Asian Stocks Fall to Three-Month Low on Europe Turmoil
Asian stocks dropped, with the regional benchmark index falling to its lowest level in more than three months, as political tension in Greece heightened concern Europe’s debt crisis may worsen, weakening the outlook for exporters in Asia.
Mitsubishi Motors Corp. (7211), an automaker that gets 27 percent of its sales from Europe, dropped 2.3 percent in Tokyo. Qantas Airways Ltd., Australia’s largest carrier, slid 2.3 percent in Sydney after the government boosted imposts on airfares and scrapped a planned corporate tax cut to end four years of budget deficits. Cosco Corp. Singapore Ltd. fell 2.5 percent after the shipbuilder posted first-quarter earnings that missed estimates.
“Europe remains the biggest issue facing markets,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages about $150 billion. “It’s not clear how deep the downturn is going to be and the effect this is going to have elsewhere.”
The MSCI Asia Pacific Index (MXAP) slipped 1.2 percent to 119.93 as of 5:26 p.m. in Tokyo, its lowest level since Jan. 19. Almost five shares fell for each that rose on the gauge. The measure is heading for its worst week in almost six months as political changes in France and instability in Greece threatened to derail austerity plans and worsen Europe’s debt crisis.
Japan’s Nikkei 225 Stock Average (NKY) dropped 1.5 percent. South Korea’s Kospi Index lost 0.9 percent. Hong Kong’s Hang Seng Index retreated 0.8 percent while China’s Shanghai Composite Index slid 1.7 percent. Trading volumes in Japan, Hong Kong and China were 2.8 percent higher than the 30-day average, according to data compiled by Bloomberg.
Futures on the Standard & Poor’s 500 Index lost 0.3 percent today. The gauge declined 0.4 percent in New York yesterday.
Companies that do business in Europe fell on speculation Greece’s new government will reject terms of its financial rescue. New Democracy leader Antonis Samaras said he failed to form a coalition following weekend elections, passing the opportunity to Alexis Tsipras’s Syriza party. Tsipras said he plans to form a government of left-wing parties that would nationalize banks, repeal recent labor reforms and cancel the bailout accords.
Mitsubishi Motors fell 2.3 percent to 85 yen in Tokyo. Esprit Holdings Ltd. (330), a clothier that counts Europe as its biggest market, slid 2.8 percent to HK$14.02 in Hong Kong. Hutchison Whampoa Ltd., which operates ports in Spain and Germany, lost 1.4 percent to HK$72.45.
Australia’s S&P/ASX 200 Index fell 0.9 percent after Treasurer Wayne Swan introduced the first cut in public spending in at least 42 years and dumped a planned 1 percent reduction in the corporate tax rate in yesterday’s federal budget.
Qantas fell 2.3 percent to A$1.495 in Sydney. Rio Tinto Group (RIO), the world’s third-biggest mining company, lost 1.7 percent to A$61.23 as metals prices retreated. BHP Billiton Ltd., the leading miner, slipped 1 percent to A$34.33.
Cosco Corp. Singapore slipped 2.5 percent to 97.5 Singapore cents after the unit of China’s biggest shipping company posted a 25 percent drop in first-quarter profit to S$27.8 million ($22.2 million), missing the average estimate of S$32.9 million by four analysts in a Bloomberg survey.
Of the 466 companies on the MSCI Asia Pacific Index that have reported quarterly earnings since April 10, 181 missed analysts’ estimates, while 166 exceeded expectations, according to data compiled by Bloomberg News.
Namco Bandai Holdings Inc. (7832) sank 2.7 percent to 1,028 yen in Tokyo after the operator of arcades and theme parks forecast a 9.3 percent drop in profit for the year ending March 31. NTT Data Corp. tumbled 12 percent to 242,400 yen after the network service provider forecast net income will rise 25 percent to 38 billion yen ($476 million) for the fiscal year, missing analysts’ estimate of a 47.3 billion yen gain.
The MSCI Asia Pacific Index rose 6.6 percent this year through yesterday, compared with a 8.4 percent gain by the S&P 500 and a 2.5 percent advance by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.4 times estimated earnings on average, compared with a multiple of 13 for the S&P 500 and 10.4 times for the Stoxx 600.
Volatility rose as stocks declined. The HSI Volatility Index (VHSI) climbed 5.3 percent to 22.35, while the Nikkei Stock Average Volatility Index jumped 5 percent to 21.85.
Among stocks that advanced, Ajinomoto Co. (2802) surged 7.4 percent to 1,120 yen in Tokyo. The seasoning maker said it will spend as much as 50 billion yen to buy back up to 7.4 percent of its outstanding shares through Jan. 21. The company forecast net income will rise 5.4 percent to 44 billion yen this fiscal year.
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