Bloomberg News

Asian Stocks Tumble, Wipe Out Year’s Gains, on Europe, U.S. Data

May 18, 2012

Asian stocks fell, with a regional index posting its worst week in almost eight months, as Europe’s debt crisis worsened, U.S. economic data missed estimates and Chinese home prices and investment declined.

Samsung Electronics Co. (005930), a consumer-electronics maker that gets about 35 percent of sales from Europe and America, sank 11 percent in South Korea. Evergrande Real Estate Group Ltd. (3333), China’s second-biggest developer by sales volume, plunged 16 percent in Hong Kong after China’s home prices slid in a record number of mainland cities during April. Hokuetsu Kishu Paper (3865) Co. dropped 14 percent in Tokyo after forecasting a decline in profit.

“Investor sentiment is at its worst,” said Masaru Hamasaki, chief strategist at Toyota Asset Management Co., which oversees the equivalent of about $23.8 billion. “We don’t know what will happen with Greece, and when something does happen, we don’t know what impact that will have. All people can do is escape from risks, a so-called panic.”

The MSCI Asia Pacific Japan Index (MXAP) declined 5.1 percent to 112.58 this week, wiping out this year’s gains. That’s the steepest weekly slide since the week ended Sept. 23.

Almost $4 trillion has been wiped from global equity markets this month as Greece’s failure to form a government rekindled Europe’s debt crisis and signs of slowing economic growth in China and U.S. damped the outlook for global demand.

China’s Shanghai Composite Index (SHCOMP) slipped 2.1 percent this week after the nation’s home prices fell from a year earlier in April in a record 46 of 70 cities tracked by the government as officials pledged to keep restrictions on property purchases that have sapped buyer demand. Hong Kong’s Hang Seng Index sank 5.1 percent.

Topix Losing Streak

Japan’s Nikkei 225 Stock Average (NKY) decreased 3.8 percent this week. The broader Topix Index fell 4.3 percent, led by papermakers, capping the longest streak of weekly losses since the Sept. 11 attacks in 2001.

Australia’s S&P/ASX 200 Index (AS51) retreated 5.6 percent; South Korea’s Kospi Index lost 7 percent this week.

Banco Santander SA was among 16 Spanish banks whose credit ratings were cut by Moody’s Investors Service, which cited economic weakness and the government’s mounting budget strain. Greece’s credit rating was downgraded one level by Fitch Ratings on concerns the country won’t be able to muster the political support needed to sustain its membership in the euro area.

Esprit Holdings Ltd., a Hong Kong-listed clothier that gets most of its revenue from Europe plunged 17 percent to HK$12.56. Hutchison Whampoa Ltd. (13), a port operator controlled by billionaire Li Ka-Shing that gets about half its sales in the debt-stricken region, dropped 6.4 percent.

Samsung, James Hardie

Samsung dropped 11 percent to 1,166,000 won in Seoul. James Hardie Industries SE, a seller of home siding that counts the U.S. as its biggest market, dropped 2.8 percent to A$7.05.

In the U.S., economic reports showed jobless claims unexpectedly stagnated at 370,000 in the week ended May 12 and the Bloomberg Consumer Comfort Index fell to minus 43.6, a level associated with recessions or their aftermaths.

Evergrande Real Estate sank 16 percent to HK$3.66 in Hong Kong this week amid further signs that China’s efforts to cool its economy are crimping demand for property. China Overseas Land and Investment Ltd., a developer controlled by the nation’s construction ministry, lost 8.1 percent to HK$14.80.

Among other stocks that fell, Hokuetsu Kishu Paper plummeted 14 percent to 413 yen this week after saying net income will fall 41 percent to 7.5 billion yen ($95 million) in the year ending March 31, citing expectations for a strong yen, high oil prices and power shortages.

Toll, STX

Ship operator STX Pan Ocean Co. plunged 29 percent to 4,200 won this week in Seoul on speculation the sale of offshore vessel-maker STX OSV Holdings Ltd. may be delayed, hindering the group’s effort to pare debts. STX Pan Ocean declined the most in the MSCI Asia Index, followed by Toll Holdings Ltd. (TOL)

Toll Holdings, Australia’s largest trucking company, tumbled 23 percent to A$4.31 in Sydney this week, after forecasting full-year profit as much as 11 percent below analysts’ estimates.

Shares in the Asia-Pacific gauge, which includes companies from some emerging markets, trade for 11.48 times estimated earnings, according to data compiled by Bloomberg. That compares with 12.33 times for the Standard & Poor’s 500 and 9.95 for the Stoxx Europe 600 Index.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

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


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