Asian Stocks Drop as BOJ Warns of Economic Risk, Korea Confidence Declines

Asian stocks fell amid slow holiday trading, with the regional benchmark headed for its worst year since 2008, as the Bank of Japan warned of downside risks to the economy and South Korean consumer confidence slid.

Nissan Motor Co. (7201), Japan’s third-largest carmaker by market value, fell 1.7 percent. Anhui Conch Cement led losses among Chinese industrial companies after a report profit growth slowed in the sector. Samsung Electro-Mechanics Co. fell 6.8 percent in Seoul after saying it will sell its stake in a light-emitting diode business for less than investors expected. Nishimatsu Construction Co. led gains among Japanese construction firms after a report the country will build three bullet train lines.

The MSCI Asia Pacific Index fell 0.2 percent to 113.64 as of 7:15 p.m. in Tokyo, with about two stocks falling for each that rose. The measure is headed for a 17 percent loss this year, its biggest annual decline since 2008. Markets in Australia, New Zealand and Hong Kong are closed today.

“Economic uncertainty is deepening around the world, which is showing up in some Japanese statistics on exports and production,” said Hitoshi Asaoka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co. “Investors find it hard to move near year-end.”

Japan’s Nikkei 225 Stock Average lost 0.5 percent after minutes from a central bank meeting last month showed a few board members said Europe’s sovereign-debt crisis and the yen’s rise pose increasing risks to economic growth. Trading volume on the gauge was more than 59 percent below the 100-day average, according to data compiled by Bloomberg.

‘No Catalyst’

“There’s no outstanding catalyst to buy stocks (MXAP),” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “Trading energy plunged in the Tokyo market yesterday. Today as well, we can’t expect foreign investors to buy shares as the overseas markets are closed.”

Nissan lost 1.7 percent to 684 yen. Sharp Corp., Japan’s largest maker of flat-panel displays, slid 1.4 percent to 711 yen.

South Korea’s Kospi Index (KOSPI) fell 0.8 percent after consumer sentiment slipped. The gauge dropped as much as 2.3 percent after a mistaken order was apparently placed, according to La Sung Chae, an official at the market trading analysis team of Korea Exchange Inc. Shares also fell amid unsubstantiated rumors concerning the health of the new leader of North Korea and the nation’s relations with China, the official said.

Shanghai Stocks

The Shanghai Composite Index dropped 1.1 percent. Shares of mainland industrial companies fell after a report that profit growth declined to 24.4 percent in the first 11 months of the year from 25.3 percent in the 10 months through October.

Anhui Conch Cement slid 2.4 percent to 15.11 yuan. Sany Heavy Industry Co. fell 1.9 percent to 11.94 yuan.

Samsung Electro-Mechanics retreated 6.8 percent to 80,700 won in Seoul. The maker of electronic parts will sell its stake in an LED venture to Samsung Electronics Co. for 283 billion won ($244 million), according to a regulatory filing. The value of the deal is lower than expected, Woori Investment & Securities Co. said in a report today. Samsung Electronics gained 0.7 percent to 1.07 million won.

Japanese construction companies advanced after the Nikkei newspaper said the nation will start work on three bullet train lines, citing Transportation Minister Takeshi Maeda. Nishimatsu added 3.2 percent to 129 yen. Matsui Construction Co. rose 3 percent to 307 yen.

Stocks in the MSCI Asia Pacific Index are valued at 12.7 times estimated earnings on average, compared with 12.8 times for the S&P 500 and 10.5 times for the Stoxx 600. Utilities have lost 27 percent this year, the worst among the 10 industry groups on the Asian benchmark gauge, as Japanese power generators tumbled after a nuclear crisis at Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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