By Shani Raja and Kana Nishizawa
Jan. 26 (Bloomberg) -- Asian stocks fell for a seventh day, the longest losing streak in two years, on mounting concern China will step up measures to slow its economic growth and as companies forecast declining profits.
Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. retreated more than 3 percent in Hong Kong as Chinese lenders began restricting new loans. KDDI Corp., Asia’s fourth- biggest wireless-network operator, sank 8.6 percent in Tokyo after cutting its profit forecast and agreeing to buy a stake in a cable-television company. Foxconn International Holdings Ltd. slumped 8.7 percent in Hong Kong after saying it expects a “significant” drop in earnings.
The MSCI Asia Pacific Index fell 2 percent to 119.17 as of 5:53 p.m. in Tokyo, erasing this year’s gain. The gauge sank 6 percent in the past seven days as U.S. President Barack Obama proposed measures to limit risk taking at banks and concern grew that China will rein in growth.
“The market is having trouble rebounding from its slump because of all the uncertainties,” said Koji Toda, chief fund manager at Resona Bank Ltd., which oversees about $55 billion in assets. “People are still worried, and yet clinging to the hope that policy support will continue to support global recovery.”
The seven days of losses for the MSCI Asia Pacific Index mark its longest retreat since December 2007. All 10 of its industry groups dropped, led by technology-related companies. All major markets in the Asia-Pacific region fell more than 1.5 percent.
Credit Rating Downgrade
Japan’s Nikkei 225 Stock Average dropped 1.8 percent. Standard & Poor’s lowered its outlook for the country’s credit rating after trading closed. The company cited diminishing “flexibility” to cope with swelling debt and the lack of a plan to rein in budget deficits.
Hong Kong’s Hang Seng Index sank 2.4 percent, extending its slump from a 16-month high on Nov. 16 to 12 percent. The Shanghai Composite Index slumped 2.4 percent. Taiwan’s Taiex Index fell 3.5 percent, dropping for a seventh day, the longest losing streak since August 2005. Australia was closed for a holiday.
Futures on the U.S. Standard & Poor’s 500 Index fell 0.6 percent. The gauge advanced 0.5 percent yesterday in New York amid signs Ben S. Bernanke will be reconfirmed as Federal Reserve chairman.
Concerns about tighter monetary policy in China have dragged the MSCI World Index down for the past five days. Goldman Sachs Group Inc. downgraded Chinese banks today.
International & Commercial Bank of China, the world’s largest bank by market value, retreated 3.4 percent to HK$5.61. Bank of China sank 3.4 percent to HK$3.68, while China Construction Bank Corp. lost 2.9 percent to HK$5.95.
Monetary Tightening
Bank of China has stopped extending new corporate loans in the Shanghai area, said a person familiar with the matter who declined to be identified. China Construction Bank’s branch in the city has been told to screen applications for personal loans and mortgages more carefully and to stop new lending once a monthly quota is met, another person said.
China is starting to take steps to cool the economy, which grew in the fourth quarter at the fastest pace since 2007. Gross domestic product expanded 10.7 percent while consumer prices rose a higher-than-estimated 1.9 percent in December from a year earlier, according to government data on Jan. 21.
“The correction is likely to carry on,” said Zhang Xiuqi, a Shanghai-based strategist at China International Fund Management Co., which oversees about $10.2 billion. “Investors have begun to revaluate their previous projections for earnings growth as the government’s tightening has come faster than expected.”
Shipping Stocks Fall
Mitsui O.S.K. Lines Ltd., the operator of the world’s biggest merchant fleet, lost 4 percent to 576 yen. Korea Line Corp. slid 4.4 percent to 43,000 won in Seoul, while STX Pan Ocean Co. lost 5.2 percent to S$14.74 in Singapore.
“Shipping will slow if China’s growth falters,” said Goya Nakao, senior investment manager at Sompo Japan Asset Management Co., which oversees more than $11 billion in Tokyo.
In Tokyo, KDDI slumped 8.6 percent to 482,500 yen. The company cut its full-year profit forecast to 225 billion yen ($2.5 billion) from 255 billion yen projected in October. KDDI also agreed to buy Liberty Global Inc.’s 38 percent stake in Jupiter Telecommunications Co. for $4 billion. Jupiter fell 6.6 percent to 90,600 yen.
“Without a sufficient explanation from KDDI it is difficult to evaluate the purchase amount,” Shinji Moriyuki, an analyst at Mitsubishi UFJ Financial Group Inc. in Tokyo, wrote in a report yesterday. Nippon Telegraph & Telephone Corp., Japan’s largest fixed-line phone operator, dropped 2.2 percent to 3,865 yen.
Lower Profit
Foxconn, the world’s biggest contract maker of mobile phones, slumped 8.7 percent to HK$8.08, the steepest drop on the Hang Seng Index. The company forecast a “significant” decline in profit for 2009, even as the second half showed “encouraging improvements.”
ASM Pacific Technology Ltd. tumbled 9.9 percent to HK$64 in Hong Kong, the second-biggest decline on the MSCI Asia Pacific Index. Goldman Sachs cut the world’s biggest maker of semiconductor-wiring machines to “sell” from “neutral.”
To contact the reporter for this story: Shani Raja in Sydney at sraja4@bloomberg.net; Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net.
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