Bloomberg News

Asia Stocks Fall for Second Week Amid Europe, Olympus Concerns

November 13, 2011

Nov. 12 (Bloomberg) -- Asian stocks fell for a second week amid concern Europe’s debt crisis is spreading after Italian bond yields surged, and as Japan’s Olympus Corp. plunged after admitting it hid losses by overpaying advisers.

HSBC Holdings Plc, Europe’s biggest lender by market value, sank 8.5 percent in Hong Kong after saying its investment banking profit fell. Olympus, the world’s largest maker of endoscopes, plunged 59 percent in Tokyo as the city’s stock exchange placed it on a watchlist for possible delisting. Noble Group Ltd., a commodity supplier, slid 25 percent in Singapore after its chief executive officer quit following the company’s first loss in 14 years.

The MSCI Asia Pacific Index fell 2.4 percent this week, its second-straight weekly drop and its longest streak since September. The benchmark gauge has tumbled 15 percent this year amid concern Europe’s debt crisis will spread and global economic growth will slow.

“Europe’s problems are structural and require more than a tinkering on the edges to resolve,” said Lee King Fuei, a Singapore-based fund manager at Schroders Plc, which has about $326 billion of assets globally. “Solving these problems will require a fair bit of pain among citizens. Even if politicians know the right solutions, they risk getting kicked out. The global economic environment looks very challenging.”

Japan’s Nikkei 225 Stock Average declined 3.3 percent this week as machinery orders, an indicator of future capital spending, fell 8.2 percent in September from August.

Hong Kong Growth

South Korea’s Kospi Index declined 3.4 percent, while Singapore’s Straits Times Index slid 2 percent. The Shanghai Composite Index sank 1.9 percent amid customs bureau data showing the nation’s exports, excluding seasonal distortions, grew at the slowest pace in almost two years.

Hong Kong’s Hang Seng Index slid 3.6 percent in the week. A government report released after the market closed on Nov. 11 showed the economy grew 0.1 percent in the third quarter. It contracted 0.4 percent in the three months ended June.

Nippon Sheet Glass Co., which counts Europe as its biggest market, slumped 7.9 percent to 140 yen this week in Tokyo. Esprit Holdings Ltd., a clothier that gets most of its revenue in Europe, dropped 7.7 percent to HK$9.95 in Hong Kong. HSBC sank 8.5 percent to HK$61.85 after saying investment banking profit fell in the third quarter amid Europe’s sovereign debt crisis and posted higher bad-debt provisions for its U.S. unit.

Europe Turmoil

Equities dropped this week as Europe’s sovereign-debt crisis stirred political turmoil across the region, with Italian Prime Minister Silvio Berlusconi and Greek Prime Minister George Papandreou both offering to step down. Italian bonds slumped on Nov. 9, driving two- and 10-year yields to euro-era records and remained above the 7 percent level that led Greece, Portugal and Ireland to seek bailouts.

Asian stocks pared their weekly loss yesterday, with the MSCI Asia Pacific Index rising 1.2 percent yesterday, after U.S. initial jobless claims fell to the lowest level in seven months and former vice president of the European Central Bank Lucas Papademos was named Greece’s interim leader.

Olympus tumbled 59 percent to 460 yen in Tokyo, the MSCI Asia Pacific Index’s worst performer for the week, after saying it concealed losses by paying $687 million to advisers on a 2008 acquisition. The Tokyo Stock Exchange later placed the company to a watch list for possible delisting.

Singapore-listed Noble Group slumped 25 percent in the week to S$1.18. Chief Executive Officer Ricardo Leiman quit after the company reported a $17.5 million third-quarter loss, compared with a profit of $157.2 million a year earlier.

Chinese developers listed in Hong Kong retreated this week after the nation’s October housing transactions fell for the first time in three months. China Overseas Land & Investment Ltd., a developer controlled by the nation’s construction ministry, tumbled 11 percent to HK$13.30, while China Resources Land Ltd., a state-run developer, sank 9.7 percent to HK$11.30.

--Editor: Darren Boey

To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.

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


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