Bloomberg News

Asian Stocks Fall After U.S. Jobs Growth Slows; Tepco Plunges

June 06, 2011

June 6 (Bloomberg) -- Asian stocks declined, dragging the regional benchmark index to its lowest level in a week, as slowing jobs growth in the U.S. added to signs the global economic recovery is faltering.

Panasonic Corp., the biggest maker of plasma televisions, fell 1.8 percent in Tokyo. Tokyo Electric Co. plunged 28 percent after the Asahi Shimbun newspaper quoted Tokyo Stock Exchange President Atsushi Saito as saying that the operator of the crippled Fukushima Dai-Ichi nuclear plant should be put under bankruptcy protection. Qantas Airways Ltd. led airlines lower after the International Air Transport Association cut its 2011 industry profit forecast.

“We were anticipating a pretty dreadful jobs number and it did turn out worse than expected,” Arjuna Mahendran, Singapore- based head of investment strategy for Asia at HSBC Private Bank, told Bloomberg Television. “We’ll have another few weeks of a gradual selloff. That will be a good time to start hunting for bargains.”

The MSCI Asia Pacific Index slipped 0.2 percent to 133.71 as of 7:53 p.m. in Tokyo, with more than three stocks falling for each that rose. The gauge last week capped its biggest streak of weekly losses since the collapse of Lehman Brothers Holdings Inc. in 2008 as reports showed manufacturing growth from China, the U.S. and Europe slowed in May and American companies hired fewer workers than forecast, adding to signs the global economy is faltering.

Nikkei Falls

Japan’s Nikkei 225 Stock Average fell 1.2 percent. Prime Minister Naoto Kan, who faces discontent over his handling of the March 11 disaster that triggered the world’s worst nuclear accident in 25 years, may resign before the end of the year after surviving a no-confidence motion in parliament last week, Chief Cabinet Secretary Yukio Edano said on television on June 4. Ruling Democratic Party of Japan politicians led by former Prime Minister Yukio Hatoyama want Kan to quit.

Australia’s S&P/ASX 200 Index dropped 0.3 percent. Singapore’s Straits Times Index declined 1 percent. India’s Sensitive Index gained 0.2 percent. Markets in China, Hong Kong, South Korea, Taiwan and New Zealand are closed for holidays.

Futures on the Standard & Poor’s 500 Index fell 0.2 percent today. In New York, the index retreated 1 percent on June 3, capping its fifth straight weekly decline and dropping to the lowest level since March. The S&P Index fell after the jobless rate unexpectedly climbed to 9.1 percent in May, the highest level this year. A separate report showed payrolls grew at the slowest pace in eight months, signaling employers are losing confidence as the economy slows.

‘Deteriorating Situation’

Employers added a less-than-projected 54,000 jobs last month, Labor Department figures released on June 3 in Washington showed. The median forecast in a Bloomberg News survey was for payrolls to rise 165,000. A string of disappointing economic data capped by last week’s jobs report is prompting economists to question the durability of the U.S. recovery.

“The U.S. job situation is deteriorating,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “The slowdown in the U.S. economy shows that there’s a lack of liquidity in the market. That means there’s no effective way to address the economy.”

Panasonic declined 1.8 percent to 912 yen in Tokyo. James Hardie Industries SE, an Australian building materials company that gets about 70 percent of sales from the U.S., dropped 0.9 percent to A$5.75 in Sydney. Billabong International Ltd., the world’s biggest surfwear maker, sank 1.3 percent to A$6.08.

Huge Problems

Tokyo Electric slumped 28 percent to 207 yen, its lowest close on record, after TSE’s Saito was quoted by the Asahi Shimbun as saying Tepco, as the utility company is known, needs to be restructured and follow the same route as Japan Airlines Co., which file for bankruptcy protection in 2010.

Japan’s Chief Cabinet Secretary Edano said after the market closed that liquidating the utility would cause huge problems and must be avoided.

A separate report by the Tokyo Shimbun said Tepco will post a full-year net loss of 570 billion yen ($7.1 billion). The company said it wasn’t the source of the story. Radiation readings from inside the No. 1 nuclear reactor building at the Fukushima Dai-Ichi nuclear facility spiked to the highest level yet, almost three months after the disaster started, according to another report by Kyodo News.

‘Impossible to Analyze’

“There’s so much uncertainty surrounding what will happen with the utility that it’s impossible to analyze,” said Naoteru Teraoka, general manager at Tokyo-based Chuo Mitsui Asset management Co., which oversees about $28 billion. “The stock moves whenever anybody opens their mouth.”

Airlines declined after the International Air Transport Association cut its 2011 industry profit forecast by 54 percent to $4 billion because of higher oil prices, political protests in the Middle East and North Africa, and the Japan earthquake.

Qantas, Australia’s biggest carrier, declined 3.7 percent to A$1.955 in Sydney. Cebu Air Inc., the biggest budget airline in the Philippines, dropped 2 percent to 84.20 pesos. Thai Airways International Pcl fell 1.5 percent to 34 baht.

Ashok Leyland Ltd., an Indian truckmaker, dropped 1.8 percent to 51.10 rupees in Mumbai. The company said it sold 5,725 vehicles in May, a decline of 12 percent from the previous year.

Sony Corp., the maker of Sony PlayStation gaming consoles and Bravia televisions, decreased 3.2 percent to 2,062 yen. The company said it contacted the U.S. Federal Bureau of Investigation and took action to protect its websites after intrusions by a group of hackers. The website of its European unit was also hacked, it said.

Nintendo Co., the world’s largest maker of handheld video- game players, lost 1.6 percent to 17,910 yen. The company said a hacker attack by the same group that targeted Sony didn’t expose information about its customers.

The MSCI Asia Pacific Index slid 2.7 percent this year through June 3, compared with a gain of 3.4 percent by the S&P 500 and a drop of 0.8 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 13.5 times estimated earnings on average, compared with 13.1 times for the S&P 500 and 11 times for the Stoxx 600.

--With assistance from Norie Kuboyama and Toshiro Hasegawa in Tokyo. Editors: John McCluskey, Jason Clenfield.

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.


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