Bloomberg News

Asian Stocks Drop on Falling Commodity Prices, U.S. Data

June 22, 2012

Asian stocks fell, with the regional benchmark index headed for a one-week low, as raw-material suppliers dropped after commodities entered a bear market and reports on U.S. home sales and manufacturing missed estimates.

BHP Billiton Ltd. (BHP), the world’s biggest mining company, slipped 2.1 percent in Sydney. Samsung Electronics Co., the largest mobile-phone maker by sales, fell 3.7 percent in Seoul. Mitsubishi UFJ Financial Group Inc., Japan’s No. 1 lender, lost 1.1 percent in Tokyo after 15 global banks were downgraded by Moody’s Investors Service.

The MSCI Asia Pacific Index (MXAP) fell 1.2 percent to 114.18 as of 7:21 p.m. in Tokyo, heading for its lowest close since June 15. About three shares declined for each that rose in the gauge, which is erasing this week’s advance. More than $5 trillion has been wiped from global equities since a March peak amid slowing economic growth in the U.S. and China, and a spreading European debt crisis that pushed Spain’s borrowing costs to a record.

“There will be further downside,” said Peter Elston, Singapore-based head of Asia-Pacific strategy and asset allocation at Aberdeen Asset Management, which oversees about $270 billion. “Things are still getting worse. When you have an essentially weak private sector, you’re relying on the government to step in and support things. You’re seeing a gradual weakening of the ability of governments to step in.”

Japan’s Nikkei 225 Stock Average (NKY) lost 0.3 percent, while South Korea’s Kospi Index sank 2.2 percent. Australia’s S&P/ASX 200 Index slipped 1 percent. Hong Kong’s Hang Seng Index dropped 1.4 percent. Markets in mainland China were closed today for a holiday. Trading volumes across Asia were below the 30-day average, according to data compiled by Bloomberg News.

Bear Market

Resources and energy companies led losses among the 10 industry groups in the MSCI Asia Pacific Index. The Thomson Reuters/Jefferies CRB Index of raw materials retreated 2.1 percent yesterday. The S&P GSCI commodities gauge slid to the lowest level since 2010 yesterday and is down 22 percent from a February peak, entering a so-called bear market.

BHP Billiton fell 2.1 percent to A$31.52 in Sydney. Rio Tinto Group (RIO), the world’s third-biggest mining company by market value, slid 1.6 percent to A$56.02. Glencore International Plc, the world’s largest publicly traded commodities supplier, slipped 2.7 percent to HK$38.40 in Hong Kong.

Bridgestone Corp. dropped 1.2 percent to 1,755 yen in Tokyo after the world’s biggest maker of tires said it may extend output cuts in the second half as Europe’s debt crisis and China’s slowdown curb demand.

U.S. Economy

Futures on the Standard & Poor’s 500 Index added 0.4 percent today. The gauge declined 2.2 percent in New York yesterday as manufacturing in the Philadelphia region shrank to the lowest level since August and sales of previously owned homes in May fell, adding to evidence U.S. economic growth is weakening.

Exporters to the U.S. declined. Samsung Electronics fell 3.7 percent to 1.182 million won in Seoul. Li & Fung Ltd., a supplier of toys and clothes to retailers including Wal-Mart Stores Inc., sank 5.5 percent to HK$14.48 in Hong Kong. James Hardie Industries SE (JHX), a building-materials supplier that counts the U.S. as its biggest market, dropped 1.7 percent to A$7.57 in Sydney.

Financial stocks dropped after Moody’s cut credit ratings for Credit Suisse Group AG, Morgan Stanley and 13 other banks. The lenders have “significant exposure to the volatility and risk of outsized losses inherent to capital-markets activities,” Moody’s Global Banking Managing Director Greg Bauer said in a statement.

HSBC, Westpac

Mitsubishi UFJ declined 1.1 percent to 368 yen in Tokyo. HSBC Holdings Plc (5), Europe’s biggest lender by market value, slid 1.2 percent to HK$67.45 in Hong Kong. Westpac Banking Corp., Australia’s second-largest lender by market value, fell 1.1 percent to A$20.75 in Sydney.

The Asian benchmark stock gauge slumped 10 percent from its peak on Feb. 29 through yesterday, dragging shares on the index to 1.2 times book value. That compares with 2.1 times for the S&P 500 and 1.4 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.

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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