Bloomberg News

Asia Stocks Fall as Fed Forgoes More Stimulus on Moderate Growth

December 14, 2011

Dec. 14 (Bloomberg) -- Asian stocks fell for a second day as the Federal Reserve refrained from taking new measures to spur growth and U.S. retail sales rose at the slowest pace in five months, clouding the earnings outlook for Asian exporters.

Sony Corp., which generates 20 percent of its sales in the U.S., fell 1.4 percent in Tokyo. Samsung Electronics Co., South Korea’s biggest exporter of consumer electronics, declined 1.5 percent in Seoul. BHP Billiton Ltd., the world’s biggest mining company, lost 0.7 percent in Sydney after metal prices fell. Nexon Co., an online game creator that’s more profitable than Zynga Inc., fell on its first day of Tokyo trading.

The MSCI Asia Pacific Index fell 0.7 percent to 113.54 as of 10:37 a.m. in Tokyo, with almost two shares falling for each that rose. The gauge, which has tumbled 16 percent since June 30, extended losses this week after Moody’s Investors Service and Fitch Ratings warned that Europe faces lower credit ratings as it struggles to contain its debt crisis.

“There’s a potential for further downside in this market,” said Lee King Fuei, a Singapore-based fund manager at Schroders Plc, which oversees about $326 billion of assets globally. “The magnitude of this crisis compared to the one in 2008 is bigger as it includes sovereign risks as well. Policy makers have probably exhausted their fiscal and monetary policy options and they are running out of bullets.”

Japan’s Nikkei 225 Stock Average lost 0.4 percent, while South Korea’s Kospi Index slipped 0.4 percent. Australia’s S&P/ASX 200 index fell 0.2 percent. Hong Kong’s Hang Seng Index slipped 0.8 percent, falling for fifth day.

U.S. Retail

Futures on the Standard & Poor’s 500 Index were little changed today. The index dropped 0.9 percent in New York yesterday after the Fed stopped short of offering another round of large-scale asset purchases to boost the economy.

Shares of Asian exporters fell as a report showed U.S. retail sales gained 0.2 percent last month, the slowest pace since June. It was short of the median estimated 0.6 percent gain from economists surveyed by Bloomberg.

The Fed said in a statement that the U.S. economy continues to expand even as global growth slows. The statement reiterated a warning from the Fed’s two previous meetings that “strains in global financial markets continue to pose significant downside risks to the economic outlook.”

The MSCI Asia Pacific Index declined 17 percent this year through yesterday, compared with a 2.5 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 12.7 times estimated earnings on average, compared with 12.4 times for the S&P 500 and 10.3 times for the Stoxx 600.

Raw material producers dropped after the London Metal Exchange Index of prices for six industrial metals including copper and aluminum fell 0.4 percent yesterday, extending declines for a second day.

--With assistance from Yoshiaki Nohara in Tokyo. Editors: Nick Gentle, Jim Powell

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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