Bloomberg News

Asian Stocks Slump as U.S. Data Deepens Global Economic Concern

October 03, 2011

Oct. 3 (Bloomberg) -- Asian stocks fell, extending the regional benchmark index’s biggest quarterly decline in almost three years, after U.S. consumer spending slowed as incomes unexpectedly dropped, souring the earnings outlook for exporters.

Sony Corp. plunged as much as 6.2 percent in Tokyo, touching its lowest price in 24 years. Toyota Motor Corp., the world’s largest carmaker, fell 2 percent. James Hardie Industries SE, a building-materials supplier that gets almost 70 percent of its sales from the U.S., sank 3.5 percent in Sydney. BHP Billiton Ltd., the world’s No. 1 mining company, dropped 2.5 percent after oil and metal prices slid. HSBC Holdings Plc, Europe’s biggest lender, led banking stocks lower.

“The U.S. is not falling into recession, but it’s definitely slowing down,” said Diane Lin, a fund manager with Sydney-based fund Pengana Capital Ltd., which manages about $1.1 billion in global assets. “We might face more risks, particularly in a market that hasn’t had enough of a correction.”

The MSCI Asia Pacific Index fell 2.8 percent to 110.00 as of 5:09 p.m. in Tokyo, ahead of a meeting of European finance ministers to weigh the threat of a Greek default. About seven stocks fell for each that rose in the measure and all 10 industry groups declined. The gauge has dropped more than 20 percent this year amid concern the global economy is poised for another recession as Europe’s debt crisis worsens and U.S. economic growth slows.

Tankan Survey

Japan’s Nikkei 225 Stock Average fell 1.8 percent after the Bank of Japan’s quarterly Tankan index showed that sentiment among Japan’s largest manufacturers remains worse than before the March earthquake. Australia’s S&P/ASX 200 slumped 2.8 percent as a gauge of Australian manufacturing fell for a third month in September.

Hong Kong’s Hang Seng Index plunged 4.4 percent, led by Ping An Insurance Group Co., China’s No. 2 insurance company by market value, amid signs China’s economic growth is slowing. Financial markets in China and South Korea are closed for holidays today.

“Economic indicators are suggesting that the economy in mainland China is slowing,” said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong. Financial and property stocks are falling on concern that banking liquidity is shrinking, he said.

Futures on the Standard & Poor’s 500 Index lost 0.3 percent today. In New York, the index fell 2.5 percent on Sept. 30, sending the measure to its biggest quarterly drop since 2008, after reports from China and Germany fueled concerns the global economy is slowing.

Consumer Spending

Consumer spending in the U.S. slowed in August as incomes unexpectedly dropped for the first time in almost two years, forcing households to dip into savings. Purchases rose 0.2 percent after a 0.7 percent increase in July, Commerce Department figures showed on Sept. 30. Incomes decreased 0.1 percent, the first decline since October 2009. Economists had forecast incomes would rise 0.1 percent, according to a Bloomberg survey.

Sony plunged 4.5 percent to 1,439 yen at the close of trading in Tokyo on speculation the yen’s appreciation and falling demand for televisions will hurt earnings.

Toyota dropped 2 percent to 2,635 yen. Canon Inc., the biggest global camera-maker, slid 1.7 percent to 3,490 yen. James Hardie declined 3.5 percent to A$5.55 in Sydney. In Hong Kong, Li & Fung Ltd., a supplier of toys and clothes to Wal-Mart Stores Inc., sank 5.9 percent to HK$12.44.

Banks Decline

Banks in Asia also slumped. HSBC sank 4.2 percent to HK$58.35 in Hong Kong. Mitsubishi UFJ Financial Group Inc., Japan’s No. 1 listed lender by market value, declined 2.8 percent to 344 yen. Commonwealth Bank of Australia, the nation’s biggest bank, slid 3.7 percent to A$43.88 in Sydney.

European officials gathering in Luxembourg today will grapple with how to shield banks from the debt crisis and consider a further boost to the region’s rescue fund. The Greek government said yesterday it approved 6.6 billion euros ($8.8 billion) of austerity measures as part of efforts to secure a pending aid payment and a second rescue package.

“To keep paying Greece money doesn’t actually solve a long-term problem,” said Pengana’s Lin.

Asian commodity stocks also sank. BHP Billiton retreated 2.5 percent to A$34.15 in Sydney. Rival Rio Tinto Ltd. sank 4.1 percent to A$59.30. Jiangxi Copper Co., China’s No. 1 producer of the metal by market value, dropped 12 percent to HK$12.18.

‘Economy Is Decelerating’

Oil fell today, extending declines after the worst quarter since 2008. Crude for November slid as much as 1.6 percent in electronic trading in New York. A measure of primary metals traded in London fell 3.4 percent on Sept. 30, when copper futures declined for a third straight quarter, the longest slump since 2001.

“While a deceleration of the global economy has largely been priced into the markets, we’re not seeing anything to change this,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “For this reason, we’ll likely see stocks move lower.”

Ping An Insurance plunged 13 percent to HK$38.30. Tencent Holdings Ltd., China’s biggest Internet company by revenue, dropped 9.3 percent to HK$149.00.

The MSCI Asia Pacific Index declined 20 percent this year through Sept. 30, compared with a 10 percent drop by the S&P 500 and an 18 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.5 times estimated earnings on average, compared with 11.4 times for the S&P 500 and 9.5 times for the Stoxx 600.

The Asia Pacific index tumbled 16 percent in the third quarter, the biggest drop since 2008, as concern mounted that Europe’s sovereign-debt crisis combined with a slowdown in the U.S. economy may drag the world back into recession.

--Editors: John McCluskey, Jason Clenfield.

To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net.


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