Asian Stocks Decline on Spain Downgrade, Growth Concern
Asian stocks fell, with the regional index heading for its third drop in five days, as Spain’s credit rating was cut and data from the U.S and Europe added to concern the global economy is slowing.
Hutchison Whampoa Ltd., which operates ports in Germany and Spain, slid 1.4 percent in Hong Kong. Esprit Holdings Ltd. sank 12 percent as the clothier’s chief executive officer and chairman quit within 24 hours of each other. James Hardie Industries SE (JHX), a building-materials supplier that counts the U.S. as its biggest market, lost 2.1 percent in Sydney as retail sales in the world’s largest economy dropped.
The MSCI Asia Pacific Index (MXAP) declined 0.5 percent to 112.93 as of 8:44 p.m. in Tokyo, with almost two shares falling for each that rose. The gauge dropped 12 percent from this year’s peak on Feb. 29 through yesterday amid concern growth in the U.S. and China is slowing and as Europe’s debt crisis intensified.
“The Spanish bank bailout on the weekend didn’t help matters and probably increased the focus on Italy, and also made investors worry about investing in Spanish bonds,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “Europe is sliding further into a recession and the global economy is still slowing in the U.S., and so I think this is a soft patch.”
Japan’s Nikkei 225 Stock Average (NKY) lost 0.2 percent. Australia’s S&P/ASX 200 Index dropped 0.5 percent. Hong Kong’s Hang Seng Index slid 1.2 percent, while China’s Shanghai Composite Index declined 1 percent. South Korea’s Kospi Index advanced 0.7 percent.
Trading volumes across the region were below the 30-day average ahead of Greece’s election this weekend, data compiled by Bloomberg showed. Euro-area industrial production declined for a second month in April, led by a drop in Germany, a report showed yesterday.
Companies that do business in Europe declined after Moody’s Investors Service cut Spain’s credit rating three steps to Baa3 from A3. Spain is on review for a further downgrade because of its increased debt burden, weakening economy and limited access to capital markets, Moody’s said.
Hutchison Whampoa lost 1.4 percent to HK$63.35 in Hong Kong. Nippon Sheet Glass Co. (5202), which counts Europe as its biggest market, slipped 1.3 percent to 78 yen in Tokyo.
Esprit plunged 12 percent to HK$9.23, extending losses after Hans-Joachim Koerber stepped down as chairman yesterday, within 24 hours after the resignation of CEO Ronald Van der Vis, leaving a gap in senior management as the clothier struggles to recover from a three-year profit decline.
“The moves could lead to questions regarding whether there are issues with the operation/accounts or there is a power struggle among the management team and the board,” Anne Ling, an analyst at Deutsche Bank AG, said in a note to clients.
Futures on the Standard & Poor’s 500 Index were little changed today. The gauge fell 0.7 percent yesterday in New York as retail sales in the U.S. dropped in May for a second month, prompting analysts to cut forecasts for economic growth.
Exporters dropped. James Hardie fell 2.1 percent to A$7.57 in Sydney. Li & Fung Ltd., a supplier of toys and clothes to retailers including Wal-Mart Stores Inc., slid 2.8 percent to HK$14.82 in Hong Kong. Toyota Motor Corp. (7203), the world’s largest carmaker by market value, declined 1.2 percent to 3,015 yen.
The Asian benchmark index lost 0.4 percent this year through yesterday, compared with a 4.6 percent advance by the S&P 500 and a 0.8 percent drop on the Stoxx Europe 600 Index. Shares on the Asian benchmark are valued at 1.2 times book value, compared with 2.1 times for the S&P 500 and 1.3 times for the Stoxx 600, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.
Tsugami Corp. declined 5.9 percent to 515 yen in Tokyo on concern orders for the company’s machine tools are slowing since peaking in March. “The company expects orders will likely fall in the second half of this year,” Miwako Miki, a Tsugami spokeswoman, said by telephone. “Demand will likely drop from a decline in customers’ willingness for capital investment.”
Noble Group Ltd. dropped 1.7 percent to S$1.13 in Singapore after Ricardo Leiman, who quit as chief executive officer in November, sued a unit of the Asia’s biggest commodity supplier, claiming his shares and 2011 bonus were wrongfully withheld. Noble was “unhappy” with Leiman’s performance and decided to terminate him, Jeffrey Alam, group general counsel for the Hong Kong-based company, said in papers in response to the lawsuit.
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