Asian Stocks Fall on Greece Bailout Delay, Westpac Earnings
February 16, 2012, 7:20 PM ESTBy Yoshiaki Nohara
Feb. 16 (Bloomberg) -- Asian stocks fell, led by Australian lenders and mining companies, after a decision on a second bailout for Greece was postponed and Westpac Banking Corp. reported lower earnings as Europe’s crisis boosted funding costs.
Westpac, Australia’s second-largest lender, fell 4.2 percent after reporting fist-quarter profit that was lower than a year earlier. BHP Billiton Ltd., the world’s No. 1 mining company, lost 2.2 percent in Sydney after metal prices dropped and Vale SA, the second-biggest global miner, said profit dropped as customers pressed for pricing revisions. Phison Electronics Corp., a maker of USB flash pen drives, declined 6.9 percent in Taiwan on lower flash memory prices.
The MSCI Asia Pacific Index dropped 0.8 percent to 126.30 as of 12:38 p.m. in Tokyo with all 10 groups on the measure falling. The gauge yesterday rose 1.9 percent to 127.34, the highest level since Aug. 4. European officials delayed a decision on a 130-billion euro ($169 billion) bailout for Greece until at least Feb. 20.
“Greece situation is being used to sell and lock in profits today,” said Soichiro Monji, chief strategist at Tokyo- based Daiwa SB Investments Ltd., which manages the equivalent of $37 billion. “If the markets were pricing in default, losses would be much bigger. Most people are expecting they would have to reach a bailout decision on Feb. 20.”
Japan’s Nikkei 225 Stock Average was little changed after gaining 2.3 percent yesterday, the biggest advance since Nov. 29. South Korea’s Kospi Index declined 1.1 percent. Australia’s S&P/ASX 200 lost 1.7 percent even after a report showed the nation’s employers added more jobs than economists expected and the jobless rate slid. Hong Kong’s Hang Seng Index dropped 0.7 percent.
Bailout Decision
Futures on the Standard & Poor’s 500 Index dropped 0.5 percent today. The index slid 0.5 percent in New York yesterday following the delay on a bailout for Greece aid. U.S. stocks also declined after the release of minutes of the Federal Reserve’s meeting last month showed policy makers were divided on additional asset purchases to spur economic growth.
“There’s a persistent concern that creditors may have to pardon parts of debt not only for Greece, but also for other South European nations,” said Toshiaki Iwasaki, an analyst at Mito Securities Co.
Financial companies, led by Australian banks, were among the biggest contributors to losses in the MSCI Asia Pacific Index. Westpac Banking fell 4.2 percent to A$20.08 after saying its unaudited cash earnings in the three months ended Dec. 31 were A$1.5 billion ($1.6 billion) as rising funding costs squeezed the profitability of its lending.
Earnings Analysis
Australia & New Zealand Banking Group Ltd., Australia’s third-largest lender, dropped 2 percent to A$21.27. National Australia Bank Ltd., the fourth-biggest, retreated 1.7 percent to A$22.65. HSBC Holdings Plc, Europe’s biggest lender, lost 0.9 percent to HK$69.20.
Of 452 companies listed on the MSCI Asia Pacific Index that have reported earnings since Jan. 9, 248 missed analysts’ estimates while 120 beat them, according to data compiled by Bloomberg.
The MSCI Asia Pacific Index gained 11.8 percent this year through yesterday, compared with a 6.8 percent advance by the S&P 500 and an 8 percent gain by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 14.5 times estimated earnings on average, compared with 12.9 times for the S&P 500 and 10.9 times for the Stoxx 600.
Mining Firms Fall
BHP Billiton fell 2.2 percent to A$35.32. Rio Tinto Group, Australia’s second-largest mining company by market value, declined 2.2 percent to A$67.34.
Rio de Janeiro-based Vale’s clients pressured the mining company to revise its pricing system to the current quarter after iron-ore prices fell in October to the lowest level since late 2009. The move for Chinese customers to a more immediate pricing system has reduced Vale’s iron-ore prices for the quarter, Jonathan Brandt, an analyst at HSBC Holdings Plc, said in a telephone interview before the report was released.
The London Metal Exchange Index of prices for six industrial metals including copper and aluminum lost 0.5 percent yesterday.
Phison Electronics slumped 6.9 percent to NT$250.50 after Chairman Pua Khein-Seng was quoted by Central News Agency as saying NAND-flash faces downward pressure. NAND-flash prices are down 34 percent over the past year.
--With assistance from Satoshi Kawano in Tokyo. Editors: John McCluskey, Nick Gentle
To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
