Asian Stocks Decline, Led by Japanese Shares

By Lynn Thomasson - Sep 26, 2011 8:43 AM GMT+0700

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Sept. 26 (Bloomberg) -- Nicholas Smith, a Japan strategist at CLSA Asia-Pacific Markets Ltd., talks about the nation's financial markets and economy. Smith speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

Asian stocks fell, sending the MSCI Asia Pacific Index to the lowest since June 2010, as Europe’s failure to tame the region’s sovereign-debt crisis threatens global economic growth.

Fanuc Corp., a producer of industrial robots, dropped 2.8 percent and trading company Mitsubishi Corp. lost more than 6.5 percent, dragging MSCI’s Asia equity benchmark to a third day of losses. Hanjin Shipping Co., South Korea’s largest shipping line, fell by the daily limit of 15 percent after saying it will sell new shares. Nippon Electric Glass Co., a maker of glass for electronic displays, sank 11 percent after cutting its profit forecast.

The MSCI Asia Pacific Index dropped 1.3 percent to 110.23 at 10:29 a.m. in Tokyo, with more than two stocks retreating for each that rose. The measure entered a so-called bear market last week after falling more than 20 percent from a May 2 high.

“There’s concern that the European debt crisis will spread,” said Takashi Hiroki, chief strategist at Monex Securities in Tokyo. “Stocks are falling as we get more concerned about a deceleration of the global economy. A sell-off in shares sensitive to the economy, such as commodity-related stocks, are a reflection of investors’ fears.”

Japan’s Nikkei 225 Stock Average tumbled 1.8 percent after being closed on Friday, when the MSCI Asia Pacific excluding Japan Index dropped 2 percent. The Nikkei is set for the lowest close since April 2009. South Korea’s Kospi Index (KOSPI) retreated 3.1 percent and Hong Kong’s Hang Seng Index swing between gains and losses after falling 9.2 percent last week.

Pimco Stagnation Forecast

European policy makers are facing mounting pressure to step up efforts to prevent their sovereign debt crisis from further roiling the world’s financial markets and economy. Pacific Investment Management Co., which runs the world’s biggest bond fund, is forecasting advanced economies to stall over the next year with Europe sliding into recession.

U.S. Treasury Secretary Timothy F. Geithner warned at the annual meeting of the International Monetary Fund in Washington that failure to combat the Greek-led turmoil threatened “cascading default, bank runs and catastrophic risk.” Billionaire investor George Soros said “something needs to be done” to safeguard Europe’s banks because Greece may be unable to avoid default.

The MSCI Asia Pacific Index lost 7.1 percent last week, the most in almost three years. The MSCI All-Country World Index of shares in emerging and developed economies dropped 7.8 percent through the week, entering a bear market for the first time in two years.

Fanuc fell 2.8 percent to 10,530 yen. Mitsubishi Corp. retreated 6.8 percent to 1,584 yen. Hanjin Shipping dropped 15 percent to 11,650 won. Nippon Electric Glass declined 11 percent to 669 yen.

To contact the reporter on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net