Asian Stocks Fall on G-20 Europe Warning, Slowing U.S. Recovery

Asian stocks fell this week, just the fourth weekly retreat this year for the regional benchmark, as the Group of 20 nations warned Europe’s debt crisis still threatens global growth and as U.S. economic data showed the recovery in the world’s largest economy is slowing.

Technology exporters led declines in Asia this week as companies from International Business Machines Corp. (IBM), the world’s biggest computer-services provider, to SanDisk Corp., reported disappointing results. TPK Holding Co Ltd., a Taiwanese supplier for Apple Inc., led declines, falling 16 percent this week. Seoul, Korea-based LG Chem Ltd. (051910), announced a lower-than- expected profit and fell 15 percent on the week.

The MSCI Asia Pacific Index lost 0.7 percent to 124.21, erasing last week’s 0.1 percent gain. The gauge fell four out of five days this week. It has alternated between weekly gains and losses since March 2, when it finished a record 11-week winning streak. It has risen about 9 percent this year.

“I still think Europe overall is just buying time for its problem, which cannot be resolved in the short term,” said Alex Au, Hong Kong-based managing director of Richland Capital Management Ltd., which oversees $300 million. “From time to time in the next few years I think we will see panic situations. The market is very thin and liquidity is low, so if someone wants to push the market down it won’t be too difficult. Investors are holding a lot of cash.”

South Korea Slump

Asia’s benchmark equity gauge has retreated 3.7 percent from the start of March on speculation stock gains have outpaced the prospects for earnings growth after the index climbed 13 percent in the first two months of the year. Shares on the MSCI Asia Pacific Index (MXAP) are valued at an average of 12.7 times estimated earnings, compared with 13.1 on the Standard & Poor’s 500 Index and 10.8 for the Stoxx Europe 600 Index.

South Korea’s Kospi Index (KOSPI) slipped 1.7 percent, led by petrochemical companies after LG Chem Ltd. missed earnings estimates.

Japan’s Nikkei 225 Stock Average (NKY) dropped 0.8 percent this week, even as exports grew at the fastest pace in a year in March and the yen fell against most of its major counterparts. The yen rose 0.7 percent against the dollar this week, its first weekly depreciation this month.

Hong Kong’s Hang Seng Index (HSI) advanced 1.5 percent this week amid speculation China’s policy makers will lower lending curbs to boost growth in the world’s second-largest economy. The Shanghai Stock Exchange Composite Index (SHCOMP) gained 2 percent this week.

Australia Gains

Australia’s S&P/ASX 200 added 1 percent as UBS AG and JPMorgan Chase & Co. upgraded Australian mining stocks amid signs of improving economic growth in China. The lagging performance of the shares boosted views from strategists at the Swiss and U.S. brokerages.

The Asian stock benchmark saw its biggest single day increase this month on April 18, gaining 1.1 percent, after the International Monetary Fund raised global economic forecasts and Spain sold more debt than targeted. The rally was short-lived as bad loans held by Spanish banks surged ahead of European bond sales the next day.

The G-20 cited “the situation in Europe” first in a list of drags on the world economy, according to a draft statement obtained by Bloomberg News. Finance ministers meeting in Washington urged Europe’s leaders to do more to fix their debt- wracked region.

Technology exporters led declines in Asia with the MSCI AC Asia Pacific Information Technology Index, a gauge of technology companies, retreating 1.9 percent. TPK Holding Co Ltd. (3673) manufactures touch screens for computers and hand-held devices and for companies including Apple Inc., dropped the most, falling 16 percent this week to NT$388.

HTC Corp. Falls

Foxconn International Holdings Ltd. (2038), a supplier for Nokia OYJ fell 15 percent to HK$4.36 in Hong Kong. HTC Corp., Asia’s second-largest smart phone maker slid 13 percent to NT$462. It named Chang Chia-lin chief financial officer and spokesman this week after reporting its biggest drop in profit since listing a decade ago earlier this month.

LG Chem Ltd., South Korea’s biggest chemicals maker, tumbled 15 percent to 315,500 won, its biggest weekly drop since October 3, 2009. The company reported a worse-than-estimated 42 percent decline in first-quarter profit as demand in China waned for materials used to make plastic and synthetic rubber.

Other Korean chemical stocks also retreated, with Honam Petrochemical Corp. (011170) falling 12 percent to 294,500 won and Kumho Petro Chemical Co. losing 14 percent to 118,500 won.

Among stocks that gained this week, Wynn Macau Ltd. (1128) rose 8.4 percent to HK$23.85, its highest level since September 16. Macaubusiness.com said the owner of the Wynn and Encore casinos may sign a land contract for a proposed resort in Cotai, Macau, this month. The shares have risen 18 percent this year.

To contact the reporter on this story: Eleni Himaras in Hong Kong at ehimaras@bloomberg.net

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

Bloomberg reserves the right to edit or 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.