Asian Stocks Post Worst Week Since November on Europe, China

Asian stocks fell, with a regional index posting its worst week in five months, amid concern Greece will be forced out of the euro and that austerity plans needed to contain the Europe’s debt crisis will be derailed.

Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, sank 4.5 percent in Hong Kong this week as the nation’s export growth slowed. Hutchison Whampoa Ltd. (13), which operates ports in Spain and Germany, declined 5.6 percent in Hong Kong. Sony Corp. (6758) fell 11 percent to the lowest in more than 31 years after the maker of Bravia televisions and PlayStation game consoles forecast profit that lagged analyst estimates by half.

“Europe remains the biggest issue facing markets,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages about $150 billion. “It’s not clear how deep the downturn is going to be and the effect this is going to have elsewhere.”

The MSCI Asia Pacific Japan Index (MXAP) declined 4.4 percent to 118.61 this week. That’s the steepest weekly slide since the last week of November as France’s political changes and instability in Greece threaten to derail austerity plans and worsen Europe’s debt crisis. Stocks extended losses yesterday as JPMorgan Chase & Co. said it had a $2 billion trading loss as positions in credit securities proved riskier than expected.

Shanghai Stocks

China’s Shanghai Composite Index (SHCOMP) dropped 2.3 percent. A report released on May 9 showed the nation’s exports rose less than economists’ estimates in April, putting pressure on policy makers to pledge stimulus measures to boost growth. Industrial output in the world’s second-largest economy rose 9.3 percent from a year earlier in April, a government report showed yesterday. That missed the 12.2 percent median estimate in a Bloomberg News survey of 32 economists.

Chinese lenders and shipping companies dropped. ICBC, as China’s biggest bank is known, slipped 4.5 percent to HK$4.89. China Construction Bank Corp. (939), the second-largest, slipped 5.9 percent to HK$5.59. China COSCO Holdings Co., the nation’s No. 1 shipping line, tumbled 14 percent to HK$3.86.

Australia’s S&P/ASX 200 Index (AS51) fell 2.5 percent, while Korea’s Kospi Index dropped 0.7 percent. Japan’s Nikkei 225 Stock Average (NKY) slid 4.6 percent, a sixth consecutive weekly loss.

Europe Impasse

Companies that do business in Europe slipped after coalition talks in Greece reached an impasse, raising concern the country may not hold to the terms of its two bailouts negotiated since May 2010. With parliament split and policy makers in Berlin and Brussels urging Greece to stay the course, the country at the epicenter of the debt crisis is again facing the risk of an exit from the euro.

In France, Francois Hollande of the Socialist party defeated Nicolas Sarkozy to become President. His victory may sharpen tensions with key allies with Hollande advocating a more aggressive European Central Bank role.

Hutchison Whampoa dropped 5.6 percent to HK$71.55. HSBC Holdings Plc (5), Europe’s largest bank, fell 3.3 percent to HK$68.40. Canon Inc. (7751), a Japanese camera maker that gets about 31 percent of sales from Europe, dropped 3.8 percent to 3,465 yen in Tokyo.

Sony Corp. fell 11 percent to 1,135 yen, the lowest in more than 31 years, after forecasting a profit that lagged behind analyst estimates amid slumping sales of its televisions and PlayStation 3 game consoles.

Minerals, Ships, Games

Iluka Resources Ltd. (ILU) slumped 20 percent to A$13.36 in Sydney after the world’s largest zircon producer cut its forecast for output of the mineral. Cosco Corp. Singapore Ltd. (COS) fell 10 percent to S$0.93 after the unit of China’s biggest shipping company posted first-quarter earnings that missed estimates. Namco Bandai Holdings Inc. (7832) sank 14 percent to 975 yen in Tokyo after the operator of arcades and theme parks forecast a 9.3 percent drop in profit for the year ending March 31.

Of the 544 companies on the MSCI Asia Pacific Index that have posted quarterly results since April 10, 206 exceeded expectations, while 209 missed analysts’ estimates, according to data compiled by Bloomberg News.

Toyota Motor Corp. (7203), Asia’s biggest carmaker, recouped losses of as much as 3 percent earlier in the week to end the week 0.9 percent higher at 3,235 yen after forecasting profit will more than double to a five-year high.

Volatility rose as stocks retreated. The HSI Volatility Index (VHSI), a measure of options prices on the Hang Seng, gained 24 percent to 23.290. The Nikkei Stock Average Volatility Index gained 15 percent to 22.71.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net

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