Bloomberg News

Asian Stocks Decline as Europe Concern Overshadows U.S. Data

January 08, 2012

Jan. 6 (Bloomberg) -- Asian stocks fell and the regional benchmark index pared weekly gains as higher borrowing costs in a French bond auction stoked concern Europe’s debt crisis is deepening, overshadowing improving economic data in the U.S.

HSBC Holdings Plc, Europe’s biggest lender by market value, declined 2.3 percent in Hong Kong. Elpida Memory Inc., a manufacturer of computer memory chips, sank 4.9 percent after Nomura Holdings Inc. cut its growth forecast for chips used to help computers juggle programs. BHP Billiton Ltd., Australia’s No.1 oil producer and the world’s largest mining company, fell 1.6 percent in Sydney as crude oil and metal prices declined.

“Europe is going to be a headwind with all the bond auctions coming up,” said Belinda Allen, a Sydney-based senior investment analyst at Colonial First State Global Asset Management, which oversees about $145 billion. “The first bond auctions from Germany and France did relatively OK, but there’s a risk Italy won’t perform as well. Markets are a lot more comfortable with the U.S. economy at this point in time. The outlook really hinges on Europe and China.”

The MSCI Asia Pacific Index dropped 1.3 percent to 113.99 as of 2:32 p.m. in Tokyo, with about six stocks falling for each that rose. The measure pared gains of as much as 2.4 this week after Prime Minister Lucas Papademos said Greece is at risk of a “disorderly default” and UniCredit SpA, Italy’s largest bank, said it will sell new shares in a 7.5 billion-euro ($9.8 billion).

Japan’s Nikkei 225 Stock Average slipped 1.4 percent, while South Korea’s Kospi Index sank 1.5 percent. Australia’s S&P/ASX 200 Index fell 0.8 percent. Hong Kong’s Hang Seng Index decreased 1.5 percent. China’s Shanghai Composite Index lost 0.6 percent.

‘Tug of War’

Futures on the Standard & Poor’s 500 Index slid 0.4 percent today. The gauge rose 0.3 percent yesterday in New York as government data showed fewer Americans filed claims for unemployment insurance last week and ADP Employer Services said payrolls increased by 325,000 in December. A separate report showed consumer confidence in the world’s biggest economy rose to a five-month high.

“We’re likely to see a tug of war in the market between the bad news in Europe and the good news of improving data in the U.S. economy,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc.

Global stocks fell yesterday as France sold 7.96 billion euros ($10.2 billion) of debt, with borrowing costs rising in its first auction of the year. Italy and Spain are among countries that in the coming weeks will sell debt that may reach 262 billion euros ($335 billion) in the first quarter, according to Deutsche Bank AG forecasts.

Chip Stocks

Companies that receive revenue from Europe declined. HSBC fell 2.3 percent to HK$59.30 in Hong Kong. Esprit Holdings Ltd., a clothier that counts Europe as its biggest market, slipped 2.5 percent to HK$10. Sony Corp., a Japanese consumer electronics maker that gets 21 percent of its sales from Europe, decreased 2.4 percent to 1,340 yen.

Makers of computer memory chips dropped after Nomura cut its forecast for 2012 growth in global shipments of dynamic random access memory to 2.7 percent from 3.7 percent.

Elpida sank 4.9 percent to 333 yen in Tokyo. Powerchip Technology Corp., a Taiwanese producer of memory chips, fell 4.8 percent to 99 Taiwanese cents.

Samsung Electronics Co., Asia’s biggest maker of computer memory chips by sales, slipped 2.2 percent to 1.031 million won in Seoul even as the company posted fourth-quarter earnings that beat analyst estimates.

Samsung Record

While smartphone sales helped propel Samsung’s revenue to a record last year, fourth-quarter operating profit was inflated by proceeds from the sales of its hard-disk-drive business, James Chung, a Seoul-based spokesman for the Suwon, South Korea- based company, said by telephone after the announcement.

The MSCI Asia Pacific Index lost 17 percent in 2011 as China took steps to cool its property market and Europe struggled to resolve its debt crisis. The Standard & Poor’s 500 Index broke even for the year and the Stoxx Europe 600 Index dropped 11 percent. Stocks in the Asian gauge were valued at 12.1 times estimated earnings on average as of yesterday, compared with 12.2 times for the S&P 500 and 9.9 times for the Stoxx 600.

Daewoo Shipbuilding & Marine Engineering Co. dropped 3.3 percent to 23,400 won in Seoul. Korea Development Bank plans to revive the sale of its stake in South Korea’s third-largest shipyard by market value, Kang Man Soo, the bank’s chief executive officer, said yesterday. The state-run lender holds 31.3 percent of the shipbuilder, while Korea Asset Management owns 19.1 percent.

Oil, Metals

SK Holdings Co. declined 3.1 percent to 125,500 won. Chey Tae Won, the chairman of South Korea’s third-largest industrial group, was indicted on charges that he embezzled funds from SK Holdings affiliates to cover investment losses by him and his younger brother.

Raw-material producers decreased as crude oil fell for a second straight day and copper for three-month delivery in London headed for a second week of decline. The London Metals Exchange Index, which tracks prices of six metals including copper and aluminum, slid 0.5 percent yesterday.

BHP slipped 1.6 to A$35.24. Glencore International Plc, the world’s biggest commodities trader, sank 3.6 percent to HK$47.50 in Hong Kong. Inpex Corp., Japan’s largest energy explorer, lost 1.4 percent to 487,000 yen in Tokyo.

Chinese oil companies rallied after the government raised the threshold on a windfall tax paid by crude producers, effectively reducing the levy.

“This will encourage more offshore China exploration as well as onshore,” said Gordon Kwan, the Hong Kong-based head of regional energy research at Mirae Asset Securities.

PetroChina Co., Asia’s biggest company by market value, advanced 2.5 percent to HK$10.64. China Petroleum & Chemical Corp., Asia’s No. 1 refinery, gained 1.9 percent to HK$8.81. Cnooc Ltd., China’s largest offshore oil producer, climbed 3.1 percent to HK$15.10.

--With assistance from Satoshi Kawano in Tokyo. Editor: John McCluskey

To contact the reporter 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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