By Jonathan Burgos and Kana Nishizawa - Dec 13, 2011 10:22 AM GMT+0700
Dec. 13 (Bloomberg) -- Nick Sargen, chief investment officer at Cincinnati-based Fort Washington Investment Advisors, talks about the European debt crisis and his investment strategy in the U.S. markets. Sargen speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Asian stocks declined, with the regional gauge heading for its lowest close in two weeks, after Fitch Ratings joined Moody’s Investors Service in warning that Europe faces lower credit ratings.
Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest lender by market value, fell 2.6 percent in Tokyo as the cost of insuring European debt rose toward a record. Advantest Corp. (6857) and other chip-related shares slid after bellwether Intel Corp. cut its sales forecast. BHP Billiton Ltd. (BHP), the world’s biggest mining company and Australia’s No. 1 oil producer, lost 2.4 percent after oil and metal prices fell.
“Asset prices, consumer sentiment and business conditions are all very dependent at the moment on a positive outcome from the euro situation,” said Angus Gluskie, who oversees about $300 million at White Funds Management in Sydney. “The euro nations are purely assuming an austerity agenda and they’re failing to consider the equally important aspect, which is to stimulate and encourage economic growth,”
The MSCI Asia Pacific Index fell 1.3 percent to 114.09 as of 11:51 a.m. in Tokyo, heading for its lowest close since Nov. 30. More than five shares fell for each that rose in the measure. The gauge dropped 2.2 percent last week after Standard & Poor’s said it may cut credit ratings for Germany, France and 13 other euro-area countries.
Japan’s Nikkei 225 Stock Average (NKY) decreased 1.4 percent, while South Korea’s Kospi Index fell 1.7 percent. Australia’s S&P/ASX 200 index dropped 1.5 percent. Hong Kong’s Hang Seng Index slipped 1.2 percent. The Shanghai Composite Index lost 1.1 percent.
‘Nothing New’
Futures on the Standard & Poor’s 500 Index (SPXL1) rose 0.1 percent today. The index slid 1.5 percent in New York yesterday after Moody’s said last week’s European summit didn’t produce “decisive” measures to end the crisis. Fitch said the summit did little to ease pressure on Europe’s sovereign ratings.
“Nothing new came out of last week’s European summit,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “If E.U. nations get downgraded, funding costs in the region will definitely rise.”
Financial stocks (MXAP) declined on concern that bank earnings may be hurt as Europe’s crisis spreads. An index of credit default swaps tied to Greece, Italy, Spain and 12 other western European nations rose yesterday, approaching a record reached Nov. 25.
Mitsubishi UFJ slid 2.6 percent to 339 yen in Tokyo. Westpac Banking Corp. (WBC), Australia’s second-largest lender by market value, sank 2.9 percent to A$20.68 in Sydney. HSBC Holdings Plc (HSBA), Europe’s biggest lender, fell 1.5 percent to HK$59.20 in Hong Kong.
Chips Stocks
Asian manufacturers of semiconductors and chip-making equipment declined after Intel, the world’s largest chipmaker, cut its sales forecast. The Santa Clara, California-based company said flooding in Thailand caused a shortage of hard-disk drives that is forcing computer makers to cut production.
Advantest, which produces chip-testing equipment, dropped 2.1 percent to 804 yen in Tokyo. Tokyo Electron Ltd. (8035), Japan’s biggest manufacturer of chip-making gear, fell 2.3 percent to 4,075 yen. Samsung Electronics Co., Asia’s biggest supplier of computer memory chips by sales, declined 1.8 percent to 1.065 million won in Seoul.
Raw material producers and energy companies dropped after commodities fell. Crude oil for January delivery slid $1.64 to $97.77 per barrel yesterday in New York. The London Metals Index, a gauge of six industrial metals, sank 2.5 percent.
BHP dropped 2.4 percent to A$35.66 in Sydney. Rio Tinto Group (RIO), the world’s second-biggest mining company by sales, slipped 2.1 percent to A$62.76. Glencore International Plc, the world’s No. 1 commodities trader, decreased 2.5 percent to HK$47.65 in Hong Kong.
China Gas
The MSCI Asia Pacific Index fell 16 percent this year through yesterday, compared with a 1.7 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 12.8 times estimated earnings on average, compared with 12.5 times for the S&P 500 and 10.3 times for the Stoxx 600.
Among stocks that rose, China Gas Holdings Ltd. surged 22 percent to HK$3.41, the most on the MSCI Asian gauge. ENN Energy Holdings Ltd. and China Petroleum & Chemical Corp. offered to buy a controlling stake in the gas supplier to gain control of a distribution network covering 20 Chinese provinces.
To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net.
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
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