Asian stocks fell for a fourth week, with the regional benchmark index posting its longest streak of weekly losses in six months, on signs China’s economic slowdown is deepening and on concern Europe’s debt crisis will worsen
The value of shares on the MSCI Asia Pacific Index fell to levels last seen during the 2008 global credit crunch, with Japan’s Topix Index posting its longest streak of weekly losses in almost 35 years. Esprit Holdings Ltd., a Hong Kong-based clothier that counts Europe as its biggest market, sank 2.4 percent. Agricultural Bank of China Ltd., the nation’s third-largest lender, declined 3.7 percent.
The MSCI Asia Pacific Index fell 0.8 percent to 111.65 this week. The gauge is heading for a decline of more than 10 percent this month, the most since October 2008, as slumping loan demand and faltering factory output in China add to signs the slowdown in the world’s second-largest economy is deepening, and as Europe’s leaders pressured Greece to honor commitments to aid packages before next month’s elections.
“The market is right now confused and obviously worried about whether Greece will end up leaving the euro or not,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “The market is pretty convinced Greece will leave at some stage, but the big difference is if their exit will be orderly or disorderly, and an orderly exit has already been priced into the market.”
The losses erased as much as $4.5 trillion in global equity value this month. The value of shares on the MSCI Asia Pacific Index fell to 1.2 times book, a level last seen in October 2008, a month after Lehman Brothers Holdings Inc. collapsed, according to data compiled by Bloomberg. That compares with 2.1 times for Standard & Poor’s 500 Index and 1.3 times for the Stoxx Europe 600.
“The Lehman shock continues to haunt the market,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo, which oversees about $188 billion. “Investors are vulnerable to the unknown and they worry that if they underestimate the Greek issue, things may fall apart. They wouldn’t feel that way if they didn’t go through the Lehman shock.”
Companies that do business in Europe declined. Esprit dropped 2.4 percent to HK$12.26 in Hong Kong. HSBC Holdings Plc, Europe’s biggest lender, fell 1.7 percent to HK$62.70. Nikon Corp., a camera maker that gets about 23 percent of sales from Europe, slipped 1.3 percent to 2,095 yen in Tokyo.
Topix Losing Streak
Japan’s Topix Index declined 0.5 percent as it fell for an eighth week, its longest losing streak since November 1977, after the Bank of Japan refrained from adding more monetary stimulus. The benchmark Nikkei 225 Stock Average lost 0.4 percent. Australia’s S&P/ASX 200 Index fell 0.4 percent.
The Hang Seng China Enterprises Index dropped 0.5 percent, extending losses from its Feb. 29 peak to 19 percent, near the 20 percent decline that traders consider a bear market. Hong Kong’s benchmark Hang Seng Index slipped 1.3 percent.
Chinese lenders declined as reports showed the nation’s manufacturing will shrink for a seventh month and the country’s biggest banks may miss loan targets for the first time in seven years. Agricultural Bank of China declined 3.7 percent to HK$3.11 in Hong Kong. Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, dropped 0.4 percent to HK$4.62.
“Definitely there’s poor appetite from industrial companies, and there’s very little demand for borrowing because you still have this restraint on property development and then you have export sentiment going down,” said Pauline Dan, Hong Kong-based chief investment officer at Samsung Asset Management Co., which manages $100 billion.
Shanghai Pharmaceuticals Holding Ltd. slumped 19 percent to HK$9.26, the most on the MSCI Asia Pacific Index, after the 21st Century Business Herald reported the drug retailer is being investigated for alleged financial fraud. The company said on May 24 it hasn’t received any notice of a regulatory probe.
Taiwanese computer makers declined after bellwether Dell Inc. forecast fiscal second-quarter sales that missed analysts’ estimates. Asustek Computer Inc. fell 3.4 percent to NT$286, while Quanta Computer Inc. sank 2.8 percent to NT$75.50.
Sims Metal Management Ltd. slid 6.4 percent to A$11.50 in Sydney after the scrap-metal processor forecast a decline in full-year earnings.