Asian Stocks Fall on Greece Concern; Commonwealth, Hynix Drop

By Shani Raja

Feb. 25 (Bloomberg) -- Asian stocks fell for a second day, led by finance and technology companies, amid speculation Greece’s credit rating will be downgraded, putting the global economic recovery at risk.

Commonwealth Bank of Australia, the nation’s biggest lender, lost 1.5 percent. Toll Holdings Ltd. slumped 18 percent in Sydney after the air-freight and logistics company posted lower profit. Hynix Semiconductor Inc. fell 2.3 percent in Seoul on speculation creditors will sell a stake in the company. Contact Energy Ltd., New Zealand’s biggest publicly traded electricity company, climbed 4.2 percent as investors sought haven from risk.

The MSCI Asia Pacific Index fell 0.7 percent to 116.94 at 7:19 p.m. in Tokyo. Concern that Greece, Spain and Portugal will struggle to curb deficits contributed to the gauge’s 7.8 percent drop from a 17-month high on Jan. 15. Standard & Poor’s said late yesterday it may lower Greece’s credit rating by the end of March. The country may see its sovereign debt rating cut within months, Moody’s Investors Service said in Tokyo today.

“The Greece issue just seems to drag on,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors, which oversees about $90 billion. “When issues like potential defaults come up, you see an escalation of nervousness. Investors are worried things might fall back again.”

Japan’s Nikkei 225 Stock Average dropped 1 percent, while Hong Kong’s Hang Seng Index sank 0.3 percent. South Korea’s Kospi Index and Taiwan’s Taiex declined more than 1.3 percent. Australia’s S&P/ASX 200 Index fell 1.2 percent.

Low Rates

The Shanghai Composite Index rose 1.3 percent after China’s government said it will extend support for the country’s industries amid weak global demand. Qingdao Haier Co., the air- conditioner and refrigerator unit of China’s biggest appliance maker, climbed 2.4 percent.

Futures on the Standard & Poor’s 500 Index lost 0.3 percent. The gauge rose 1 percent yesterday after U.S. Federal Reserve Chairman Ben S. Bernanke said the economy still needs low interest rates.

The MSCI Asia Pacific Index erased an earlier 0.2 percent advance as Greece concerns mounted. S&P cut Greece’s credit rating in December and yesterday flagged another possible downgrade. Greece may see its debt rating lowered within months should it fail to meet the objectives in its fiscal deficit reduction plan, Pierre Cailleteau, managing director of sovereign risk at Moody’s, said in Tokyo today.

Commonwealth Bank sank 1.5 percent to A$53.18. KB Financial Group Inc., owner of South Korea’s largest lender, slumped 4 percent to 48,950 won as the financial regulator said it found some accounting discrepancies at the company’s Kookmin Bank unit. Woori Finance Holdings Co., South Korea’s second-biggest financial company by assets, lost 3.7 percent to 13,000 won.

Safe Haven

“The concern is that the size of the bailout for Greece will be limited,” said Tahnoon Pasha, regional head of equities at MFC Global Investment Management in Hong Kong, which oversees $30 billion. “It’s reinforcing the ongoing process of taking risk off the table.”

Contact Energy Ltd. gained 4.2 percent to NZ$6.14 in Wellington as investors sought stocks less tied to economic growth. Tohoku Electric Power Co. climbed 1.4 percent to 1,933 yen in Tokyo. Manila Electric Co., the Philippines’ largest power retailer, jumped 4.1 percent to 177 pesos.

In Sydney, Toll Holdings plunged 18 percent to A$7.10 after the company reported that first-half net income fell 32 percent. Also in Sydney, Iluka Resources Ltd. dropped 3.5 percent to A$3.62. The world’s biggest zircon producer swung to a full-year loss after a decline in demand cut sales and forced the company to write down the value of deposits and close mines.

Analyst Estimates

Goodman Fielder Ltd., Australia’s largest baker, slumped 4.2 percent to A$1.48. The company said first-half profit rose 25 percent to A$90.3 million ($81 million). Earnings were expected to rise to A$92.4 million, the median estimate of analysts surveyed by Bloomberg.

Hynix lost 2.3 percent to 21,700 won in Seoul. The world’s second-largest computer-memory chipmaker slumped after Yonhap News reported that creditors will sell as much as 13 percent of the company this year.

In Tokyo, Denso Corp. declined 2.8 percent to 2,418 yen after one of the autoparts maker’s units was inspected by the U.S. Federal Bureau of Investigation. The unit in America is cooperating with the investigation, said Bridgette Gollinger, a spokeswoman for the subsidiary.

Low Interest Rates?

The MSCI Asia Pacific Index had risen earlier on Bernanke’s comments that a slack labor market and low inflation will allow the Federal Open Market Committee to keep the benchmark lending rate low “for an extended period.”

The gauge dropped the most in two weeks on Feb. 19 after the Fed raised the discount rate from 0.5 percent to 0.75 percent on Feb. 18, triggering concern stimulus programs are winding down. Companies in the MSCI measure trade at 18 times estimated earnings, compared with 14.2 times for the S&P 500 and 12.4 times for the Dow Jones Stoxx 600 in Europe.

“Bernanke stuck to the script and emphasized the Fed’s commitment to maintaining interest rates at low levels until the economic recovery becomes self-sustaining,” said Tim Schroeders, who helps manage about $1.1 billion of equity investments at Pengana Capital Ltd. in Melbourne.

In Shanghai, Qingdao Haier rose 2.4 percent to 21.91 yuan, leading consumer-related companies higher after China’s State Council, or Cabinet, said it will maintain measures to boost car and home-appliance sales in rural areas.

GD Midea Holding Co., China’s second-biggest publicly traded appliance maker, climbed 3 percent to 21.11 yuan.

“Boosting consumption is the government’s key task this year and that investment theme will persist throughout the year,” said Yan Ji, who helps oversee about $1.2 billion at HSBC Jintrust Fund Management Co. in Shanghai. “Some big-cap stocks are bargains given they will see continuing earnings growth and economic fundamentals are still sound.”

To contact the reporter for this story: Shani Raja in Sydney at sraja4@bloomberg.net.