Asia Stocks Fall as Fed Forgoes More Stimulus on Moderate Growth

By Jonathan Burgos - Dec 14, 2011 10:44 AM GMT+0700

Asian stocks (MXAP) fell for a second day as the Federal Reserve refrained from taking new measures to spur growth and U.S. retail sales rose at the slowest pace in five months, clouding the earnings outlook for Asian exporters.

Samsung Electronics Co., South Korea’s biggest exporter of consumer electronics, declined 1.6 percent in Seoul. Sony Corp., which generates 20 percent of its sales in the U.S., fell 1 percent in Tokyo. Evergrande Real Estate Group Ltd. (3333) sank 3.6 percent in Hong Kong after the homebuilder’s revenue slumped. PT Astra International, Toyota Motor Corp.’s Indonesian distributor lost 1.2 percent as nationwide auto sales dropped.

The MSCI Asia Pacific Index fell 0.6 percent to 113.73 as of 12:20 p.m. in Tokyo, with about three shares falling for every two that rose. The gauge, which has tumbled 16 percent since June 30, extended losses this week after Moody’s Investors Service and Fitch Ratings warned that Europe faces lower credit ratings as it struggles to contain its debt crisis.

“There’s a potential for further downside in this market,” said Lee King Fuei, a Singapore-based fund manager at Schroders Plc, which oversees about $326 billion of assets globally. “The magnitude of this crisis compared to the one in 2008 is bigger as it includes sovereign risks as well. Policy makers have probably exhausted their fiscal and monetary policy options and they are running out of bullets.”

Japan’s Nikkei 225 Stock Average (NKY) lost 0.6 percent, while South Korea’s Kospi Index slipped 0.4 percent. Hong Kong’s Hang Seng Index slipped 0.2 percent, falling for fifth day. Australia’s S&P/ASX 200 index gained 0.1 percent, erasing losses of as much as 0.6 percent.

U.S. Retail

Futures on the Standard & Poor’s 500 Index (SPXL1) added 0.3 percent today. The index dropped 0.9 percent in New York yesterday after the Fed stopped short of offering another round of large-scale asset purchases to boost the economy.

Shares of Asian exporters fell as a report showed U.S. retail sales gained 0.2 percent last month, the slowest pace since June. It was short of the median estimated 0.6 percent gain from economists surveyed by Bloomberg.

Samsung Electronics dropped 1.6 percent to 1.033 million won in Seoul. Sony Corp. (6758) fell 1 percent to 1,372 yen in Tokyo. Honda Motor Co. (7267), a Japanese carmaker that gets about 44 percent of sales from North America, declined 2.4 percent to 2,326 yen.

The Fed said yesterday that the U.S. economy continues to expand even as global growth slows. The Fed reiterated a warning from its two previous meetings that “strains in global financial markets continue to pose significant downside risks to the economic outlook.”

Chinese Developers

Chinese property developers dropped after Evergrande Real Estate reported its home sales plunged 86 percent in November from a month earlier.

Evergrande sank 3.6 percent to HK$2.94 in Hong Kong. China Overseas Land & Investment Ltd. (688), the biggest mainland developer listed in Hong Kong, lost 1.2 percent HK$13.40.

Astra slipped 1.3 percent to 74,000 rupiah in Jakarta as a report from the Indonesian automotive industry association showed domestic vehicle sales declined 22 percent in November from a month earlier. Jardine Cycle & Carriage Ltd. (JCNC), which holds a 50 percent stake in Astra, fell 1.2 percent to S$48.72 in Singapore.

The MSCI Asia Pacific Index declined 17 percent this year through yesterday, compared with a 2.5 percent drop by the S&P 500 and a 14 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.7 times estimated earnings on average, compared with 12.4 times for the S&P 500 and 10.3 times for the Stoxx 600.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net.

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