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Asia Stocks Fall as Policy Makers Struggle to Spur Growth

Asian stocks fell as UBS AG cut its profit outlook for BHP Billiton Ltd. and the Bank for International Settlements said central banks are facing the limit of their ability to boost economic growth.

BHP Billiton, the world’s largest mining company, led materials companies lower, sliding 1.4 percent. Samsung (005930) Electronics Co. fell 4.2 percent, dragging technology stocks lower, as the world’s top mobile-phone maker investigated a complaint that one of its smartphones caught fire. Billabong International Ltd. (BBG), Australia’s largest surf-wear maker, slumped 34 percent after selling A$155 million ($155 million) of new shares.

The MSCI Asia Pacific Index (MXAP) slid 0.6 percent to 113.44 as of 8 p.m. in Tokyo as five stocks fell for every two that rose. The Asian benchmark has lost 12 percent from this year’s highest level in February, erasing this year’s advance, amid concern growth in the U.S. and China is slowing as Europe’s debt crisis deteriorates. Italy and Spain will sell debt tomorrow and European Union leaders will hold a two-day summit starting June 28.

“There is a question mark as to how many years we are going to see sub-par growth for,” Erwin Sanft, chief strategist for Pan-Asia equities at BNP Paribas SA in Hong Kong, said in an interview on Bloomberg Television today. “Growth has been disappointing across the board.”

South Korea’s Kospi Index sank 1.2 percent, Australia’s S&P/ASX 200 Index slipped 0.5 percent and Japan’s Nikkei 225 Stock Average slid 0.7 percent. Hong Kong’s Hang Seng Index retreated 0.5 percent, while China’s Shanghai Composite Index dropped 1.6 percent.

Stimulus Limits

Central banks are being “cornered into prolonging monetary stimulus,” the Basel, Switzerland-based BIS said in its annual report, published yesterday. “Both conventionally and unconventionally accommodative monetary policies are palliatives and have their limits.”

Futures on the Standard & Poor’s 500 Index slipped 0.7 percent today. The index rose 0.7 percent in New York on June 22 as bank downgrades from Moody’s Investors Service were no worse than the firm had warned. The ratings firm cut Morgan Stanley by two levels rather than a threatened three grades. Banks rose the most among the 24 industry groups in the S&P 500.

“The volatility will remain,” said Savanth Sebastian, Sydney-based equities economist at Commonwealth Bank of Australia, the nation’s largest lender. “The market wants more clarity for what’s going on in Europe and that’s what is lacking.”

Soros Warning

The Asia-Pacific benchmark index has lost 0.4 percent this this year, compared with a 6.2 percent advance by the S&P 500 and a 0.8 percent gain by the Stoxx Europe 600 Index. Stocks in the Asian gauge are valued at 1.2 times book value, compared with 2.1 times for the S&P 500 and 1.4 times for the Stoxx 600, according to data compiled by Bloomberg. A number below 1 means companies can be bought for less than the value of their assets.

Billionaire investor George Soros called on Europe to start a fund to buy Italian and Spanish bonds, warning that a failure by leaders meeting this week to produce drastic measures could spell the demise of the currency. Policy makers should create a body to purchase sovereign debt in return for Italy and Spain implementing achievable budget cuts, Soros said in an interview in London yesterday.

Italy is scheduled to sell inflation-linked securities maturing in 2016 and 2026 tomorrow as well as 3 billion euros ($3.8 billion) of zero-coupon bonds. Spain will offer three- and six-month bills the same day.

China GDP

Citigroup Inc. reduced its 2012 gross domestic product forecast for China to 7.8 percent from 8.1 percent, citing anemic domestic activity in the second quarter and further weakening of European demand.

BHP Billiton (BHP) lost 1.4 percent to A$31.07. UBS downgraded earnings estimates the company by 4 percent due to Australia’s mining and carbon taxes. BHP will pay $715 million in mining tax and A$300 million ($302 million) in carbon tax in the year ending June 30, 2013, according to UBS analyst Glyn Lawcock.

The carbon tax will cost Rio Tinto Group $202 million, while the mining tax will cost the company $676 million in the 2013 calendar year, he said. Rio pared losses as of much as 1.6 percent to close 0.2 percent lower at A$55.90.

Samsung declined 4.2 percent to 1.132 million won. A Galaxy S III smartphone owner in Ireland posted photos online June 20 showing the phone scorched on the bottom. Samsung’s local office has obtained the handset and is trying to identify the cause of the incident, James Chung, a Seoul-based spokesman for Samsung, said by phone.

Billabong slumped 34 percent to 96 Australian cents in Sydney. The maker of Kustom shoes and Billabong clothing has had its recommendation cut to sell by analysts at Citigroup and UBS since reducing its earnings target on June 21 and announcing the share sale.

Yahoo Japan Corp. fell 1.5 percent to 24,870 yen as the government said it will question the company about plans to display advertisements based on users’ e-mail messages.

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

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

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