Bloomberg News

Asia Stocks Decline for Fourth Week on Europe, Japan Concerns

November 27, 2011

Nov. 26 (Bloomberg) -- Asian stocks declined for a fourth straight week, the longest streak since August, amid Europe’s worsening debt crisis, speculation that Japan may face a credit- rating cut and evidence that China’s factory output may have contracted.

BlueScope Steel Ltd., Australia’s biggest steelmaker, led declines, sliding 27 percent after announcing it would sell new shares at a 34 percent discount to raise capital and pay debt. HTC Corp., the Taiwan-based largest seller of smart phones in the U.S., plunged 26 percent after cutting its sales forecast and being downgraded by Citigroup Inc. and Barclays Capital. Hong Kong-based Fosun International Ltd., the No. 1 shareholder of Focus Media Holding Ltd., fell 17 percent as Muddy Waters LLC released a report alleging the mainland Chinese company overstated its outdoor advertising assets.

“Europe cannot drag its feet anymore,” said Ng Soo Nam, Singapore-based chief investment officer at Nikko Asset Management Asia Ltd., which oversees about $165 billion. “Some countries in Europe will probably go into recession. Chinese data suggest small and medium-sized manufacturers are already feeling the effects of the liquidity crunch.”

The MSCI Asia Pacific Index dropped 4.6 percent to 108.95, extending a four-week decline to 12.6 percent. The index erased last month’s gains and fell to its lowest level since Oct. 5.

Australia’s S&P/ASX 200 dropped 4.6 percent, the most among the major Asia Pacific indexes, as Europe’s debt crisis shows no sign of easing. German Chancellor Angela Merkel ruled out common euro-area bonds and a bigger role for the European Central Bank in fighting the crisis.

1983 Levels

Concern that Japan may soon be faced with unsustainable lending costs led the Nikkei 225 Stock Average to fall 2.6 percent this week. The broader Topix Index lost 1.9 percent, taking its decline to 21 percent this year, and is less than 1 percent away from levels not seen since 1983.

Hong Kong’s Hang Seng Index declined 4.3 percent this week, while China’s Shanghai Composite Index fell 1.5 percent. India’s Sensitive Index slumped 4.8 percent.

HSBC Holdings Plc, Europe’s No. 1 lender by market value, dropped 5.3 percent to HK$56.10, the lowest closing level since April 2009. Hutchison Whampoa Ltd., which operates ports throughout Europe, declined 7.2 percent to HK$63.55.

Olympus Corp. rose 77 percent this week to 1,107 yen as investors bet the company would be able to contain losses and meet a Dec. 14 deadline for reporting its results and avoid delisting from the Tokyo Stock Exchange. Michael C. Woodford, former chairman of the Japanese camera maker, this week pledged to work with the board to avoid the threat of delisting after three executives implicated in a scheme to hide losses resigned.

BlueScope Plunges

“Funds are buying back as their concerns are easing that the company may get delisted and has more hidden losses,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “Olympus’s image would also improve if Woodford returns.”

BlueScope Steel plunged 27 percent this week in Sydney to 40 Australian cents after saying it plans to raise about A$600 million ($582 million) to cut debt by selling shares. The company said it has received commitments from institutional investors to take up 87 percent of the shares for which they are eligible, raising A$338 million.

HTC Corp. dropped 26 percent this week to NT$489.50, its lowest close since July 9, 2010. The stock has dropped 60 percent from its record-high on April 28, erasing some $23 billion in value, according to data compiled by Bloomberg.

HTC cut its fourth-quarter revenue forecast amid competition from Samsung Electronics Co. and Apple Inc. The news has prompted at least six brokers, including Citigroup and Credit Suisse Group AG, to downgrade the stock.

Muddy Waters

Fosun International, a Hong Kong investment company, fell 17 percent this week to HK$4.04. The company is standing behind its stake in Focus Media, purchasing 602,687 American depositary receipts of Focus Media for $10.4 million on Nov. 22, increasing its stake to 16.4 percent.

Muddy Waters, controlled by short-seller Carson Block, said in a Nov. 21 report that Focus Media overstated the number of television screens in its advertising network by about 50 percent and may have overpaid for takeovers to mask losses.

--Editors: Nick Gentle, Paul Tighe

To contact the reporter on this story: Eleni Himaras in Hong Kong at ehimaras@bloomberg.net

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


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