By Kana Nishizawa and Norie Kuboyama - Dec 8, 2011 10:35 AM GMT+0700
Dec. 8 (Bloomberg) -- Robert P. Browne, chief investment officer at Northern Trust Corp., talks about the European debt crisis, global stock markets and his investment strategy. Browne speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Dec. 8 (Bloomberg) -- Wilfred Sit, Asia chief investment officer for Baring Asset Management, talks about the outlook for Asian financial markets in 2012 and his investment strategy. Sit speaks in Hong Kong with Susan Li on Bloomberg Television's "First Up" .(Source: Bloomberg)
Asian stocks (MXAPJ) dropped ahead of a European summit on the region’s sovereign debt crisis, and after economic data from Japan and Australia signaled the global economy is slowing.
Tokyo Electric Power Co., the operator of the power plant at the center of the biggest nuclear disaster in 25 years, sank 8 percent after the Mainichi newspaper reported it may be effectively nationalized. Hitachi Construction Machinery Co., a Japanese construction machinery maker, declined 1.6 percent. LG Electronics Inc. (066570), a home appliances maker that gets more than a fifth of its revenue from Europe, fell 3.3 percent in Seoul.
City Developments Ltd. (CIT), Singapore’s second-biggest real- estate company by market value, led declines among the city’s property developers after the government imposed additional taxes on purchases of private residential property.
“As the European meetings get closer investors have turned cautious,” said Masaru Hamasaki, who helps oversee the equivalent of $24 billion as chief strategist at Toyota Asset Management Co. in Tokyo. “There’s been a switch from a feeling that we were going to get some visibility on the situation to a cooler stance, where people are in a wait-and-see mood.”
The MSCI Asia Pacific Index (MXAP) slid 0.9 percent to 117.18 as of 12:21 p.m. in Tokyo. All 10 industry groups on the measure dropped, with more than three stocks falling for each that rose.
Japan’s Nikkei 225 Stock Average (NKY) retreated 1.1 percent after machinery orders fell 6.9 percent in October from September, missing the median forecast of a 0.5 percent gain by 27 economists surveyed by Bloomberg News.
Australia’s S&P/ASX 200 index fell 0.3 percent as the nation’s employers cut 6,300 workers in November from the previous month, missing the 10,000 extra jobs forecast in a Bloomberg survey of 22 economists.
New Zealand’s NZX 50 Index dropped 0.5 percent after the central bank left interest rates at a record low of 2.5 percent today and cut its economic growth predictions. South Korea’s Kospi Index (KOSPI) declined 0.5 percent as the central bank refrained from raising borrowing costs for a sixth straight month amid a global slowdown. Hong Kong’s Hang Seng Index fell 0.8 percent, while Singapore’s Straits Times Index lost 1.6 percent.
The MSCI Asia Pacific Index declined 14 percent this year through yesterday, compared with a gain of 0.3 percent by the Standard & Poor’s 500 and a 12 percent slump by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.9 times estimated earnings on average, compared with 12.7 times for the S&P 500 and 10.6 times for the Stoxx 600.
Pressure Intensifies
LG Electronics fell 3.3 percent to 72,500 won in Seoul, while Hutchison Whampoa Ltd. (13), an owner of ports in Germany, Italy and Spain, retreated 0.9 percent to HK$67.65 in Hong Kong.
Pressure on Europe’s leaders to halt the spread of the region’s debt crisis at a summit in Brussels this week intensified as the European Union had its AAA long-term rating put on “creditwatch negative” by S&P following a similar action on 15 euro-area governments.
German Chancellor Angela Merkel and French President Nicolas Sarkozy are expected to argue for rewriting European Union treaties to tighten control of national budgets at the meeting of euro zone leaders tonight and tomorrow.
“Investors can’t buy or sell until they see the results of the European meetings,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “Stocks have been rising on expectations the European Union and the European Central Bank may take some action, but now investors need to see whether the results meet or beat expectations.”
Hitachi Construction declined 1.6 percent to 1,367 yen in Tokyo, while Fanuc Corp. (6954), a maker of industrial robots, slid 0.8 percent to 12,990 yen.
Tepco Action
Tokyo Electric Power, known as Tepco, dropped 8 percent to 253 yen after the Mainichi newspaper said the government’s Nuclear Damage Liability Facilitation Fund may buy preferred shares worth at least 1 trillion yen ($12.9 billion) from the utility by next summer, without saying where the information came from. Most of Tokyo Electric’s management will be replaced, the report said.
City Developments sank 7.1 percent to S$9.31 in Singapore, the second-biggest drop in the MSCI Asia Pacific Index after Tepco. CapitaLand Ltd. (CAPL), an operator in residential and commercial properties, dropped 6.9 percent to S$2.43. Keppel Land Ltd., the real-estate unit of Keppel Corp., retreated 6.8 percent to S$2.45.
Singapore developers declined after the government required foreigners and corporate entities to pay an additional 10 percent stamp duty when they buy homes in the city. Permanent residents purchasing a second home as well as citizens buying their third residential property also need to pay an additional tax of 3 percent, the government said in a statement yesterday.
To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net; Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
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