Asian Stocks Drop as U.S. Home Prices Slip

By Yoshiaki Nohara - Dec 28, 2011 1:24 PM GMT+0700
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Employees work at the trading floor of the Tokyo Stock Exchange. Photographer: Tomohiro Ohsumi/Bloomberg

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Dec. 27 (Bloomberg) -- Tobias Levkovich, Citigroup Inc.’s chief U.S. equity strategist, and Vassili Serebriakov, a currency strategist at Wells Fargo & Co., talk about the outlook for U.S. stocks, the yuan and euro, and European Central Bank and Federal Reserve policy. They speak with Adam Johnson and Deirdre Bolton on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Asian stocks fell for a second day amid slow trading, with the regional benchmark index headed for the worst year since 2008, after a report showed U.S. housing prices fell, damping the earnings outlook for Asia’s exporters.

Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, dropped 2.4 percent. SK Telecom Co. paced declines among South Korean companies that went ex-dividend today. China Mengniu Dairy Co. plunged 23 percent after saying moldy feed given to cows led to excessive levels of a toxin in its milk. Tokyo Electric Power Co. (9501) fell 12 percent after Japan’s trade minister said the utility should consider temporary government control.

The MSCI Asia Pacific Index declined 0.7 percent to 112.81 as of 3:09 p.m. in Tokyo, with all but one of the gauge’s 10 industry groups falling. The measure has declined about 18 percent this year, the most since 2008.

“The U.S. housing market has yet to get on a firm recovery path because we don’t know if prices will actually come back,” said Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset Management Co., which oversees about $29.6 billion. “Market participants are in vacation mode and aren’t doing much.”

Futures on the Standard & Poor’s 500 Index (SPXL1) slipped 0.3 percent today. The gauge was little changed yesterday in New York as better-than-estimated U.S. consumer confidence overshadowed a decline in home prices and concern about Europe’s debt crisis.

‘No Incentive’

Japan’s Nikkei 225 Stock Average fell 0.2 percent after a report showed factory output fell 2.6 percent in November as Thailand’s floods disrupted supply chains at manufacturers such as Sony and Honda Motor Co. Trading volume on the Nikkei was 43 percent below the 100-day average.

“There’s no incentive for investors to move their positions at the end of year,” said Hisakazu Amano, who helps oversee the equivalent of $29 billion at Tokyo-based T&D Asset Management Co. “The bottleneck is U.S. housing data. Corporate earnings are recovering and consumer confidence was good.”

South Korea’s Kospi Index lost 0.9 percent. Yesterday was the last day to buy shares and still get a year-end dividend in 15 percent of the companies included in the 785-member gauge.

Australia’s S&P/ASX 200 lost 1.3 percent, while Hong Kong’s Hang Seng Index slid 0.9 percent. Markets in Australia and Hong Kong reopened today after a four-day weekend.

Exporters dropped after the S&P/Case-Shiller index of property values in 20 U.S. cities dropped 3.4 percent in the year ended October after decreasing 3.5 percent in the year ended September, the New York-based group said yesterday.

Sony fell 2.4 percent to 1,354 yen, and Canon Inc. (7751), the world’s biggest camera maker, slid 1.6 percent to 3,415 yen.

Going Ex-dividend

SK Telecom led declines among firms that have the highest dividend yields among South Korea’s 50 largest publicly traded companies, according to data compiled by Bloomberg. SK Telecom retreated 6.3 percent to 141,500 won. Rival KT Corp. (030200) slipped 4.8 percent to 35,850 won. Korea Exchange Bank (004940) fell 5.1 percent to 7,450 won.

China Mengniu Dairy plunged 23 percent to HK$20.25, the biggest intraday loss since September 2008. In a random inspection of milk products, the level of a toxin in one batch of the firm’s milk was more than double the nation’s permitted level, an unidentified official at the General Administration of Quality Supervision, Inspection and Quarantine said in an interview with the official Xinhua News Agency.

Tokyo Electric Plunges

Stocks (MXAP) in the Asian benchmark are valued at 12.6 times estimated earnings on average, compared with 12.8 times for the S&P 500 and 10.5 times for the Stoxx 600. Utilities have lost 27 percent this year, the worst among the 10 industry groups on the Asian benchmark gauge, as Japanese power generators tumbled after a nuclear crisis at Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant.

Tepco, as the utility is known, slumped 12 percent to 186 yen today. The company needs to consider all options related to its survival, including the government taking temporary control of the utility, trade minister Yukio Edano told the company president Toshio Nishizawa in Tokyo yesterday.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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