to funds for companies from overseas and the stock market is cut off by the global recession.

Kamath’s ICICI Bank said yesterday that it was reducing rates on new home loans by as much as 50 basis points. Rates on loans of more than 3 million rupees ($58,120) were cut to 11.5 percent from 12 percent, the bank said. A basis point is 0.01 percentage point.

The ICICI Bank CEO is currently president of the Confederation of Indian Industry, a lobby group, according to the organization’s Web site.

To contact the reporter on this story: Douglas Wong in Mumbai at dwong19@bloomberg.net.

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Trading Slump Signals More S&P 500 Losses: Technical Analysis

By Elizabeth Stanton

March 6 (Bloomberg) -- Stock trading during yesterday’s 4.3 plunge in the Standard & Poor’s 500 Index was 21 percent below the level on Nov. 20, when the index sank to an 11-year low, a sign to some analysts that the worst isn’t over.

“There’s just no sign of a bottom,” said John Murphy, chief technical analyst at StockCharts.com in Oradell, New Jersey. Technical analysis, Murphy’s field since 1968, involves mining price and volume data to make forecasts.

As the S&P 500 fell to 682.55 yesterday, its lowest close since September 1996, volume on U.S. exchanges totaled 12.6 billion shares. That’s 36 percent less than on Oct. 10, last year’s busiest day, when the stock index completed an 18 percent drop that was the steepest weekly decline in 75 years. New York Stock Exchange volume totaled 1.88 billion shares yesterday, 37 percent below its 2008 peak.

About 16.1 billion shares traded on Nov. 20, when the S&P 500 dropped 6.7 percent to 752.44, the lowest level since April 1997.

The S&P 500 tumbled 56 percent and the Dow Jones Industrial Average fell 53 percent to 6,594.44 from their October 2007 records. They may retreat to 660 and 6,000, respectively, Murphy said. Some previous sell-offs have ended with a surge in volume, he added.

“People just get so disgusted that they throw in the towel and you get a sharp down day on big volume,” he said. “We haven’t seen that.”

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.

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AnnTaylor, Ciena, Harley-Davidson, Insulet: U.S. Equity Movers

By Lu Wang

March 6 (Bloomberg) -- Shares of the following companies are having unusual moves in U.S. trading. Stock symbols are in parentheses, and prices are as of 10 a.m. in New York.

AnnTaylor Stores Corp. (ANN US) fell the most in the Russell 1000 Index, sliding 19 percent to $4.51. The U.S. retailer of women’s business attire reported a wider fourth-quarter loss and said it drew down $125 million under its $250 million revolving credit facility yesterday.

ArcSight Inc. (ARST US) climbed 27 percent to $11.20 and earlier jumped to $11.49, the highest intraday price since Aug. 12. The developer of computer security software said profit excluding some items will be at least 41 cents a share during the fiscal year ending in April, or 41 percent more than the average analyst estimate.

FairPoint Communications Inc. (FRP US) fell 25 percent to $1.20, and slid 39 percent earlier, the most intraday since February 2005. The owner of telephone lines in New England suspended its dividend after reporting a fourth-quarter loss of 85 cents a share.

Ciena Corp. (CIEN US) rose 6.9 percent to $6.34 and earlier advanced to $6.38, the highest intraday price since Feb. 13. The maker of network equipment reduced operating expense was boosted to “neutral” from “underperform” by Credit Suisse Group AG.

Fuel Systems Solutions Inc. (FSYS US) plunged 26 percent to $14.20, and dropped 30 percent earlier, the most intraday since Sept. 29. The company whose devices allow internal-combustion engines to run on alternative fuels reported profit excluding some items of 31 cents a share, missing the average analyst estimate by 28 percent.

General Motors Corp. (GM US) declined 7 percent to $1.73 for the biggest loss in the Dow Jones Industrial Average. The automaker said it may lose more than $1 billion separating from its Swedish Saab Automobile unit, which filed for protection from creditors last month.

Harley-Davidson Inc. (HOG US) rose 5.5 percent to $8.65 and earlier climbed 12 percent, the most intraday since Feb. 3. The biggest U.S. motorcycle maker said it expects to meet 2009 earnings forecast after retail sales of motorcycles fell 13 percent in the first two months of the year.

H&R Block Inc. (HRB US) rose 7.6 percent to $18.63 and earlier jumped 12 percent, the most intraday since Oct. 28. The biggest U.S. tax preparer reported third-quarter earnings per share from continuing operations of 20 cents, double the average analyst estimate.

Insulet Corp. (PODD US) fell the most in Russell 2000 Index, slumping 31 percent to $3.51. The maker of a device to give insulin to diabetic patients forecast sales of $65 million at most this year, missing the average analyst estimate of $74.4 million.

Macy’s Inc. (M US) surged 9.4 percent to $7.20 and earlier gained 13 percent, the most intraday since Feb. 24. The second- biggest U.S. department-store chain was raised to “buy” from “neutral” at Goldman Sachs Group Inc. and added to the brokerage’s “conviction buy” list on reduced concern about its balance sheet.

Marvell Technology Group Ltd. (MRVL US) rose 8.2 percent to $8.14 and advanced earlier to $8.30, the highest intraday price since Feb. 9. The maker of chips for mobile phones reported earnings excluding some items of 5 cents a share, more than double the average analyst estimate.

Northeast Utilities (NU US) rose 3.6 percent to $20.39 and gained 4.4 percent earlier, the most intraday since Jan. 26. The utility owner in New England was picked to replace Tyco International Ltd. (TYC US) in the Standard & Poor’s 500 Index.

Quest Diagnostics Inc. (DGX US) fell 3 percent to $43.68 and earlier slipped to $42.36, the lowest intraday price since Nov. 21. The world’s largest provider of medical diagnostic tests was added to Goldman Sachs Group Inc.’s “Americas Conviction Sell List.” The brokerage said the shares are expensive and there are risks to 2009 revenue growth.

Wells Fargo & Co. (WFC US) rose 11 percent to $9.01 and earlier added 17 percent, the most intraday since Feb. 24. The fourth-largest U.S. bank cut its quarterly dividend by 85 percent to 5 cents a share in a move to save an additional $5 billion a year and said January and February results were “strong.”

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net

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U.S. Stocks Pare Gain as Technology Slump Offsets Jobs Report

By Cristina Alesci and Lynn Thomasson

March 6 (Bloomberg) -- U.S. stocks pared their advance as JPMorgan Chase & Co. cut estimates for Apple Inc., offsetting gains following government data showing the rate of American job losses slowed in February.

Apple fell 4 percent, leading technology companies to the steepest decline in the Standard & Poor’s 500 Index, as JPMorgan said the deepening recession is hurting profit at the iPhone maker. Wells Fargo & Co. gained 12 percent after cutting its dividend to save cash and saying business was “strong” in January and February.

The Standard & Poor’s 500 Index rose 0.5 percent to 685.95 at 10:29 a.m. in New York after rallying 2.4 percent earlier. The Dow Jones Industrial Average gained 43.57 points, or 0.7 percent, to 6,638.01.

The S&P 500 is headed for its fourth straight weekly decline as the worsening recession, a third government rescue for Citigroup Inc. and dividend cuts at companies from General Electric Co. to JPMorgan Chase & Co. helped drag the measure down 24 percent this year. The index has fallen 6.7 percent this week.

Wells Fargo jumped 11 percent to $9. The bank that bought Wachovia Corp. said the dividend cut will help it pay back the government and better absorb losses should the credit crisis worsen.

“That’s definitely affecting the market because the bank is basically saying that it won’t need more funding,” said Tom Wirth, senior investment officer at Chemung Canal Trust Co., which manages $1.5 billion in Elmira, New York.

General Electric Co. and Bank of America Corp. added more than 3.5 percent as the government said American employers eliminated 651,000 jobs in February, down from a revised 655,000 in January and compared with the median economist estimate of 650,000.

“Maybe we’re starting to get to where we’re at the high point of unemployment, and maybe we plateau from here,” said Jason Cooper, who helps manage $3 billion at 1st Source Investment Advisors in South Bend, Indiana. “We’ll probably have a good day today because you didn’t see any huge surprises.”

GE, which plunged to a 16-year low yesterday, added 5.1 percent to $7. Bank of America climbed 3.5 percent to $3.28. The lender has still tumbled more than 75 percent in 2009.

Energy stocks rose on higher oil prices as the U.S. dollar weakened against the euro, bolstering the appeal of commodities as an alternative investment. Crude oil for April delivery gained 3.1 percent to $44.97 a barrel in New York.

Chevron Corp. gained 3.7 percent to $58.53. Hess Corp. advanced 4 percent to $54.84. ConocoPhillips rose 2.7 percent to $36.34. Exxon Mobil Corp. added 2.6 percent to $63.81.

The jobless rate surged to 8.1 percent, more than forecast and the highest since December 1983, the Labor Department said today in Washington.

“Maybe it’s a relief and people saying it could have been a lot worst,” said Gary Shilling, an economist at A. Gary Shilling & Co. in Springfield, New Jersey, who predicted the recession that began in December 2007. He remains concerned that the economy is worsening and job losses will increase.

“Higher unemployment means the economy is more likely to drag on consumer spending, which feeds on itself and leads to weaker stocks, which also weighs on consumer sentiment,” Shilling added.

At yesterday’s close, more than $1.6 trillion has been erased from U.S. equities since Jan. 20 as mounting bank losses and rising unemployment convinced investors the recession is getting worse. The Dow average has fallen 20 percent since Inauguration Day, the fastest drop under a new president in at least 90 years, as investors speculated Barack Obama’s stimulus measures won’t revive the economy anytime soon.

H&R Block Inc. rose 6 percent to $18.36. The biggest U.S. tax preparer reported third-quarter earnings from continuing operations of 20 cents a share, double the average analyst estimate.

To contact the reporters on this story: Cristina Alesci in New York at calesci2@bloomberg.net; Lynn Thomasson in New York at lthomasson@bloomberg.net.

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