Asian Stocks Erase 2012 Gains as U.S., Europe Sow ‘Panic’

Asian stocks fell, with the regional benchmark index erasing this year’s gains, after U.S. economic data missed estimates and ratings agencies downgraded Spanish banks and Greece as Europe’s debt crisis deepens.

Samsung Electronics Co. (005930), a consumer-electronics maker that gets 40 percent of sales from Europe and America, dropped 4.7 percent in Seoul as exporters tumbled. Japanese machinery makers plunged in Tokyo after sales growth slowed at industry bellwether Caterpillar Inc. The Hang Seng China Enterprises Index (HSCEI) of Hong Kong-listed Chinese companies fell as much as 21 percent from its high for the year on Feb. 29 after home prices slid in a record number of mainland cities during April.

“We don’t know what will happen with Greece, and when something does happen, we don’t know what impact that will have,” said Masaru Hamasaki, chief strategist at Toyota Asset Management Co., which oversees the equivalent of about $23.8 billion. “We don’t even know what the worst-case scenario is. All people can do is escape from risks, a so-called panic.”

The MSCI Asia Pacific Index (MXAP) slid 2.5 percent to 112.58 as of 8:12 p.m. in Tokyo, its biggest drop since Nov. 10, with more than eight stocks retreating for each that rose. The index, which entered a co-called correction yesterday after falling more than 10 percent from a Feb. 29 high, is headed for a 5.1 percent retreat for the week, its steepest weekly drop since September.

Almost $4 trillion has been wiped from global equity markets this month as Greece’s failure to form a government rekindled Europe’s debt crisis and signs of slowing economic growth in China and U.S. damped the outlook for global demand.

Topix Weekly Decline

Japan’s Nikkei 225 Stock Average retreated 3 percent today. The broader Topix Index dropped 2.9 percent, capping the longest streak of weekly losses since the Sept. 11 attacks in 2001. Australia’s S&P/ASX 200 Index fell 2.7 percent, its lowest closing level this year, while South Korea’s Kospi Index dropped 3.4 percent.

Hong Kong’s Hang Seng Index (HSI) declined 1.3 percent, while China’s Shanghai Composite Index retreated 1.4 percent. Home prices fell in a record 46 of 70 cities tracked by China’s statistics bureau in April from a year earlier as officials pledged to keep restrictions on property purchases.

The U.S. Standard & Poor’s 500 Index has gained 3.8 percent this year, while the Stoxx Europe 600 Index (SXXP) declined 1.2 percent. Stocks in the Asian benchmark were valued at 11.8 times estimated earnings on average yesterday, compared with a multiple of 12.4 for the S&P 500 and 10 times for the Stoxx 600.

Futures on the S&P 500 swung between gains and losses today. The index dropped 1.5 percent in New York yesterday, a fifth day of declines to a four-month low.

Sentiment Slumps

U.S. economic reports yesterday showed jobless claims in the nation were unchanged at 370,000 in the week ended May 12. That compares with the median forecast of 48 economists surveyed by Bloomberg News for a drop in claims to 365,000. The Bloomberg Consumer Comfort Index fell in the week ended May 13 to minus 43.6, a level associated with recessions or their aftermaths, from minus 40.4 in the previous period.

Samsung Electronics retreated 4.7 percent to 1,166,000 won in Seoul, while James Hardie Industries SE (JHX), an Australian supplier of building materials that gets more than half of its sales from the U.S., slumped 2.6 percent to A$7.05 in Sydney.

Heavy-equipment maker Hitachi Construction Machinery Co. tumbled 9.6 percent to 1,487 yen in Tokyo, the second-steepest drop in the MSCI Asia Pacific Index. Komatsu Ltd. (6301), a maker of excavators, fell 5.7 percent to 1,879 yen.

U.S.-based Caterpillar, the largest maker of construction and mining equipment, said global machinery retail sales rose 12 percent in the three months through April from a year earlier, the slowest rate since May 2010.

Credit Downgrades

Banco Santander SA was among 16 Spanish banks whose credit ratings were cut by Moody’s Investors Service, which cited economic weakness and the government’s mounting budget strain.

Greece’s credit rating was downgraded one level by Fitch Ratings on concerns the country won’t be able to muster the political support needed to sustain its membership in the euro area.

Esprit Holdings Ltd. (300), a clothier that depends on Europe for most of its sales, sank 4.1 percent to HK$12.56 in Hong Kong, while Nippon Sheet Glass Co., a glassmaker that counts Europe as its No. 1 market, slumped 4.3 percent to 89 yen in Tokyo.

Anta Sports Products Ltd. (2020), a Chinese sportswear maker, tumbled 9.2 percent to HK$6 in Hong Kong, the third-steepest drop in the Asia-Pacific Index, after Hitachi Construction and Chinese luxury-vehicle seller China ZhengTong Auto Services Holdings Ltd., which tumbled 12 percent. Intensifying competition has been affecting the Anta’s profitability over the past several quarters.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

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

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