Asian stocks dropped, with the regional benchmark index headed for the biggest two-day loss in seven weeks, after a Chinese central bank adviser forecast economic growth will slow further and on renewed concern that Greece may not meet its bailout targets.
Samsung Electronics Co. (005930), which gets 47 percent of its revenue in China and Europe, lost 2.4 percent in Seoul. HSBC Holdings Plc (5), Europe’s largest bank, slumped 5.7 percent, its biggest drop since November. BHP Billiton Ltd. (BHP), the world’s No. 1 mining company, lost 2.6 percent in Sydney amid concern about global economic growth. Gauges of volatility in Asia rose, reflecting increasing risk aversion among investors.
The MSCI Asia Pacific Index lost 1.9 percent to 114.48 as of 5:20 p.m. in Tokyo, erasing last week’s advance, as all 10 industry groups on the gauge retreated and 10 stocks dropped for each that gained. The measure is headed for a two-day loss of 2.6 percent, the biggest since June 4.
“There are many global macro headwinds,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian unit. The Swiss bank has about $1.5 trillion in assets under management. “Risk aversion persists for many investors. Cautious corporate guidance remains, given the many different macro and political challenges.”
The MSCI Asia Pacific Index fell 9.5 percent from this year’s high on Feb. 29 through last week amid concern China’s economy is slowing and Europe’s sovereign-debt crisis will worsen. The regional benchmark trades at 11.8 times estimated earnings, compared with 13.2 for the Standard & Poor’s 500 Index and 10.8 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Hong Kong’s Hang Seng Index (HSI) fell 3 percent, the biggest drop since May 16, while China’s Shanghai Composite Index retreated 1.3 percent. Japan’s Nikkei 225 Stock Average declined 1.9 percent as the yen reached an 11-year high against the euro, weighing on the nation’s exporters. South Korea’s Kospi Index (KOSPI) slid 1.8 percent, and Australia’s S&P/ASX 200 Index (AS51) lost 1.7 percent.
Volatility across the region rose. The HSI Volatility Index (VHSI) climbed 18 percent to 22.19, the most since May, indicating options traders expect a swing of 5.3 percent in the Hong Kong benchmark over the next 30 days. Volatility gauges for Japan’s Nikkei 225 and Korea’s Kospi 200 Index also advanced.
Futures on the S&P 500 (SPXL1) fell 0.8 percent today. The gauge dropped 1 percent in New York on July 20, the biggest loss since June 25.
Samsung led declines among exporters to China and Europe after Song Guoqing, an academic member of the People’s Bank of China monetary policy committee, predicted the nation’s expansion may cool to 7.4 percent this quarter. The adviser to the central bank also warned that a drop in producer prices in tandem with consumer inflation may hurt investment returns of industrial companies.
Samsung fell 2.4 percent to 1.162 million won in Seoul. HSBC tumbled 5.7 percent to HK$63.10 in Hong Kong. Machinery maker Komatsu Ltd. (6301), which generates 24 percent of its revenue in China and Europe, dropped 3.3 percent to 1,655 yen in Tokyo.
China developers also declined. Shimao Property Holdings Ltd. fell 3.1 percent to HK$10.82 and Agile Property Holdings Ltd. (3383) dropped 2.8 percent to HK$9.90 in Hong Kong.
In Europe, Greece is back at the heart of the region’s debt crisis as policy makers arrive in Athens tomorrow amid doubts the country will meet its commitments and reluctance among euro- area states to issue more funds should it fail.
“If Greece doesn’t fulfill those conditions, then there can be no more payments,” German Vice Chancellor Philipp Roesler told broadcaster ARD.
Resources and energy companies fell amid concern about the global economic slowdown. Japan’s government is seeing increased signs of a weakening global expansion, the Cabinet Office said today.
Crude for September delivery fell as much as $2.06 to $89.77 a barrel in electronic trading on the New York Mercantile Exchange today.
BHP Billiton slid 2.6 percent to A$30.55 in Sydney. Cnooc Ltd. (883), China’s largest offshore energy explorer, lost 3.1 percent to HK$15.44 in Hong Kong.
China Pacific Insurance (Group) Co. slumped 10 percent to HK$24.20 in Hong Kong on a share sale plan. Carlyle Holdings Mauritius Ltd. and Parallel Investors Holdings Ltd. are selling 220 million shares in the insurer for HK$25.50 to HK$26 each, according to terms for the sale obtained by Bloomberg News. That’s a discount of as much as 5.2 percent to the stock’s closing price on July 20.
Among the 1,007 companies listed on the MSCI Asia Pacific Index, 155 are scheduled to report earnings this week, according to data compiled by Bloomberg. Earnings have exceeded analyst estimates for 26 of the 44 companies listed on the index that have reported quarterly results this month, according to data compiled by Bloomberg.
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