Dec. 27 (Bloomberg) -- Asian stocks fell after the world's most powerful earthquake in more than 40 years caused waves that killed at least 14,000 in the region and flooded roads, cities and tourist areas from Malaysia to Sri Lanka.

``This can trigger declines across Asia because the disaster struck across the region,'' said Yudhistia Susanto, who helps manage the equivalent of $216 million in Indonesian stocks for PT Batavia Prosperindo Aset Manajemen in Jakarta. ``This may reduce interest in investing in Asian stocks.''

Morgan Stanley Capital International's Asia-Pacific Index, which tracks the performance of more than 900 stocks, fell 0.2 percent to 99.02 at 3:30 p.m. in Tokyo.

Thai Airways International Pcl slumped, pacing a 1.5 percent drop in Thailand's SET Index. Travel-related stocks such as H.I.S. Co., Japan's largest discount travel agency, and Singapore Airlines Ltd. fell on concern tourism in Southeast Asia will drop.

Indonesia's oil-related stocks such as PT Energi Mega Persada fell on concern that oil transport may be hampered by the disaster. Sri Lanka, which said the death toll there has exceeded 5,000, suspended trading for the day.

Stocks also declined in every local market, except those in India, while indexes in Japan and Indonesia were little changed. Exchanges in Australia, Hong Kong, New Zealand and the Philippines are closed for the Christmas holiday.

`Devastating'

The magnitude 9.0 quake, centered 1,605 kilometers (997 miles) northwest of Jakarta at a depth of 10 kilometers, struck at 7 a.m. local time yesterday, the U.S. Geological Survey said.

``It came at the worst possible time. It's high season when tourists peak'' in Southeast Asia, said Hans Goetti, a Singapore- based fund manager who helps oversee $1.5 billion in global assets at Citigroup Private Bank. ``The impact on the tourist industry is pretty devastating, especially in Thailand.''

Thai Airways, the country's largest biggest carrier, declined 3.5 percent to 48.75 baht. Airports of Thailand Pcl, the biggest airport operator, fell 2.5 percent to 48.25 baht.

H.I.S. shares slid 3.2 percent to 1,995 yen. The company said it plans to cancel package tours to Phuket and the Maldives following the disaster. Singapore Airlines, which flies to some of the affected cities, fell 2.6 percent to S$11.30.

Kinki Nippon Tourist Co., Japan's second-largest travel agency, declined 2.3 percent to 253 yen. AirAsia Bhd., Southeast Asia's largest budget airline, lost 2.3 percent to 1.71 ringgit.

Travelers to Thailand and Malaysia accounted for 9.3 percent of South Koreans going abroad in 2003.

`Definitely Bad'

Korean Air Lines Co. declined 2.5 percent to 17,450 won, while Asiana Airlines Inc. lost 4.2 percent to 3,460 won. Asiana, which flies three times a week to the Thai resort island of Phuket, said travelers were canceling flights.

Thailand said at least 461 people died in Phuket and five other coastal provinces when the tsunamis struck during the south coast's peak holiday season.

``It's cold for the next couple of months, and the places that were hit were nice, warm-weather prime travel destinations. Now, who's going to want to go there?'' said Kim Woo Sik, who manages the equivalent of $130 million at Daehan Investment Trust Management Co. in Seoul. ``This is definitely bad for travel- related shares, especially in the short-term.''

Minimal Impact

Tourism accounts for more than 6 percent of Thailand's economy, Southeast Asia's second largest. Phuket, about 900 kilometers south of Bangkok, attracted as many as 4 million tourists last year, almost two-fifths of all visitors to Thailand, according to local tourist officials.

Elsewhere, Hyundai Motor Co., South Korea's largest automaker, dropped 2.1 percent to 52,400 won after saying 1,173 of its vehicles were under water after waves inundated a port in eastern India. The cars, valued at 6 billion won ($5.7 million), were fully insured, the company said.

PT Energi Mega Persada, Indonesia's second-largest oil company, fell 4.2 percent to 575 rupiah.

The destruction raises concern that ``revenue from gas and oil may fall,'' said PT Batavia Prosperindo's Susanto.

Still, some investors said the earthquake, centered more than a 1,000 miles from the nation's capital of Jakarta, near Aceh province, won't derail the nation's economic growth.

``The impact is minimal as Aceh's contribution in terms of GDP is small,'' said Arfan Karniody, who helps manage the equivalent of $323 million for PT Niaga Aset Manajemen in Jakarta. ``Most economic growth comes from big cities in Java, so the economy will still grow.''

Growth on Track

Indonesian Trade Minister Mari Pangestu said there was no reason to revise economic growth expectations. Indonesia's economy may grow 5 percent this year, the fastest pace in eight years, the government said last week.

Sri Lanka's John Keells Holdings Ltd. and Aitken Spence & Co., two largest hotel operators on the island, may lead declines when trading resumes tomorrow.

The country, enjoying an increase in tourism amid a cease- fire that ended a 20-year civil war, was struck by the tsunami waves during peak tourist season that started this month.

Tourism revenue on the island, known for its white beaches, ancient Buddhist sites and tea plantations, climbed 11 percent to $266 million in the first 10 months of 2004, the central bank said. Tourism is Sri Lanka's fourth-largest revenue source.

As many as 200,000 people may have lost their homes in Sri Lanka, President Chandrika Kumaratunga said yesterday.

``It's certainly depressing,'' said Hugh Young, who helps oversee $10 billion in Asian bonds and equities as a Singapore- based managing director at Aberdeen Asset Management Asia. ``The earthquake will affect short-term traders.''

Rebuilding

Shares of construction companies in India paced the Sensitive Index higher on speculation they may win contracts once areas devastated by the tsunami waves start to rebuild.

The Sensex gained 0.5 percent. Larsen & Toubro Ltd., the nation's biggest construction company, gained 1.8 percent to 993 rupees. Bharat Heavy Electricals Ltd., India's biggest power- equipment maker, added 1 percent to 732.60 rupees.

``Construction companies could get orders to help rebuild damaged ports, jetties and roads,'' said Sanjay Panicker, head of equity sales at Darashaw Securities Pvt., in Mumbai.

Elsewhere in Asia, NEC Electronics Corp., the world's largest maker of semiconductors for mobile-phone displays, tumbled 5 percent to 4,940 yen after the Nihon Keizai newspaper reported that the company will miss its profit forecast.

The company's net income may total 17 billion yen ($164 million) for the year ending March 31, the Nihon Keizai reported Dec. 25, without saying where it got the information.

That compares with a 28 billion yen profit the company projected in October and 28.1 billion yen net income the previous year. The newspaper cited declining demand for semiconductors used in mobile phones and DVD recorders as the reason.

To contact the reporter on this story: Michael Tsang in Tokyo at mtsang1@bloomberg.net.

Last Updated: December 27, 2004 01:41 EST