23 Jun 2009
June 23 (Bloomberg) -- Asian stocks fell, sending the MSCI Asia Pacific Index down by the most in almost six weeks, as concern an economic recovery will be delayed dragged commodity prices lower and spurred demand for the yen as a haven.BHP Billiton Ltd., the biggest mining company globally, sank 3.9 percent in Sydney after the World Bank's forecast of a deeper recession sparked a slump in oil and copper. Japan's Mitsubishi Corp., a trading company that gets almost half its sales from resources, lost 5.5 percent. Honda Motor Co., which gets 45 percent of its sales from North America, fell 2.5 percent in Tokyo as the yen strengthened against the dollar, diminishing the value of U.S. revenue.
"The World Bank has ostensibly poured a big jug of ice- cold water over those looking for a bounce in economic growth globally," said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. in Melbourne. "Given the muted growth outlook, the focus will now switch to the appropriateness of valuations."
The MSCI Asia Pacific Index sank 2.6 percent to 99.28 as of 12:23 p.m. in Tokyo, the biggest drop since May 14. The gauge has climbed 41 percent from a more than five-year low on March 9, on optimism government stimulus efforts and interest-rate cuts had stemmed the global recession. Valuations of companies in the measure last week were near their highest levels since September.
Hong Kong's Hang Seng Index fell 3.3 percent, while Japan's Nikkei 225 Stock Average declined 3.1 percent. Australia's S&P/ASX 200 Index retreated 3 percent. South Korea's Kospi Index lost 2.6 percent, paced by STX Pan Ocean Co., which slumped 6.4 percent after freight rates declined.
Faltering Growth
The biggest advance on the MSCI Asia Pacific Index today came from Gome Electrical Appliances Holdings Ltd., which surged 77 percent in Hong Kong on plans to raise funds from investors.
Futures on the Standard & Poor's 500 Index were little changed. The gauge slid 3.1 percent and Europe's Dow Jones Stoxx 600 Index lost 2.8 percent yesterday after the World Bank forecast the global economy to contract 2.9 percent this year, compared with a previous forecast of a 1.7 percent decline. The report came during trading hours in Asia.
A gauge of six metals in London slumped 5.4 percent, the steepest drop since Jan. 27, following the World Bank's prediction. Crude oil for August delivery in New York tumbled 3.6 percent to settle at $67.50 a barrel yesterday. Oil lost 1.1 percent in after-hours trading, while copper dropped 0.4 percent.
BHP declined 3.9 percent to A$33.86. Mitsubishi Corp. sank 5.5 percent to 1,710 yen. Fortescue Metals Group Ltd., the No. 3 iron-ore exporter in Australia, tumbled 10 percent to A$3.65.
‘Correction Phase'
The global economy may suffer another slump due to the potential "double whammy" of rising oil prices and widening budget deficits, Nouriel Roubini, the New York University economics professor who predicted the financial crisis, told a conference in Paris yesterday.
Woodside Petroleum Ltd., Australia's second-largest oil company, retreated 3 percent to A$40.06. Cnooc Ltd., China's largest offshore oil producer, slumped 4.7 percent to HK$9.19 in Hong Kong. Energy stocks are the worst performing of the MSCI Asia Pacific Index's 10 industry groups in the past month as investors question the strength of the global recovery.
Government figures last week showed more than one-quarter of American states now have unemployment rates higher than 10 percent, while Britain posted the biggest budget deficit for any month since records began in 1993.
The MSCI Asia Pacific Index declined 3.5 percent last week, its first weekly drop in five, as the rally since March drove the average valuation of companies in the gauge to 1.5 times the net value of assets, according to Bloomberg data. That was the highest level since September.
‘Correction Phase'
"During this correction phase, bad news will likely get more attention than good," said Yoshinori Nagano, who helps oversee the equivalent of $90 billion at Daiwa Asset Management Co. "Chances are the market will drift into a continuous downward trend."
Japanese exporters declined as the yen gained against the dollar ahead of a U.S. report tomorrow that may show durable- goods orders declined in May. The yen earlier climbed to 95.29 per dollar, the highest since June 1.
Toyota Motor Corp., the world's largest automaker, fell 2.7 percent to 3,580 yen. Honda, Japan's second-largest carmaker, sank 2.5 percent to 2,520 yen as it said it will cut the number of models sold only domestically to trim development costs.
"Worries that the ‘green shoots‘ of the global recovery are unlikely to be sustainable may make investors risk averse," said Hideki Amikura, deputy general manager of foreign exchange in Tokyo at Nomura Trust and Banking Co., a unit of Japan's largest brokerage. "This will probably lead to yen appreciation."
Public Funding
Elpida Memory Inc. lost 3.5 percent to 997 yen. The company may this month receive 30 billion yen ($315 million) in taxpayer money, public broadcaster NHK reported, without saying where it obtained the information. The Japanese chipmaker yesterday applied for public funding to bolster its capital, NHK said.
STX Pan Ocean, South Korea's biggest bulk carrier, sank 6.4 percent to 11,650 won after the Baltic Dry Index, a measure of shipping costs for commodities, fell 1 percent yesterday, as demand cooled for iron-ore carriers.
Korea Line Corp., the second-biggest bulk carrier, lost 4.4 percent to 65,000 won. China Cosco Holdings Co., the world's largest operator of dry-bulk ships, slumped 6.7 percent to HK$8.88 in Hong Kong.
Gome, China's second-biggest electronics retailer, soared 77 percent to HK$1.98 in Hong Kong after a seven-month suspension. The company announced plans to raise as much as $447 million from investors including Bain Capital LLC.
