Asian Stocks Slump on U.S. Growth Concern; Nikkei 225 Enters Bear Market

Asian stocks fell amid speculation a U.S. home sales report today will provide more evidence the global economy is faltering. Benchmark indexes in Japan and Vietnam slumped into bear markets.

Sony Corp., which gets about 22 percent of its revenue in the U.S., dropped 3.7 percent in Tokyo as a strengthening yen threatened to erode Japan’s export earnings. BHP Billion Ltd., the world’s largest mining company, sank 1.5 percent in Sydney as oil and metal prices declined. Aluminum Corp. of China Ltd. and Foster’s Group Ltd., Australia’s biggest beer and wine maker, slumped more than 4 percent after posting losses.

The MSCI Asia Pacific Index sank 0.8 percent to 117.47 as of 7:35 p.m. in Tokyo. Investor concerns grew before a report by the Chicago-based National Association of Realtors that will show July sales of existing U.S. homes tumbled 12.9 percent from June, according to economists in a Bloomberg survey.

“The U.S. economy now seems to be weaker than markets expected,” said Stephen Halmarick, who helps manage about $135 billion as head of investment markets research at Colonial First State Global Asset Management in Sydney. “Investors are worried growth will fade sharply and that an improvement in company profits will reverse.”

Japan’s Nikkei 225 Stock Average declined 1.3 percent to its lowest close since May 1, 2009. The gauge has fallen 21 percent from an 18-month high on April 5, a drop that signifies a bear market to some analysts. Vietnam’s VN Index tumbled 3 percent, taking its drop since May 6 to 21 percent.

Election Deadlock

The S&P/ASX 200 Index fell 1.1 percent in Australia, where the ruling political party and its opposition are wooing independent lawmakers in a bid to break an election deadlock and form government. The Philippine Stock Exchange Index slid 2.3 percent after a bus siege in Manila ended with the deaths of at least eight tourists from Hong Kong.

Hong Kong’s Hang Seng Index lost 1.1 percent, while South Korea’s Kospi Index dropped 0.4 percent. Property stocks helped the China’s Shanghai Composite Index rise 0.4 percent.

Futures on the Standard & Poor’s 500 Index lost 0.7 percent. The gauge slumped 0.4 percent yesterday as speculation the economy may return to recession overshadowed the prospect of more takeovers. Economists surveyed by Bloomberg predict U.S. government data tomorrow will show that new-home sales stayed at the second-lowest level on record last month.

Electronics maker Sony dropped 3.7 percent to 2,406 yen in Tokyo. Canon Inc., which gets 28 percent of its revenue from the Americas, declined 0.9 percent to 3,520 yen. Elpida Memory Inc., a chipmaker, slid 4.8 percent to 1,009 yen.

‘Softer Demand’

“The U.S. is a big consumer of goods manufactured in Asia,” said Prasad Patkar, who helps manage $1.6 billion at Platypus Asset Management in Sydney. “Weakness in the U.S. implies softer demand for Asian exports, which weighs down on growth in the region.”

Japanese exporters declined after the yen advanced to an eight-year high against the euro as economic growth concerns boosted demand for refuge assets. Japan’s currency gained to 106.67 yen per euro from 107.79 in New York yesterday, after touching 106.11, the highest since September 2001. The yen traded at 84.47 per dollar from 85.16.

Prime Minister Naoto Kan will today meet business leaders to discuss the strengthening yen’s impact on the economy, the Sankei newspaper reported, without saying where it got the information.

“The market is expecting the U.S. housing data to show bad results,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “As concern about the U.S. economy grows and the yen continues strengthening, investors are having to wait on the sidelines.”

U.S. Data

Concern that economic growth in the U.S., Europe and China will falter has dragged down the MSCI Asia Pacific Index by 8.6 percent from its high this year on April 15. Shares in the gauge are valued at an average 13.7 times estimated earnings, compared with 12.8 times for the S&P 500 and 11.4 times for the Stoxx Europe 600 Index.

A gauge of raw-material producers in the MSCI Asia Pacific Index dropped 1.4 percent, the most among 10 industry groups. Copper futures in New York sank 1.1 percent in after-hours trading, while oil dropped 0.9 percent, the fifth straight drop.

Rio Tinto Group, the world’s third-biggest mining company, lost 1.6 percent to A$71.07. Inpex Corp., Japan’s largest oil explorer, slumped 2.8 percent to 389,500 yen.

BHP, which is due to report earnings tomorrow, slipped 1.5 percent to A$37.54. Separately, Potash Corp. of Saskatchewan Inc., the fertilizer producer seeking to fend off a hostile takeover bid from BHP, said it began talks with other companies on alternatives to the $39 billion offer.

Chalco, Foster’s

In Hong Kong, Aluminum Corp., also known as Chalco, slid 4.4 percent to HK$6.26, even as the company’s chief financial officer said losses in July narrowed from June. Chalco posted a net loss of 96 million yuan ($14 million) for the three months ended June.

Chinese developers climbed after Sina.com reported that weekly new home transaction volumes in the southern city of Shenzhen jumped. China Vanke Co., the nation’s biggest listed property developer, rose 4.2 percent to 8.85 yuan. Poly Real Estate Group Co., the second largest, advanced 2.3 percent to 12.59 yuan.

Foster’s slumped 4.3 percent to A$5.99 after posting a second-half loss following a writedown on its wine division. The brewer had a net loss of A$820.1 million ($728 million) in the six months ended June, compared with net income of A$27 million a year earlier, Melbourne-based Foster’s said today.

Also in Sydney, Westpac Banking Corp. dropped 2.9 percent to A$21.43 after the stock was downgraded to “neutral” from “outperform” at Macquarie Group Ltd., whose analysts described the lender’s earnings yesterday as “lackluster.”

PCCW Ltd., Hong Kong’s biggest phone carrier, plunged 9.8 percent to HK$2.59. The company said it will sell HK$1.3 billion ($167 million) of new stock at a discount to reduce debt.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.

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