Asian Stocks Tumble as Crisis Hits Italy; Banks, Exporters Dive
Nov. 10 (Bloomberg) -- John Wadle, head of banking research at Mirae Asset Securities (HK) Ltd., talks about China's banking industry. Wadle also discusses Goldman Sachs Group Inc.'s stake in Industrial & Commercial Bank of China Ltd., and HSBC Holdings Plc's financial results and business outlook. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Nov. 10 (Bloomberg) -- Marino Valensise, chief investment officer at Baring Asset Management Ltd., discusses Europe's debt crisis, global equity markets and investment allocation. Valensise speaks in Hong Kong with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Asian stocks plunged, with the regional index headed for its biggest drop in seven weeks, after Japan’s machinery orders dropped and China’s export growth slowed and Europe’s debt crisis has infected Italy.
HSBC Holdings Plc (HSBA), the U.K.’s largest lender by market value, sank 9.1 percent in Hong Kong after profit at its investment bank declined amid political and economic uncertainty in Europe. Fanuc Corp. (6954), a maker of industrial robots, slipped 4.1 percent in Tokyo. Noble Group Ltd. (NOBL) slumped 25 percent in Singapore, its biggest plunge since 1998, as Chief Executive Officer Ricardo Leiman quit after the Hong Kong-based commodity supplier posted its first loss in 14 years.
“Europe’s problems are structural and require more than a tinkering on the edges to resolve,” said Lee King Fuei, a Singapore-based fund manager at Schroders Plc, which has about $326 billion of assets globally. “Solving these problems will require a fair bit of pain among citizens. Even if politicians know the right solutions, they risk getting kicked out. The global economic environment looks very challenging.”
The MSCI Asia Pacific Index declined 3.4 percent to 115.95 as of 6:02 p.m. in Tokyo, poised for its biggest drop since Sept. 22. Just 50 of the 1,015 companies on the gauge advanced.
Gauges of financial and industrial companies led the decline. Information technology companies had the third biggest loss on the index as Elpida Memory Inc. (6665), which shed 10 percent, led chipmakers down after memory fell to a record low price.
‘Big Concern’
Japan’s Nikkei 225 (NKY) Stock Average slipped 2.9 percent, the most since Aug. 5. Australia’s S&P/ASX 200 dropped 2.4 percent. China’s Shanghai Composite Index fell 1.8 percent as the nation’s exports rose at the slowest pace in almost two years. India’s markets were closed today.
Hong Kong’s Hang Seng Index tumbled 5.3 percent, the most since Aug. 9. South Korea’s Kospi Index fell 4.9 percent. Volatility indexes for the Hong Kong and Japanese benchmark gauges jumped more than 20 percent. A gauge of price swings on the Kospi 200 Index jumped 17 percent.
Futures on the Standard & Poor’s 500 Index swung between gains of 0.7 percent and losses of 0.6 percent. The index slumped 3.7 percent in New York yesterday, with only one stock advancing, the lowest number since June 29, 2010, according to data compiled by Bloomberg.
Global stocks dropped this week as Europe’s sovereign-debt crisis stirred political turmoil across the region, with Italian Prime Minister Silvio Berlusconi and Greek Prime Minister George Papandreou both offering to step down. Italian 10-year bond yields have breached the 7 percent level at which Greece, Portugal and Ireland sought bailouts.
‘Very Worried’
“The big concern is that Italy will need to get its funding from other sources than the market,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “Because of its size, people are very worried,”
Financial stocks were the main drag for the MSCI Asia Pacific Index amid concern political wrangling in Europe will hinder efforts to contain the debt crisis. Papandreou’s drive to put together a unity government in Greece descended into disarray as rival parties squabbled over his replacement.
HSBC slumped 9.1 percent to HK$61.90 in Hong Kong, the most since March 2009, after the lender posted a 53 percent drop in third-quarter pretax profit at its investment bank and bad loan provisions climbed.
Industrial & Commercial Bank of China (601398) Ltd. sank 8.7 percent to HK$4.74 after Goldman Sachs Group Inc. raised $1.1 billion selling shares of ICBC, as the world’s biggest lender is known, at a discount. Goldman Sachs sold 1.75 billion ICBC shares at HK$4.88, two people with knowledge of the matter said, asking not to be identified because the details are private.
Chip Stocks Plunge
Japanese industrial companies dropped after a report showed the nation’s machinery orders fell more than economists forecast in September, indicating companies may hold off capital outlays as Europe’s crisis threatens the global economic recovery.
Fanuc slipped 4.1 percent to 12,280 yen in Tokyo. Komatsu Ltd. (6301), Asia’s biggest maker of construction equipment, dropped 5.1 percent to 1,898 yen.
Chipmakers tumbled after the price of computer-storage chips dropped to their cheapest levels on record. Elpida dropped 10 percent to 377 yen. Toshiba Corp. (6502), which receives 18 percent of sales from semiconductors, retreated 6.7 percent to 323 yen. Inotera Memories Inc. (3474), a Taiwanese DRAM-chip maker, dropped 7 percent to NT$4.12.
Copper Slides
Raw-material producers declined after copper dropped to a two-week low, crude oil fell for a second day and rubber plunged to the lowest price in 18 months. The Thomson Reuters/Jefferies CRB Index of 19 commodities, ranging from cotton to corn, slid 1.3 percent in New York yesterday, snapping a five-day gain.
BHP Billiton Ltd. (BHP), the world’s biggest mining company and the Australia’s No. 1 oil producer, slipped 2.2 percent to A$37.48. Glencore International Plc, the world’s largest commodities trader, sank 3.9 percent to HK$53.60 in Hong Kong.
The MSCI Asia Pacific Index fell 13 percent this year through yesterday, compared with a 2.3 percent loss by the S&P 500 and a 14 percent decline by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 12.9 times estimated earnings on average, compared with 12.4 times for the S&P 500 and 10.2 times for the Stoxx 600.
Of the 511 companies on the Asian gauge that reported results since Oct. 11, 46 percent have missed analysts’ estimates, while 34 percent exceeded expectations, according to data compiled by Bloomberg.
Noble Group plunged 25 percent to S$1.20 in Singapore, the most since September 1998 and the worst performer on the MSCI Asia Pacific Index. The company reported a third-quarter net loss of $17.5 million, the first in about 14 years, citing defaults by U.S. cotton farmers and a plunge in carbon credits in Europe.
Chairman and founder Richard Elman will be acting CEO until talks with Leiman’s unidentified replacement are completed, it said.
To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
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