Asia Stocks Drop Most for ’12 as Greek Vote Spurs Concern
Asian stocks fell, with a regional benchmark index headed for its biggest loss this year, as Greece’s move to call new elections increased concern the country will leave the euro and derail efforts to contain the region’s debt crisis.
Hong Kong’s Hang Seng Index and Korea’s Kospi index fell more than 3 percent, entering so-called corrections after retreating more than 10 percent from recent highs. Nissan Motor Co., which depends on Europe for about 16 percent of its sales, slid 2.2 percent in Tokyo. BHP Billiton Ltd. (BHP), the world’s largest mining company, declined 4.1 percent in Sydney after metal prices fell. Toll Holdings Ltd. (TOL), an Australian trucking company, sank 15 percent after forecasting lower full-year profit.
The MSCI Asia Pacific Index slid 2.6 percent to 114.13 as of 8:38 p.m. in Tokyo, headed for its biggest loss since November. The gauge is poised to close more than 10 percent below this year’s high on Feb. 29, a retreat some investors call a correction.
“The Asian market is caught up in global events, as overseas investors avoid risky assets and drop their overall positions,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. “The Greece issue is the bottleneck. Until we see the election results it’s hard to actively take a stance.”
More than seven stocks slid for each that rose on the measure, which is headed for its longest streak of declines since April 11.
Japan’s Nikkei 225 Stock Average declined 1.1 percent even as the nation’s machinery orders fell less than economists forecast in March from the previous month. South Korea’s Kospi Index retreated 3.1 percent. Australia’s S&P/ASX 200 Index dropped 2.4 percent as a survey showed the nation’s consumer confidence was little changed near the lowest level this year.
Hong Kong’s Hang Seng Index retreated 3.2 percent, while China’s Shanghai Composite Index fell 1.2 percent.
The MSCI Asia Pacific Index, which includes some companies from emerging markets, is less than 0.5 percent from erasing this year’s gains. That compares with a 5.8 percent gain by the S&P 500 and a 0.5 percent advance by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.9 times estimated earnings on average, compared with a multiple of 12.7 for the S&P 500 and 10.2 times for the Stoxx 600.
Futures on the Standard & Poor’s 500 Index (SPX) rose 0.2 percent after falling 0.5 percent earlier today. The index slid 0.6 percent in New York yesterday amid concern a political impasse in Greece will destabilize austerity plans in Europe.
Greek leaders said a second election will be held after political gridlock left the nation without a government since elections on May 6. Greeks have withdrawn as much as 700 million euros ($893 million) from the nation’s banks, President Karolos Papoulias told party leaders.
German Chancellor Angela Merkel and French President Francois Hollande said they would consider measures to spur economic growth in Greece as long as voters there committed to the austerity demanded to stay in the euro.
Nissan dropped 2.2 percent to 752 yen in Tokyo, while Esprit Holdings Ltd. (330), a clothier that depends on Europe for most of its sales, retreated 5.5 percent to HK$13.30 in Hong Kong.
“As the pressure builds in Europe, you need to see another mini crisis before policy makers will step in, and we’re not there yet,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages about $150 billion. “Markets and economies in Asia are at the mercy of the export story.”
Jiangxi Copper Tumbles
Mining companies declined after the London Metal Exchange Index of prices for six industrial metals including copper and aluminum slid 0.6 percent yesterday.
BHP slid 4.1 percent to HK$32.49 in Sydney, while Jiangxi Copper Co., China’s biggest producer of the metal, fell 6 percent to HK$15.98 in Hong Kong.
Toll Holdings slumped 15 percent to A$4.73 in Sydney, the steepest drop in the MSCI Asia Pacific Index (MXAP), after saying earnings before interest and tax will be A$400 million ($397 million) to A$420 million in the 12 months ending June compared with A$436 million a year earlier.
Stocks that were removed from MSCI indexes dropped on concern prices will be affected as index-tracked funds adjust their holdings. Sinofert Holdings Ltd., a Chinese fertilizer producer, dropped 5.9 percent to HK$1.44, the lowest price since December 2005. Japanese regional lenders Hiroshima Bank Ltd. (8379) sank 9.1 percent to 280 yen and Hokuhoku Financial Group Inc. declined 9.1 percent to 120 yen.
Sinofert will be removed from the MSCI China index and the two regional banks will be deleted from MSCI Japan index effective May 31, MSCI Inc. said in a statement yesterday.
Olam International Ltd. (OLAM), one of the world’s top three suppliers of rice, cocoa, and coffee, dropped 11 percent to S$1.785 in Singapore after saying third-quarter profit declined 23 percent from a year earlier amid waning demand.
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