Asian Stocks Retreat on U.S. Home Sales, Slowing Japan Exports

Asian stocks slumped, dragging the MSCI Asia Pacific Index to a one-month low, as a record plunge in U.S. home sales and slowing export growth in Japan added to evidence a global economic recovery is weakening.

Toyota Motor Corp., the world’s largest automaker, fell 2.4 percent and Canon Inc., which makes 78 percent of its sales outside Japan, retreated 2.7 percent. Samsung Electronics Co., Asia’s biggest maker of computer chips, sank 1.4 percent in Seoul as a measure of South Korean consumer confidence fell. BHP Billiton Ltd., the world’s largest mining company, slid 0.3 percent as metal prices fell for a fifth day in London.

“The effects of the stimulus measures are waning in the U.S. and fears about the global economic recovery are increasing,” said Tomomi Yamashita, a fund manager in Tokyo at Shinkin Asset Management Co., which oversees $6 billion. “The U.S. housing data showed some bad results and the risk of a double-dip recession is growing. No one wants to take risks right now.”

The MSCI Asia Pacific Index dropped 1.4 percent to 116.09 at 7:23 p.m. in Tokyo, set to close at the lowest level since July 22. Concern economic growth in the U.S., Europe and China will falter has dragged the gauge down by 10 percent from its high this year on April 15.

Shares in the gauge are valued at an average 13.4 times estimated earnings, compared with 12.6 times for the S&P 500 and 11.2 times for the Stoxx Europe 600 Index.

Bear Market

Japan’s Nikkei 225 Stock Average declined 1.7 percent to its lowest level since April 30, 2009. The gauge has fallen 22 percent since its high for this year on April 5, passing the threshold of a 20 percent decline that some analysts regard as the starting point of a so-called bear market.

Australia’s S&P/ASX200 Index retreated 1.4 percent in Sydney. South Korea’s Kospi Index slipped 1.5 percent in Seoul. Hong Kong’s Hang Seng Index declined 0.1 percent, while the Shanghai Composite Index fell 2 percent.

Futures on the Standard & Poor’s 500 Index were little changed after gaining as much as 0.5 percent and falling as much as 0.2 percent. The gauge sank to a seven-week low yesterday following the drop in home sales.

Purchases of existing houses plunged by a record 27 percent in July to a 3.83 million annual pace, the lowest in a decade of record keeping and worse than the most pessimistic forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed.

“With the U.S. at the focus, there’s increasing uncertainty about the future of the global economic recovery,” said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc. “Stocks are falling, the yen is rising and there is no end to this risk aversion we’re seeing now.”

Yen Strength

Toyota dropped 2.4 percent to 2,910, its lowest level since March 12, 2009. Honda Motor Co., which receives 84 percent of its revenue abroad, fell 3.1 percent to 2,718. Canon declined 2.7 percent to 3,425 yen.

Japan’s export growth slowed for a fifth month in July, adding to risks in an economy already under threat by the yen’s surge to a 15-year high against the dollar.

The yen appreciated to as much as 83.90 against the dollar today, compared with 84.97 at the close of stock trading in Tokyo yesterday. Against the euro, it rose to as much as 105.92 from 107.41. A stronger yen reduces overseas income at Japanese companies converted into their home currency.

The yen climbed to a 15-year high against the dollar yesterday and is on course for its strongest annual average level since currencies began trading freely in 1971, according to data compiled by Bloomberg and based on each day’s close.

Further Easing

The Ministry of Finance may consider currency intervention if speculators drive up the currency by several yen in a day, Nikkei English News reported today, without saying where it had obtained the information. Japanese Prime Minister Naoto Kan yesterday said “steep currency moves are undesirable.”

“The Japanese government and the Bank of Japan’s response to the stronger yen is too slow and I doubt they can really address this problem,” said Shinkin Asset’s Yamashita.

All industry groups represented on the MSCI Asia Pacific Index fell, with materials, technology and consumer stocks leading the declines. The gauge slid 0.5 percent yesterday on speculation the U.S. housing data would provide more evidence the world’s largest economy is faltering.

Samsung slipped 1.4 percent to 772,000 won in Seoul, as South Korea’s consumer confidence fell for the first time in five months, according to the Bank of Korea in a statement today. LG Electronics Inc. dropped 3 percent to 98,500 won.

‘External Risks’

“Optimism is still strong, but the key is how external risks will affect the economy,” said Lee Sang Jae, an economist at Hyundai Securities Co. in Seoul. “The BOK may face more difficulty raising rates further if things get worse.”

Concern over a weakening U.S. economy drove commodity prices lower. Crude oil futures fell 2 percent in New York yesterday, while the London Metal Exchange Index of six metals including copper and zinc slumped 1.6 percent, dropping to the lowest level since July 27.

Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal, dropped 1.8 percent to HK$6.15 in Hong Kong. BHP Billiton, Australia’s largest oil producer, fell 0.3 percent to A$37.44. Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, lost 2 percent to A$42.27.

Rio Tinto Group, the world’s third-biggest mining company, declined 2.3 percent to A$69.45. Macarthur Coal Ltd. plunged 9 percent to A$11.25 after the company selling shares.

Also in Sydney, WorleyParsons Ltd., Australia’s biggest engineering company, slumped 9.2 percent to A$20.20. Full-year profit fell 26 percent on project delays and after a stronger currency cut revenues.

Among stocks that rose today, Suncorp-Metway Ltd. surged 2.4 percent to A$7.97. The Australian insurer said second-half profit surged after Chief Executive Officer Patrick Snowball sold assets in a restructuring and swelled banking and investment income.

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