Asian stocks fell this week, posting the biggest weekly decline on the regional gauge since August, after the International Monetary Fund cut its forecast for global growth and Spain had its credit rating downgraded.
Toyota Motor Corp. (7203), Asia’s largest carmaker by market value, dropped 3.7 percent after reporting its biggest drop in China sales since at least 2008. Hutchison Whampoa Ltd. (13), an operator of ports and telephone companies which gets 55 percent of sales in Europe, slid 1.2 percent. Softbank Corp. (9984) plunged 21 percent, the biggest slide since October 2008, after Japan’s third-biggest phone operator said it’s in talks to invest in loss-making Sprint Nextel Corp.
The MSCI Asia Pacific Index (MXAP) lost 1.5 percent to 120.78 this past week, the biggest weekly drop since the final week of August. The IMF cut its global growth forecast, Japanese car sales fell in China and Spain’s debt rating was lowered two levels to BBB- from BBB+, citing mounting economic and political risks.
“We are clearly seeing the impact of a Chinese slowdown globally,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “Equity markets have had a very strong run, so it won’t be surprising if they go through some correction. In a sense, actually a correction will be healthy.”
The MSCI Asia Pacific Index has gained 6.1 percent this year as central banks in Europe, the U.S., Japan and China added stimulus measures to counter a global economic slowdown and the European debt crisis. The Asian benchmark traded at 12.78 times estimated earnings on average, compared with 13.61 times for the Standard & Poor’s 500 Index and 11.96 times for the Stoxx Europe 600 Index.
Japan’s Nikkei 225 Stock Average fell 3.7 percent, its biggest weekly decline since May. Japan’s Economy Minister Seiji Maehara said he has a “sense of crisis” as the government downgraded its economic assessment for a third month, the longest streak since the 2009 global recession.
The biggest declines in more than a year for Fast Retailing Co. and Softbank dragged the Nikkei 225 Stock Average to its fourth day of declines Oct. 12. Without those two companies, the benchmark gauge would have risen 1.4 percent yesterday, according to data compiled by Bloomberg.
Japan and China agreed to hold talks over a territorial dispute that has disrupted trade and resulted in a slump in China sales for Toyota, Nissan Motor Co. and Honda Motor Co. last month. No date has been set for the vice-ministerial level discussions, Japan’s foreign ministry said.
Australia’s S&P/ASX 200 Index (AS51) rose 0.4 percent. Hong Kong’s Hang Seng Index gained 0.6 percent, while China’s Shanghai Composite Index advanced 0.9 percent. South Korea’s Kospi Index slipped 3.1 percent.
Singapore’s Straits Times Index retreated 2.1 percent for its biggest weekly decline since May. The country’s central bank unexpectedly refrained from easing monetary policy even as the economy contracted last quarter, saying inflation will remain elevated for some time.
Toyota and Honda reported China sales plunged after rioters torched dealerships and smashed cars in protests sparked by the territorial dispute. Japanese auto brands may lose their market- share lead in the country for the first time since 2005, according to data from the China Passenger Car Association. Toyota lost 3.7 percent to 2,934 yen, while Honda dropped 3.5 percent to 2,338 yen.
“Growth is facing headwinds not only in China, but also everywhere, and the territorial dispute is adding another headache, weighing on the auto sector,” said Kuninobu Takeuchi, Tokyo-based executive portfolio manager at Diam Co., which oversees about 10 trillion yen ($128 billion). “You had expected a rebound in earnings in the second half of this fiscal year, but now things seem to be going against that hope.”
Softbank plunged 21 percent to 2,395 yen, recording a record one-day drop yesterday, after Japan’s third-largest phone operator said it’s in talks to invest in Sprint Nextel. CLSA called the possible acquisition “a cause for concern,” citing difficulties in returning the U.S. company to profit.
Fast Retailing Co. sank 13 percent to 16,040 yen after forecasting annual profit below analyst estimates as a slowdown in global economic growth hurt sales of the clothier’s Uniqlo branded apparel.
Hutchinson Whampoa lost 1.2 percent to HK$75.25. Makita Corp., a power-tool maker that gets more than 40 percent of sales from Europe, slid 2.8 percent to 3,000 yen in Tokyo.
Billabong International Ltd. (BBG) tumbled 21 percent to 83.5 Australian cents as TPG International LLC scrapped a A$694 million ($713 million) bid for the surfwear maker, sending the shares to a record low as it was left without a suitor.
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