24 Dec 2008
Toyota Motor Corp., the world's second-largest automaker, dropped 3.8 percent in Tokyo after forecasting its first operating loss in 71 years and cutting global production. Bridgestone Corp., the world's largest tiremaker by sales, and Denso Corp. dropped more than 3 percent after slashing their earnings estimates. China Shipping Development Co. paced declines among the region's shipping-related companies after the cost of transporting raw materials fell for a fourth day.
"The global economic situation is continuing to deteriorate," said Karma Wilson, Sydney-based head of Asian equities at AMP Capital Investors, which manages about $61 billion. "We're going to go through a very difficult earnings season, particularly in the first quarter. There's not a lot of positive news on the horizon at the moment."
The MSCI Asia Pacific Index dropped 1.4 percent to 86.27 at 1:48 p.m. in Tokyo. Two stocks declined for each that rose on the gauge, which has fallen 4.5 percent in the past four days. The Nikkei 225 Stock Average retreated 2.5 percent, resuming trade after a holiday yesterday.
Most markets in Asia fell, with South Korea's Kospi Index losing 1.6 percent. LG Display Co., the world's second-largest maker of liquid-crystal displays, slumped after Goldman Sachs Group Inc. cut its share-price estimate. Australia's S&P/ASX 200 Index rose 1.4 percent as Sydney Gas Ltd. soared 55 percent on a takeover bid.
Trading is likely to be slower than average today, with Hong Kong and Australia closing early for Christmas. About A$1.3 billion worth of shares traded today in Australia, less than a third of the average in the past three months.
Tumbling Home Sales
The MSCI Asia Pacific has lost 45 percent in 2008, the worst annual performance in its two-decade history, as the most severe financial crisis since the Great Depression dragged economies worldwide into recessions.
Global growth will be 2.2 percent in 2009, down from 3.7 percent this year, the International Monetary Fund said on Nov. 6. The IMF has said that a growth rate of 3 percent or less is "equivalent to a global recession."
U.S. stocks yesterday dropped for a second day, as a report showed sales of single-family houses in the U.S. last month dropped by the most in two decades, while resale prices tumbled at a Depression-era pace. A separate government report confirmed the U.S. economy shrank the most since 2001 last quarter.
In Japan, companies became more pessimistic this quarter. Sentiment among large manufacturers fell to minus 44.5 points from minus 10 points three months earlier, a survey by the Cabinet Office and Finance Ministry showed today. A negative number means pessimists outnumber optimists.
‘Destroying Demand'
"Most of the developed world is in recession and that's destroying a lot of demand," said Sean Fenton, who manages about $324 million at Tribeca Investment Partners in Sydney. "All the macro indicators are pointing to slowing growth."
The rout in stocks this year has taken the average valuation of the MSCI Asia Pacific Index's constituents to 13 times estimated earnings, about a quarter below the level at the start of this year.
Toyota dropped 3.8 percent to 2,785 yen after saying output fell 27 percent to 589,505 vehicles in November. The company said on Dec. 22 it will post a 150 billion yen ($1.7 billion) loss in the year through March. It previously forecast profit of 600 billion yen.
Honda Motor Co., Japan's second-largest automaker, fell 5.9 percent to 1,792 yen. Production dropped 10 percent to 326,176 vehicles, the company said separately today.
Baltic Dry Index
Bridgestone slumped 4.1 percent to 1,233 yen after the tire maker slashed its net income prediction for the year by 82 percent. Denso, the world's largest listed auto-parts maker, lost 3.1 percent to 1,337 yen as it cut its earnings forecast 90 percent. Both companies cited lower demand and a stronger yen.
China Shipping Development Co., whose vessels carry oil, coal and manufactured goods, fell 4 percent to HK$6.91. Mitsui O.S.K. Lines Ltd., Japan's largest operator of iron-ore ships, slumped 5.8 percent to 516 yen. Nippon Yusen K.K., Japan's biggest shipping line by sales, lost 4 percent to 508 yen.
The Baltic Dry Index, a measure of shipping costs for commodities, lost 2.1 percent yesterday, taking its four-day decline to 6.2 percent. The index has tumbled 92 percent in the past 12 months as slowing global trade lowered cargo rates.
LG Display retreated 5.5 percent to 21,500 won after Goldman Sachs cut its share-price estimate by 19 percent to 25,600 won. The company may post a fourth-quarter net loss of 98 billion won ($74 million) as sales decline, the brokerage said.
Takeover Offer
Ssangyong Motor Co., the South Korean unit of China's largest carmaker, fell 8.9 percent to 925 won. The stock fell after a lawmaker said parent SAIC Motor Corp. may exit from the company if the South Korean company's labor union doesn't accept a restructuring plan.
Sydney Gas soared 55 percent to 42.5 Australian cents after AGL Energy Ltd., Australia's biggest electricity and gas retailer, agreed to buy the company for A$171 million ($116 million) to expand coal seam gas output.
