By Shani Raja - Sep 10, 2011 6:34 AM GMT+0700
Asian stocks fell this week, snapping a fortnight of advance, as exporters dropped on speculation the world’s largest economy is headed toward recession and banks slid amid concern Europe may fail to contain its sovereign debt crisis.
Honda Motor Co., a carmaker with more than 40 percent of its revenue in North America, plunged 6.4 percent in Tokyo after a report showed the U.S. job market stalled in August. BHP Billiton Ltd. (BHP) sank 2.9 percent in Sydney. HSBC Holdings Plc (HSBA), Europe’s largest lender by market value, slumped 3.3 percent in Hong Kong after the cost of insuring against default on European sovereign and financial debt surged to records. Fanuc Corp. (6954) tumbled 15 percent after an industry group said growth in machine-tool orders slowed.
“It’s clear the U.S. economy needed more stimulus as there’s a limit to what monetary policy can do,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “There’s growing concern that the sovereign-debt crisis in the EU is now manifesting into a sharp slowdown in the economy and a banking crisis,”
The MSCI Asia Pacific Index fell 2.7 percent this week to 120.78, snapping a 3.9 percent two-week advance. The gauge tumbled 8.6 percent last month amid escalating concern over Europe’s debt crisis and after Standard & Poor’s downgraded the U.S.’s credit rating. Stocks in the Asian benchmark are valued at about 11.9 times estimated earnings on average, compared with 11.5 times for the S&P 500 and 9.3 times for the Stoxx 600.
Nikkei, Kospi
Japan’s Nikkei 225 (NKY) Stock Average dropped 2.4 percent in a week when the Cabinet Office also said Japan’s economy contracted more than an initial government estimate. Australia’s S&P/ASX 200 Index slipped 1.1 percent after a statistics bureau report showed the nation’s employers unexpectedly cut jobs for a second straight month in August.
South Korea’s Kospi Index (KOSPI) slid 2.9 percent and Hong Kong’s Hang Seng Index (HSI) retreated 1.7 percent. The Shanghai Composite Index slid 1.2 percent this week.
Honda, which counts North America as its biggest market for sales, plunged 6.4 percent to 2,347 yen in Tokyo. Canon Inc. (7751), which earns more than 80 percent of its sales overseas, declined 2.9 percent to 3,490 yen. James Hardie Industries SE (JHX), a building materials supplier that gets almost 70 percent of sales from the U.S., sank 4.2 percent to A$5.78 in Sydney.
A report Sept. 2 showed U.S. payrolls were unchanged in August, the weakest reading since September 2010. The median forecast in a Bloomberg News survey called for an increase of 68,000.
‘Scary Report’
“It was a scary report,” Dan North, chief U.S. economist at Euler Hermes ACI in Owings Mills, Maryland, said in an interview from Singapore with Susan Li on Bloomberg Television on Sept. 5. “When you get to negative job growth, which we’re very close to now, it means you’re already in a recession.”
Stocks fell even as U.S. President Barack Obama outlined a jobs plan that would inject $447 billion into the economy, and Federal Reserve Chairman Ben S. Bernanke said policymakers will discuss ways to boost growth at their next meeting.
Fed officials gather for a two-day meeting on Sept. 20 that was expanded from the one day originally scheduled to “allow a fuller discussion” of the economy and the central bank’s possible policy response.
BHP, Jiangxi
BHP Billiton, the world’s No. 1 mining company and Australia’s biggest oil producer, fell 2.9 percent to A$37.91 in Sydney. Rio Tinto Group, the second-largest miner by sales, slid 1.1 percent to A$71.25. In Hong Kong, Jiangxi Copper Co., China’s No. 1 producer of the metal, slumped 4.6 percent to HK$20.95, while Chinese oil explorer Cnooc Ltd. (883) tumbled 9.3 percent to HK$14.
Belle International Holdings Ltd. (1880), a Chinese retailer of women’s shoes, plunged 10 percent to HK$14.60 in Hong Kong and Tencent Holdings Ltd. (700), a Shenzhen-based Internet company, lost 1.5 percent to HK$184.50.
China’s inflation eased in August from a three-year high, the National Bureau of Statistics said in Beijing on Sept. 9. Still, consumer prices climbed 6.2 percent from a year earlier. A separate report showed industrial output growth in China trailed estimates.
Asian stocks also slipped this week after an election loss for German Chancellor Angela Merkel’s party and reports of a rift between Greece and the International Monetary Fund fueled concern that support for bailing out indebted European nations is waning. Later in the week, European Central Bank President Jean-Claude Trichet said “downside risks” for the region have risen, while resisting calls to lower interest rates.
Financial Stocks
HSBC fell 3.3 percent to HK$64.95 in Hong Kong. Korea Exchange Bank (004940) retreated 4.3 percent to 7,590 won in Seoul. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender by market value, declined 2.9 percent to 332 yen in Tokyo after the cost of insuring against default on European sovereign and financial debt surged to records.
Investors drove yields higher on the bonds of Greece, Portugal, Spain and Italy early in the week on doubts Europe’s leaders will be able to stop the crisis spreading. The yield on the Greek two-year note rose above its price for the first time on Sept. 5, indicating mounting concern the nation will default on the debt.
Lasting Solution
“Volatility is likely to remain high until there’s clarity around Europe’s ability to work out a lasting solution,” said Nader Naeimi, a Sydney-based strategist for AMP Capital Investors Ltd., which manages almost $100 billion. “Right now, it seems policy makers are going in the opposite direction. While the fundamentals in Asia are in better shape than elsewhere, shares here will get caught up in the crossfire.”
Fanuc, Japan’s No. 1 maker of controls used to run machine tools, fell 15 percent to 10,730 yen, after the Japan Machinery Tool Builders’ Association said growth in Japanese orders slowed in August, falling 12.7 percent from July. A separate Cabinet Office report this week said Japanese machinery orders fell 8.2 percent in July after rising 7.7 percent in June.
Komatsu Ltd. (6301), the world’s No. 2 maker of construction equipment and Japan’s largest construction machinery maker, sank 14 percent to 1,797 yen.
Technology Shares
Among stocks that advanced this week, Hynix Semiconductor Inc. (000660), the world’s second-largest maker of computer memory, jumped 4.2 percent to 19,900 won in Seoul, leading some technology stocks higher on speculation chip prices will recover. Samsung Electronics Co. gained 1.4 percent to 780,000 won.
The price of the benchmark DDR3 2-gigabit DRAM has fallen 3 percent this month after falling 14 percent in August, according to data from Taipei-based Dramexchange Technology Inc., operator of Asia’s largest spot market for semiconductors.
“There’s some consensus that the chip market is near its bottom,” Ahn Seong Ho, an analyst at Hanwha Securities Co. who covers technology stocks, said in Seoul.
To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
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