Asian Stocks Drop as Mining, Metal Shares Slide on China

Asian stocks fell a third time in four days as earnings disappointed investors amid concerns about Europe’s simmering debt crisis. Steelmakers slid after the world’s biggest ore producer said China’s golden years of economic expansion are over.

China Aerospace International Holdings Ltd. slumped 5.3 percent in Hong Kong after the maker of liquid-crystal displays said first-half profit probably dropped. Kobe Steel Ltd. and other makers of industrial materials declined after an official at Vale SA said China’s growth is slowing. Great Wall Motor Co. (2333) slid 5.1 percent after recalling most of its vehicles sold in Australia following the discovery of asbestos in some models.

“China’s economic slowdown remains a concern,” said Shintaro Takeuchi, Tokyo-based fund manager at Tokio Marine & Nichido Fire Insurance Co., which oversees $109 billion in assets. “That could be tough for cyclical sectors, exporters and manufacturers.”

The MSCI Asia Pacific Index (MXAP) fell 0.5 percent to 119.79 as of 7:58 p.m. in Tokyo, with almost two stocks declining for each that advanced. Spain’s government is considering asking for a broader bailout, European Economic and Monetary Affairs Commissioner Olli Rehn said yesterday as a report showed the euro zone’s economy shrank in the second quarter.

Asia’s benchmark equity fell 6.7 percent from this year’s high on Feb. 29 through yesterday on concern earnings would be hurt by Europe’s debt crisis and China’s slump. The gauge traded at 12.4 times estimated earnings compared with 13.6 for the Standard & Poor’s 500 Index and 11.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Nikkei 225

The Nikkei 225 Stock Average fell 0.1 percent today. Australia’s S&P/ASX 200 Index (AS51) retreated 0.3 percent after a survey showed consumer confidence fell the most in five months amid the highest interest rates among major developed nations.

Singapore’s Straits Times Index dropped 0.8 percent. Hong Kong’s Hang Seng Index retreated 1.4 percent, while the Shanghai Composite Index lost 1.1 percent. South Korea’s markets are closed for a holiday today.

Futures on the S&P 500 Index fell 0.2 percent today. The gauge was little changed yesterday as a slump in technology and financial shares reversed an earlier rally sparked by bigger- than-expected gains in U.S. retail sales.

Shares fell across Asia today after a report the euro-area economy contracted in the second quarter as a spreading debt crisis and government spending cuts forced at least six nations into recession. Gross domestic product in the 17-nation currency bloc fell 0.2 percent from the first quarter, when it stagnated, the European Union’s statistics office said yesterday in Luxembourg.

‘Open Mind’

“The Spanish government has an open mind,” Olli Rehn said in a Bloomberg Television interview in New York yesterday after Prime Minister Mariano Rajoy said he would ask the central bank to buy Spanish bonds “if it seems reasonable.”

In the U.S., retail sales climbed more than forecast in July as spending rebounded at department stores and car dealerships. The 0.8 percent advance followed a revised 0.7 percent drop in June and was more than double economists’ projections for a 0.3 percent increase.

A measure of mining and metal companies had the second- biggest drop among the MSCI Asia Pacific Index’s 10 industry groups after Vale’s director of investor relations said China’s “golden years are gone.”

“We are not going to see the spectacular growth rates of 10, 12 percent per year,” Vale’s Castello Branco said yesterday at the Bloomberg Brazil Economic Summit in Rio. The mining company shipped about 44 percent of its iron ore and pellets to Chinese steelmakers in the second quarter.

Kobe Steel

Kobe Steel declined to 5.7 percent to 66 yen in Tokyo, while JFE Holdings Inc. (5411), Japan’s second-biggest maker of the alloy, slumped 3.9 percent to 1,047 yen. Daido Steel Co. dropped 1.6 percent to 440 yen.

Sims Metal Management Ltd. declined 7.7 percent to A$8.70 in Sydney after the recycler said writedowns on its North American assets will lead to a loss of A$521 million ($547 million) this fiscal year. Fortescue Metals Group Ltd., an Australian iron-ore explorer, lost 4.6 percent to A$4.20.

More than half of the 421 companies on the MSCI Asia Pacific Index that have reported quarterly results since July, and for which Bloomberg has estimates, missed expectations. About 120 companies of the index’s 1,008 firms are reporting earnings this week, according to data compiled by Bloomberg.

China Aerospace declined 5.3 percent to 54 Hong Kong cents. Profit for the six months through June may decrease from a year earlier, the company said.

Gree Drops

Gree Inc., the online social network run by Japan’s youngest billionaire, fell the most in almost three weeks in Tokyo after forecasting a smaller operating profit than estimated due to expansion costs. The stock dropped 7.3 percent to 1,350 yen, its steepest decline since July 27.

Gome Electrical Appliances Holding Ltd. (493), an electronics retailer that gets all its revenue from China, tumbled 6.9 percent to 67 Hong Kong cents after announcing price cuts.

Great Wall Motor slid 5.1 percent to HK$16.48 in Hong Kong. The Chinese automaker recalled most of its vehicles sold in Australia after authorities found asbestos in in engine and exhaust gaskets. The recall affects 23,000 vehicles, includes some made by privately-held Chery Automobile Co., according to a statement by the Australian Competition and Consumer Commission.

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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