Asian Stocks Decline, Led by Japanese Shares
Asian stocks fell, sending the MSCI Asia Pacific Index to the lowest level since May last year, amid mounting concern Europe won’t resolve its debt crisis and as companies from Nippon Electric Glass Co. to China Yurun Food Group Ltd. (1068) predicted lower earnings.
Nippon Electric Glass, a maker of parts for flat screen displays, sank 12 percent after cutting its profit forecast. China Yurun Food plunged 31 percent after the pork producer said profit will drop because of higher material costs. Hanjin Shipping Co., South Korea’s largest shipping line, fell by the daily limit of 15 percent after saying it will sell new shares.
The MSCI Asia Pacific Index dropped 2.4 percent to 109.06 at 7:28 p.m. in Tokyo, extending losses for a third day. The measure slumped 7.1 percent last week, the most in almost three years, driving the index into a so-called bear market after falling more than 20 percent from a May 2 high.
“Markets have moved well beyond Greece by now and are really focusing on the outlook for growth and the possible contagion into the banking sector,” Mark Konyn, the Hong Kong- based chief executive officer of RCM Asia Pacific Ltd., told Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” RCM oversees about $154 billion. “Confidence is continuing to drain.”
The Nikkei 225 Stock Average tumbled 2.2 percent to 8,374.13, the lowest since April 2009. Japan’s markets were shut for a public holiday on Sept. 23, when the MSCI Asia Pacific excluding Japan Index dropped 2 percent. South Korea’s Kospi Index (KOSPI) fell 2.6 percent and Hong Kong’s Hang Seng Index retreated 1.5 percent.
Futures on the Standard & Poor’s 500 Index gained 1 percent to 1,141.5 after swinging between gains and losses of as much as 1.3 percent today. The U.S. equity benchmark dropped 6.5 percent last week.
European policy makers face mounting pressure to step up efforts to contain the sovereign-debt crisis. U.S. Treasury Secretary Timothy F. Geithner warned at an annual meeting of the International Monetary Fund in Washington that failure to combat the Greek-led turmoil threatened “cascading default, bank runs and catastrophic risk.” Billionaire investor George Soros said “something needs to be done” to safeguard Europe’s banks because Greece may be unable to avoid default.
Pacific Investment Management Co., which runs the world’s biggest bond fund, is forecasting that advanced economies will stall over the next year as Europe slides into a recession. Mohamed El-Erian, chief executive officer of Newport Beach, California-based Pimco, said the worldwide expansion will be about 2.5 percent, less than the 4 percent forecast by the International Monetary Fund.
Nippon Electric Glass dropped 12 percent to 656 yen. The company cut its net income forecast for the half-year ending Sept. 30 to 24 billion yen ($314 million), 14 percent lower than its previous outlook of 26.5 billion yen, citing a slump in the flat-panel display market.
China Yurun Food plunged 31 percent to HK$7.51. Profit at the meat processor will drop because of “continual publication of negative media reports” and an increase in raw material costs, the company said in an exchange filing. Yurun has fallen 47 percent since its closing price on Sept. 7, the day before the National Business Daily reported that meat sold by one of its units contained an illegal additive.
Hanjin Shipping fell 15 percent to 11,650 won, the lowest intraday price since it began trading in December 2009. The company plans to sell 40 million new shares, and a 159.8 billion won ($135 million) stake in an energy venture, to help reduce its debt-to-equity ratio after posting a first-half loss.
Mining companies retreated as gold futures for immediate delivery slumped for a fourth day, losing 3.6 percent to $1,596.72 an ounce. Newcrest Mining Ltd., Australia’s biggest gold producer, dropped 8.5 percent. Zhaojin Mining Industry Co., which also produces the metal, plunged 18 percent.
“There’s concern that the European debt crisis will spread,” said Takashi Hiroki, chief strategist at Monex Securities in Tokyo. “Stocks are falling as we get more concerned about a deceleration of the global economy. A sell-off in shares sensitive to the economy, such as commodity-related stocks, are a reflection of investors’ fears.”
Chaoda Modern Agriculture (Holdings) Ltd. tumbled after Hong Kong’s government said it initiated proceedings against the Chinese food producer for market misconduct amid allegations it overstated its land holdings. The stock plunged 27 percent to HK$1.10, the lowest level since July 2003, before trading was suspended.
Investors are getting paid more than ever to hold Asian stocks compared with the rest of the world. Equity declines have pushed up dividend yields as much as 37 percent on Australia’s S&P/ASX 200, according to data compiled by Bloomberg. That helped send the MSCI Asia Pacific Index’s payout to 3.2 percent, exceeding the MSCI All-Country World Index by the most since at least 1995, the data show.
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