Asian Stocks Drop for Third Day on Concern for Profit, Budgets

Feb. 8 (Bloomberg) -- Asian stocks fell, dragging the MSCI Asia Pacific Index 10 percent below its January peak, as electronics makers posted losses and European finance ministers failed to announce detailed plans to tackle budget deficits.

Panasonic Corp. and Casio Computer Co. slumped more than 5 percent in Tokyo. Jupiter Telecommunications Co. sank 9.6 percent on concern KDDI Corp. may trim its planned investment in the cable operator. HTC Corp. lost 6.7 percent in Taipei after a newspaper said the phone maker may cut prices by 40 percent.

The MSCI Asia Pacific Index dropped 0.5 percent to 114.06 as of 7:22 p.m. in Tokyo, with twice as many stocks declining as advancing. The gauge has fallen 10 percent from a 17-month high on Jan. 15, entering a so-called correction, on concern central banks from China to India will tighten monetary policy to curb inflation, and that Greece, Spain and Portugal will have difficulty curbing deficits.

“The correction we’re seeing is likely to go further, but I still regard these recent sell-offs as a bump in the road,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which oversees about $90 billion globally. “Despite the anxiety in recent weeks, the global growth recovery remains intact.”

Today marked the MSCI index’s third-straight drop. Japan’s Nikkei 225 Stock Average fell 1.1 percent. Kirin Holdings Co. dropped 7.4 percent as merger talks with Suntory Holdings Ltd. stalled. Hong Kong’s Hang Seng Index lost 0.6 percent. The Jakarta Composite Index sank 1.7 percent, the biggest retreat in the Asia-Pacific, on declines in some commodity prices.

Indexes, Futures

Australia’s S&P/ASX 200 Index rose 0.2 percent after the government said it’s withdrawing guarantees on large deposits and wholesale funding as credit markets recover from the global financial crisis. New Zealand’s NZX 50 Index fell 0.4 percent in Wellington, even as house prices increased in January.

Futures on the Standard & Poor’s 500 Index added 0.3 percent. The gauge gained 0.3 percent on Feb. 5, erasing an early 1.8 percent drop, on speculation the European Union would devise a solution for budget deficits in Greece and Spain.

Concluding a meeting of Group of Seven finance ministers in Canada, European officials said they will help ensure Greece tackles the largest budget deficit in the region. French Finance Minister Christine Lagarde told reporters that European nations “have confirmed the substance and significance” of Greece’s plan to reduce the deficit without outside assistance.

‘Still Pretty Nervous’

“The market is still pretty nervous,” said Chris Hall, who helps manage $3.3 billion at Argo Investments Ltd. in Adelaide, Australia. “Greece is still just one part of a bigger concern about the growing size of budget deficits.”

The MSCI Asia Pacific Index dropped 1.8 percent last week, a third weekly decline. That cut the average price of stocks in the gauge to 18 times estimated earnings, the lowest level since February 2009, according to data compiled by Bloomberg.

Panasonic, the world’s largest maker of plasma televisions, fell 5.3 percent to 1,318 yen. Its net loss was 14.6 billion yen ($164 million) for the nine months ended Dec. 31, compared with a profit of 65.4 billion yen a year earlier, the company said in a statement after markets closed on Feb. 5.

Casio sank 5.3 percent to 625 yen after the electronics maker widened its full-year net loss forecast to 22 billion yen from 7 billion yen.

Yamaha Motor Co. retreated 4.5 percent to 1,198 yen after the motorcycle maker reported a bigger-than-forecast loss. The company had a net loss of 216.2 billion yen in the year ended Dec. 31, wider than its 182 billion yen forecast.

‘Totally Wrong’

Korea Gas Corp., the world’s biggest buyer of liquefied natural gas, sank 1.9 percent to 52,300 won on lower-than- estimated earnings. Chunghwa Picture Tubes Ltd. slid by the 7 percent daily limit for a second day in Taipei after reporting its sixth quarterly loss. The stock fell to NT$3.34.

Also in Taipei, HTC plunged 6.7 percent to NT$278. The company will cut smartphone prices by as much as 40 percent to gain market share, the Economic Daily News reported, without saying where it got the information. The reduction reported by the Taipei-based newspaper “is totally wrong,” HTC Chief Financial Officer Cheng Hui-ming said by phone today, declining to say by how much prices will be cut.

In Sydney, JB Hi-Fi Ltd. slumped 5.1 percent to A$19.07 after reporting first-half results and saying Terry Smart will replace Richard Uechtritz as chief executive officer this year.

In Tokyo, Kirin fell 7.4 percent to 1,337 yen. The company ended talks with closely held Suntory after the two brewers failed to agree on a merger that would have created the world’s fifth-biggest foodmaker.

Commodity Prices Gain

Woodside Petroleum Ltd., Australia’s No. 2 oil and gas producer, advanced 2 percent to A$42.33 in Sydney. Rio Tinto Group, the world’s third-biggest mining company, gained 0.9 percent to A$67.18.

Crude oil for March delivery in New York rose as much as 1.7 percent today after having lost 7.8 percent in the past three days. Copper futures for March delivery climbed 1.5 percent, the first advance in four days.

Newcrest Mining Ltd., Australia’s largest gold producer, gained 1.2 percent to A$31.52. The metal’s price for immediate delivery rose as much as 1.9 percent.

“The resources sector is a long-term theme for us,” AMP’s Naeimi said. “We expect commodity prices to stay well-bid and strong, and that should benefit resources and the energy sector.”

Jupiter Telecommunications tumbled 9.6 percent to 86,000 yen, the largest decline in the MSCI Asia Pacific Index. KDDI, Japan’s second-biggest mobile-phone operator, may scale back its planned investment in the company to avoid inviting regulatory scrutiny, said a KDDI official familiar with the plan.

Australian Banks Climb

Ten Network Holdings Ltd., an Australian broadcaster, jumped 9.6 percent to A$1.66. The government will provide license-fee rebates of 33 percent this year and 50 percent next year, the Australian Financial Review reported, citing Communications Minister Stephen Conroy. The move may save the industry as much as A$95 million ($82 million) this year, according to the paper.

Also in Sydney, Westpac Banking Corp., Australia’s second- biggest lender by market value, climbed 2.8 percent to A$23.25, leading the nation’s banking stocks higher. Financial shares rose the most among the Australian index’s 10 industry groups.

The Australian government is withdrawing a guarantee on large deposits and wholesale funding on March 31, Treasurer Wayne Swan said yesterday on signs the nation’s banks are recovering from the impact of the global financial crisis.

New Zealand is also reviewing its wholesale funding guarantees in the light of Australia’s move, according to Finance Minister Bill English.

To contact the reporters for this story: Shani Raja in Sydney at sraja4@bloomberg.net; Anna Kitanaka in Tokyo at akitanaka@bloomberg.net.