Bloomberg News

Asian Stocks Drop for Sixth Day on Europe Debt Concerns

April 11, 2012

Asian stocks slipped, with the benchmark index headed for its longest losing streak since August, as Spanish yields surged closer to levels that prompted other European countries to seek bailouts. Indonesian stocks pared declines after an earthquake struck near Sumatra.

Esprit Holdings Ltd. (330), a clothier that depends on Europe for about 80 percent of sales, fell 3.2 percent in Hong Kong. China Shipping Development Co. declined 7.6 percent after the commodities transporter said it may post a first-quarter loss on lower cargo rates. Sony Corp. (6758) and Sharp Corp., Japan’s biggest makers of liquid-crystal-display televisions, dropped after posting record losses amid declining TV sales and a stronger yen.

“Spain is in a very difficult situation and more likely than not to require some type of official intervention,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “Europe is still 20 percent of the world economy and obviously a big customer of Asia.”

The MSCI Asia Pacific Index slid 0.7 percent to 123.07 as of 8:54 p.m. in Tokyo, with more than three shares sliding for each that rose. The gauge has fallen about 2.8 percent this month amid renewed concern Europe’s debt crisis is spreading and signs U.S. jobs growth may be slowing.

Japan’s Nikkei 225 Stock Average (NKY) fell 0.8 percent today, while Australia’s S&P/ASX 200 Index slid 1.1 percent. Hong Kong’s Hang Seng Index declined 1.1 percent. The Shanghai Composite Index added 0.1 percent after declining as much as 1.1 percent.

Indonesian Earthquake

The Jakarta Composite Index (JCI) fell 0.5 percent, trimming earlier losses of 0.9 percent as Indonesia’s Aceh province was hit by a magnitude 8.7 earthquake in the final hour of trading. Buildings in neighboring Singapore shook and tsunami warnings were issued in Thailand and countries around the Indian Ocean. Singapore’s Straits Times Index dropped 1.2 percent.

Thailand’s SET Index slid as much as 1.2 percent, with the Thai Tourism & Leisure Index falling the most since Nov. 25. Central Plaza Hotel Pcl, the nation’s largest hotel operator by market value, dropped 4.1 percent. Laguna Resorts & Hotels Pcl, which operates in coastal Phuket province, fell 2.4 percent to 40 baht.

“The tsunami report has further weakened investors’ sentiment in the Thai market, which has already been under selling pressure from profit taking,” Andy Jenwipakul, the head of research at SCB Securities Co. Ltd., said by phone today.

South Korean markets are closed today as the nation holds parliamentary elections. The vote takes place as North Korean plans to launch a rocket in the next few days fuel regional tension.

Spanish Yields Rise

Futures on the Standard & Poor’s 500 Index rose 0.8 percent today. The gauge fell 1.7 percent in New York yesterday as Spanish bonds slumped after Economy Minister Luis de Guindos declined to rule out a rescue. Bank of Spain Governor Miguel Angel Fernandez Ordonez said the nation’s lenders may need extra capital if the economy weakens more than expected.

Companies that do business in Europe declined after yields on 10-year Spanish bonds reached the highest this year and closer to levels that prompted Greece, Ireland and Portugal to seek bailouts. Prime Minister Mariano Rajoy yesterday said Spain’s future is at stake in its battle to tame rising borrowing costs.

Esprit decreased 3.2 percent to HK$16.22 in Hong Kong. Hutchison Whampoa Ltd. (13), which operates ports in Germany and Spain, fell 1 percent to HK$73.95. Mazda Motor Corp. (7261), an automaker that gets 18 percent of sales from Europe, dropped 2.2 percent to 131 yen in Tokyo.

China Shipping Development declined 7.6 percent to HK$5.08 after saying it may report a first-quarter loss as weak demand and a glut of shipping capacity dragged cargo rates lower.

Sony’s Record Loss

Sony sank 4.5 percent to 1,515 yen in Tokyo after Japan’s largest electronics exporter posted a record loss of 520 billion yen ($6.4 billion) for the year ended March 31. Plans to take a 300 billion yen charge to write down deferred tax assets. Sharp fell 3.2 percent to 513 yen after reporting a record annual loss of 380 billion yen.

The two companies have lost business to rivals Apple Inc. and Samsung Electronics Co. as television sales plunge and currency appreciation erodes earnings.

“Investors have kept hoping for their revival and have been repeatedly let down,” Einosuke Yoshino, a fund manager at Commons Asset Management in Tokyo, said today by telephone. “They make slow decisions and have weak leadership.”

Market Retreats

The MSCI Asia Pacific Index (MXAP) has retreated about 4.7 percent since the start of March as China cut its economic growth target and on speculation stocks had risen too fast after the index advanced 15 percent in the first two months of the year. Shares on the gauge traded at 12.6 percent times estimated earnings, compared with 13 times for the S&P 500 and 10.5 times for the Stoxx Europe 600 Index.

Flinders Mines Ltd. (FMS), a developer of Australian iron-ore mines, tumbled 9.1 percent to 22.5 Australian cents after prospective buyer OAO Magnitogorsk Iron & Steel delayed a decision on a loan to help finance the deal. MMK, as the Russian steelmaker is known, agreed in November to buy Adelaide-based Flinders for A$554 million ($568 million).

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@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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