Asian Stocks Pare Losses as BOJ Expands Stimulus After European Downgrades

Asian stocks fell after Moody’s Investors Service cut credit ratings of six European countries, reigniting concern the region may not contain its debt crisis. Japanese equities reversed losses after the central bank unexpectedly increased asset purchases.

Cosco Pacific Ltd., which operates container facilities at Greece’s Piraeus port, fell 1.9 percent in Hong Kong. E Ink Holdings Inc., which makes screens for Amazon.com’s handheld reader, slumped 6.2 percent in Taiwan. Mitsubishi UFJ Financial Group Inc. (8306) advanced 1.3 percent after the Bank of Japan expanded an asset-purchase program to buoy growth

The MSCI Asia Pacific Index dropped 0.4 percent to 125.32 as of 4:52 p.m. in Tokyo, paring losses of as much as 0.8 percent. Nine of the 10 industry groups on the MSCI Asia Pacific Index slid after Moody’s cut debt ratings of Italy, Spain, Portugal and three other European countries. The move follows downgrades in the last two months by Standard & Poor’s and Fitch Ratings.

“These sorts of things can have a negative knee-jerk impact,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “The reality is we’ve been talking about this for so long that it should hardly be a surprise to anybody.”

Moody’s cited “uncertainty over the euro area’s prospects for institutional reform of its fiscal and economic framework” as a reason for the downgrades.

Cosco Pacific Slips

Cosco Pacific Ltd. (1199), which operates container facilities at Greece’s Piraeus port, fell 1.9 percent to HK$12.10 in Hong Kong. Esprit Holdings Ltd. (330), a clothier that counts Europe as its biggest market, slid 3 percent to HK$14.50.

The Nikkei 225 Stock Average advanced 0.6 percent after the Bank of Japan added 10 trillion yen ($128 billion) to an asset- purchase program and set an inflation target after an economic slide fuelled criticism it has been slower to act than counterparts.

“The BOJ finally moved while other central banks are promoting more monetary easing,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “Investors like it.”

Mitsubishi UFJ gained 1.3 percent to 392 yen. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second-biggest lender by market value, added 1.3 percent to 2,599 yen.

Another Greek Bailout

Futures on the Standard & Poor’s 500 Index dropped 0.2 percent. The index climbed 0.7 percent in New York yesterday amid speculation the approval of budget cuts by Greece’s parliament yesterday would be enough to secure another bailout. European finance chiefs are expected tomorrow to ratify a 130 billion-euro ($171 billion) aid package for the debt-stricken nation.

Australia’s S&P/ASX 200 lost 1 percent even after a report showed confidence among the nation’s business rose to an eight- month high in January. South Korea’s Kospi Index fell 0.2 percent.

Hong Kong’s Hang Seng Index (HSI) rose 0.2 percent. The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, declined 0.3 percent. Stocks slipped after a former deputy governor of China’s central bank said authorities probably won’t significantly ease credit conditions this year if the economy worsens.

E Ink Drops

Anhui Conch Cement Co., the mainland’s biggest supplier of the material, dropped 3.2 percent to HK$26.15 in Hong Kong. Angang Steel Co. slipped 4.1 percent to HK$6.02 percent. China Coal Energy Co. declined 1.7 percent to HK$9.95.

E Ink (8069) slumped 6.2 percent to NT$40.3 after Goldman Sachs cut its rating on the stock, saying shipment growth of displays for electronic readers may slow. JPMorgan Chase & Co. cut the company’s share-price estimate 40 percent to NT$36.

China Molybdenum Co., a mineral explorer, slumped 7.4 percent to HK$4.01 after reporting fiscal year profit was 1.12 billion yuan ($178 million), short of the 1.18 billion yuan estimated by analysts.

Of 441 companies on the Asia Pacific index that have reported earnings since Jan. 9, more than half have missed analysts’ estimates, according to data compiled by Bloomberg.

The MSCI Asia Pacific Index gained 10.5 percent this year through yesterday, compared with a 7.5 percent increase by the S&P 500 and a 7.6 percent advance by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 14.1 times estimated earnings on average, compared with 12.9 times for the S&P 500 and 10.9 times for the Stoxx 600.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net

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

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.