Asia Stocks Fall Most in 6 Mths as French Elect Socialist
Asian stocks fell, with the regional benchmark index declining the most in six months, as concern grew that the European debt crisis may worsen after Francois Hollande was elected France’s first Socialist president in almost two decades.
Samsung Electronics Co., the world’s No. 1 maker of mobile phones by sales, dropped 1.3 percent in Seoul after U.S. employers added fewer jobs than expected. Sony Corp. sank 4.5 percent, leading losses among Japanese exporters on concern a weaker euro will damp overseas income. Miner and oil producer BHP Billiton Ltd. lost 4.1 percent in Sydney as copper and crude futures fell.
“The situation in Europe is tough,” Khiem Do, Hong Kong- based head of Asian multi-asset strategy at Baring Asset Management Asia Ltd., said on Bloomberg Television. The firm oversees about $10 billion. “Very few nations can stand austerity. If the European Monetary Union stays the same, something has to give.”
The MSCI Asia Pacific Index (MXAP) declined 2.4 percent to 121.14 as of 5:30 p.m. in Tokyo, its biggest drop since Nov. 10. About 10 shares fell for each that rose on the gauge. The measure lost 0.2 percent last week after Australia’s central bank cut its economic growth forecast and U.S. services industries expanded less than forecast, sparking concern the global recovery may be faltering.
The Nikkei 225 Stock Average (NKY) sank 2.8 percent as Japanese markets resumed trading after a four-day weekend. South Korea’s Kospi Index slid 1.6 percent and Australia’s S&P/ASX 200 Index closed down 2.2 percent, its biggest loss since December.
Hong Kong’s Hang Seng Index declined 2.6 percent, while China’s Shanghai Composite Index was little changed. Trading volumes in Japan, Hong Kong and China were at least 2.6 percent above the 30-day average, according to data compiled by Bloomberg News.
Volatility rose as stocks tumbled. The HSI Volatility Index (VHSI), a measure of options prices on the Hang Seng, jumped 19 percent to 22.29 for the biggest gain in six months. The Nikkei Stock Average Volatility Index surged 14 percent to 22.58, the highest since March 15.
Futures on the Standard & Poor’s 500 Index fell 0.7 percent today. The gauge sank 1.6 percent in New York on May 4 after a report showed payrolls climbed 115,000 in April, the smallest gain in six months and below economists’ estimates for a 160,000 advance. The jobless rate unexpectedly fell to a three-year low of 8.1 percent as people left the labor force.
Exporters to the U.S. declined. Samsung Electronics slid 1.3 percent to 1.342 million won in Seoul. Li & Fung Ltd., a supplier of toys and clothes to Wal-Mart Stores Inc., sank 5.1 percent to HK$16.32 in Hong Kong. Honda Motor Co., a carmaker that gets 44 percent of sales from North America, dropped 5.6 percent to 2,660 yen in Tokyo.
“In the U.S., the job recovery is getting sluggish, fueling concern that may have a bad impact on consumer spending and housing markets,” said Toshiyuki Kanayama, a market analyst at Tokyo-based Monex Inc. “There’s concern that the European debt problem may get serious. The euro is being sold in the currency market and that’s negative for Japanese stocks.”
Japanese exporters also declined after the euro fell to its lowest level against the yen in almost three months as French voters elected Hollande president and Greek voters flocked to anti-bailout parties, stoking concern austerity efforts in Europe may be derailed.
Sony, which gets about 21 percent of sales from Europe, dropped 4.5 percent to 1,213 yen, headed for its lowest close since April 1987. Canon Inc., which counts Europe as its biggest market, dropped 1.9 percent to 3,530 yen.
Hollande, the first Socialist in 17 years to lead Europe’s second-biggest economy, pledged to push for less austerity. He got about 52 percent of the vote against about 48 percent for Nicolas Sarkozy, according to estimates by four pollsters. Hollande’s platform calls for policies German Chancellor Angela Merkel opposes, including increased spending and a delayed deficit-reduction effort.
Energy companies posted the second-biggest decline among the 10 industry groups in the MSCI Asia Pacific Index. Crude oil for June delivery plunged as much as 3.2 percent in electronic trading on the New York Mercantile Exchange. Copper for July delivery fell as much as 1.5 percent.
Woodside Petroleum Ltd. (WPL), Australia’s second-largest oil producer, slipped 2.5 percent to A$34.50. Oil explorer Inpex Corp. declined 5.3 percent to 499,000 yen. Cnooc Ltd., China’s largest offshore crude producer, decreased 4.2 percent to HK$15.84 in Hong Kong.
BHP, Rio Drop
BHP dropped 4.1 percent to A$34.57. Rio Tinto Group (RIO), the world’s No. 3 mining company by market value, sank 4.5 percent to A$62. Jiangxi Copper Co., China’s biggest producer of the metal, slid 3.3 percent to HK$18.30.
The MSCI Asia Pacific Index gained 9 percent this year through May 4, compared with a 8.9 percent advance by the S&P 500 and a 3.5 percent increase for the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 1.3 times book value, compared with 2.2 times for the S&P 500 and 1.4 times for the Stoxx 600, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.
Gree Inc. and DeNA Co. led declines among Japanese game makers as the nation’s consumer agency said it’s probing whether a sales method used by operators is illegal. Gree tumbled 23 percent to 1,651 yen. DeNA slumped 20 percent to 1,990 yen.
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