Asian Stocks Head for Largest Weekly Drop Since August
Asian stocks fell, with the regional benchmark index heading for its biggest weekly decline since August, as scuffles on the streets of Nicosia underscored concern that Europe’s debt crisis is worsening.
HSBC Holdings Plc, Europe’s largest bank, fell 1.2 percent in Hong Kong. Bridgestone Corp. (5108), the world’s biggest tiremaker that gets, lost 3.2 percent in Tokyo after the yen strengthened, dimming the outlook for Japanese exporters. Billabong International Ltd. (BBG) recouped some of yesterday’s 14 percent loss after saying two potential bidders are still interested in the Australian sports-wear company.
The MSCI Asia Pacific Index lost 0.7 percent to 134.26 as of 6:41 p.m. in Hong Kong. The gauge is heading for a 1.8 percent decline this week as Cyprus scrambles to avoid a collapse of its banking system and reports showed Europe’s manufacturing decline steepening.
“It seems that the downturn could intensify” in Europe, said Matthew Sherwood, head of investment markets research in Sydney at Perpetual Investments, which manages about $25 billion. “Its leadership keeps looking at the hole in the hull and wondering why they are waist deep in water, rather than fixing the damage.”
The MSCI Asia Pacific Index (MXAP) climbed 13 percent from mid- November through yesterday as investors bet that a change of leadership in Japan would press its central bank to deploy more easing. That pushed valuations on the gauge to 15 times average estimated earnings compared with 14 for the Standard & Poor’s 500 Index and 12.6 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Japan’s Nikkei 225 Stock Average (NKY) retreated 2.4 percent, falling from its highest level since September 2008. The yen advanced after new Bank of Japan Governor Haruhiko Kuroda failed to outline any immediate increase to stimulus in his first press conference and as investors sought a haven from Europe’s crisis.
Taiwan’s Taiex Index lost 0.2 percent, and South Korea’s Kospi Index slid 0.1 percent. Hong Kong’s Hang Seng Index declined 0.5 percent, while China’s Shanghai Composite gained 0.2 percent. Australia’s S&P/ASX 200 Index (AS51) added 0.2 percent.
Trading volumes in Japan, South Korea and Australia were at least 30 percent below the 30-day average for the time of day, according to data compiled by Bloomberg.
Thailand’s SET Index sank 3.3 percent, heading for the biggest weekly slump since the global financial crisis of 2008, on concern the bourse may increase margin requirements on equity trading. The exchange may increase the level of collateral that customers must maintain in their trading accounts to 20 percent of their credit line, from 15 percent, the bourse said in a statement late yesterday.
Futures on the Standard & Poor’s 500 Index were little changed today. The S&P 500 yesterday fell 0.8 percent, with the measure heading for its biggest weekly decline of 2013, after an unexpected contraction in German manufacturing and as Cyprus’s president worked on a new plan to obtain a European bailout.
Cypriot police yesterday clashed with protesters outside Parliament as President Nicos Anastasiades maneuvered at home and in Russia to stave off financial collapse. The European Central Bank said it may cut off Cypriot banks from emergency funds after March 25 as Anastasiades struggles to forge a bailout agreement. Cyprus failed to secure financial support from Russia, Cyprus Finance Minister Michael Sarris said.
Companies that do business in Europe fell. HSBC declined 1.2 percent to HK$83.10 in Hong Kong. Esprit Holdings Ltd. (330), a clothier that counts Europe as its biggest market, fell 1.4 percent to HK$9.47. Nippon Sheet Glass Co., which counts Europe as its biggest market, slipped 2.7 percent to 109 yen in Tokyo.
“Investors’ sense of caution is increasing because of the Cyprus problem and we’re in a risk-off atmosphere,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd., which manages about $163 billion. “Kuroda didn’t announce anything concrete and the market was a little bit ahead of itself in terms of its expectations.”
Japanese exporters slid as the yen climbed for a second day. A strengthening currency erodes the value of overseas earnings at Japan’s automotive companies and electronics makers when repatriated.
Bridgestone lost 3.2 percent to 3,150 yen in Tokyo. Toyota Motor Corp., the world’s largest carmaker, dropped 2.2 percent to 4,880 yen. Sony Corp., the maker of Bravia televisions and PlayStation game consoles, fell 1.8 percent to 1,660 yen.
Leighton Holdings Ltd. (LEI) retreated 6.9 percent to A$20.20, the most since May, in Sydney as Chairman Stephen Johns resigned along with two non-executive directors at Australia’s largest construction company, citing a dispute with its controlling shareholder Hochtief AG.
Among stocks that rose, Billabong jumped 7.9 percent to 75 Australian cents, paring yesterday’s 14 percent plunge. Two groups, consisting of Altamont Capital Partners and VF Corp. on one side and Sycamore Partners Management and Billabong Americas head Paul Naude on the other, have said they may offer A$1.10 a share for firm.
China Unicom Hong Kong Ltd., nation’s second-largest mobile-phone company, climbed 3.7 percent to HK$10.74 in Hong Kong after posting fourth-quarter profit that beat analyst estimates.
Yue Yuen Industrial Holdings Ltd. (551), a supplier to Nike Inc., gained 1 percent to HK$25. Nike’s gross margin widened for the first time in nine quarters and the the world’s largest sporting-goods company said orders for the Nike brand in China, excluding changes in currency exchange rates, gained after sales there sank 10 percent last quarter.
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