Asia Stocks Fall as Berlusconi Faces Italy Leadership Vote; Olympus Drops
Asian stocks dropped for a second day ahead of a parliamentary vote in Italy that will show whether Prime Minister Silvio Berlusconi has enough support to stay in power and implement austerity measures.
Sony Corp. (6758), an electronics maker that gets about 21 percent of its sales from Europe, fell 4.1 percent in Tokyo. Olympus Corp. (7733) tumbled 29 percent after the maker of optical equipment said it hid losses by paying inflated fees to advisers on the 2008 acquisition of Gyrus Group Plc. Australia & New Zealand Banking Group Ltd. (ANZ) led the nation’s lenders higher after Australian business confidence climbed in October.
“People are concerned about the Italian situation now,” said Angus Gluskie, who manages more than $350 million at White Funds Management in Sydney. “We need to see some kind of resolution and improvement there before investors get really comfortable with markets.”
The MSCI Asia Pacific Index dropped 0.7 percent to 118.95 as of 7:54 p.m. in Tokyo, having swung between gains and losses at least 16 times. Two shares fell for each that rose on the gauge.
The measure sank 3.6 percent last week, the most since Sept. 23, after debt-laden Greece announced plans to hold a referendum on Europe’s rescue package. Greek Prime Minister George Papandreou scrapped the plan and agreed to step down to allow the creation of a unity government to help secure international aid.
Japan’s Nikkei 225 (NKY) Stock Average dropped 1.3 percent as the Olympus scandal weighed on investor sentiment. South Korea’s Kospi Index lost 0.8 percent. China’s Shanghai Composite Index dropped 0.2 percent, while Hong Kong’s Hang Seng Index was little changed. Australia’s S&P/ASX 200 gained 0.5 percent.
Futures on the Standard & Poor’s 500 Index lost 0.3 percent today after rising as much as 0.5 percent earlier. In New York, the index rose 0.6 percent yesterday after the European Central Bank’s Juergen Stark said the region’s debt crisis will be under control in two years.
Italian premier Berlusconi is struggling to hold on to power and prove he can implement austerity measures pledged to European Union allies. Berlusconi denied a report by Giuliano Ferrara, his former spokesman and now editor of newspaper Il Foglio, who wrote that the premier would step down “within hours.”
Greek Prime Minister Papandreou and Antonis Samaras, leader of New Democracy, “made progress in talks yesterday to name a head of a national unity government,” Elias Mosialos, a Greek government spokesman, said in an e-mailed statement. The talks will resume today, said a Greek official who declined to be named.
‘Management with Integrity’
Exporters to Europe declined. Sony sank 4.1 percent to 1,346 yen in Tokyo. Nippon Sheet Glass Co., which counts Europe as its biggest market, decreased 2.6 percent to 148 yen. Esprit Holdings Ltd., a clothier that gets most of its sales from Europe, dropped 0.9 percent to HK$10.56.
Olympus tumbled 29 percent to 734 yen, the most on the MSCI Asia Pacific Index. Michael C. Woodford, the former chief executive officer of Olympus, said the company needs a “new management with integrity” as it admitted wrongdoing for the first time following accusations Woodford made four weeks ago.
Three Olympus executives, including former chairman Tsuyoshi Kikukawa, helped conceal decades of losses by paying inflated fees to takeover advisers, said president Shuichi Takayama in a press conference in Tokyo today. Shares of the maker of cameras and endoscopes may be placed on a watchlist for possible delisting by the Tokyo Stock Exchange, said Kazuhiko Yoshimatsu, a bourse spokesman.
‘Sense of Mistrust’
Shares of Japanese brokerages declined as Olympus’ statement sparked concerns about corporate governance in Japan. Nomura Holdings Inc. (8604), the nation’s biggest brokerage, slumped 15 percent to 245 yen. Rival Daiwa Securities Group Inc. (8601) sank 7 percent to 251 yen.
“Olympus’s announcement gave a sense of mistrust to Japan’s stock market as a whole, prompting investors to sell brokerage stocks,” said Masao Muraki, a Tokyo-based analyst at Deutsche Securities Inc.
The MSCI Asia Pacific Index declined 13 percent this year through yesterday, compared with a 0.3 percent gain by the S&P 500 and a 14 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.9 times estimated earnings on average, compared with 12.7 times for the S&P 500 and 10.3 times for the Stoxx 600.
Of the 459 companies on the Asian benchmark index that have reported results since Oct. 11, 214 missed analysts’ estimates while 159 exceeded expectations, according to data compiled by Bloomberg.
Dainippon Screen Manufacturing Co., a chip-equipment maker, dropped 3.8 percent to 560 yen. The company cut its full-year net-income outlook 52 percent to 10 billion yen ($128 million), saying chipmakers may reduce capital spending.
Chinese property developers dropped after Barclays Capital Research said home prices will fall as much as 30 percent next year, driven by the government’s housing curbs. State-owned China Resources Land Ltd. sank 3.6 percent to HK$11.78. China Overseas Land & Investment Ltd. (688), the largest mainland developer listed in Hong Kong, declined 5 percent to HK$13.56.
Little Sheep Group Ltd., which runs a hot-pot restaurant chain, surged 15 percent to HK$6.37 in Hong Kong. Yum! Brands Inc., owner of the KFC and Pizza Hut fast-food chains, won anti- monopoly clearance from China’s Ministry of Commerce for a takeover, Little Sheep said.
Australian lenders advanced after a survey showed business confidence in the country rose to a five-month high in October as companies bet correctly the central bank would lower interest rates.
ANZ Bank climbed 1.8 percent to A$21.58. Westpac Banking Corp. (WBC), Australia’s second-largest lender by market value, gained 0.8 percent to A$21.28. National Australia Bank Ltd. rose gained 1 percent to A$25.43.
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