16 Feb 2009
Feb. 16 (Bloomberg) -- Asian stocks fell, led by finance and consumer companies, as Japan's economy shrank the most since 1974 and Group of Seven finance chiefs said the economic slowdown will persist through most of 2009.Takefuji Corp., Japan's third-biggest consumer lender, sank 9.5 percent in Tokyo after forecasting a full-year loss. Fisher & Paykel Appliances Holdings Ltd., which makes washing machines and dryers, plunged 35 percent in Wellington after saying it doesn't expect a profit this fiscal year. Brambles Ltd., the world's biggest supplier of pallets used to move and store goods, slumped 12 percent in Sydney as first-half earnings declined.
"There's no magic potion we can all drink and cure the ills that the global economy has at the moment," said Tim Schroeder, who helps manage about $2.6 billion at Pengana Capital Ltd. in Melbourne. "The evidence shows any pick-up is going to be muted, and that profitability is not going to recover meaningfully for some time."
The MSCI Asia Pacific Index declined 0.4 percent to 81.40 at 4:42 p.m. in Tokyo after the Japanese government said gross domestic product contracted 12.7 percent in the fourth quarter. Five stocks dropped for every four that advanced. The gauge has lost 9.2 percent this year, extending 2008's record 43 percent tumble, as the credit crisis dragged the world's biggest economies into recession.
The Nikkei 225 Stock Average fell 0.4 percent to 7,750.17. Hong Kong's Hang Seng Index declined 0.8 percent, while New Zealand's NZX 50 Index lost 2.6 percent. Most markets in Asia declined.
Shrinking Economy
Futures on the U.S. Standard & Poor's 500 Index dropped 0.4 percent. U.S. markets are closed today for Presidents' Day.
Citic Securities Co., China's biggest publicly traded brokerage, added 3.8 percent amid optimism profits will increase from surging trading volumes. Shikoku Electric Power Co. led Japan's utility companies higher as investors sought haven in stocks less vulnerable to economic cycles.
Takefuji tumbled 9.5 percent to 572 yen. The lender forecast a full-year loss of 264.1 billion yen ($2.9 billion) on rising claims to return overpaid interest and lower income from lending. The company had estimated in November a profit of 3 billion yen.
Electronics maker Pioneer Corp., which last week forecast a record loss, slumped 8.5 percent to 130 yen. Fast Retailing Co., Japan's No. 1 clothing retailer, lost 4.3 percent to 10,650 yen.
The Japanese economy contracted the most since the 1974 oil shock, according to figures from the Cabinet Office, with gross domestic product falling for a third-straight quarter. The median estimate of 26 economists surveyed by Bloomberg News was for an 11.6 percent contraction.
Rescue Plans
Evidence of a shrinking economy caused the cost of protecting Japanese corporate bonds from default to rise to a record. The Markit iTraxx Japan index of credit-default swaps on the debt of 50 investment-grade borrowers gained 20 basis points to 490, Barclays Plc prices show.
The G-7's finance ministers and central bankers said in a statement released after talks in Rome on Feb. 14 that they were working to restore confidence in markets and revive the world economy. They predicted the full effect of individual rescue packages will "build over time."
Reports last week showed Germany's economy contracted the most in 22 years in the fourth quarter and U.S. consumer confidence neared its lowest since 1981.
Governments and central banks are under increasing pressure to reverse the worst global slump since World War II, with International Monetary Fund Managing Director Dominique Strauss- Kahn saying on Feb. 13 that he expects more countries to apply to the IMF for aid.
Slumping Profits
Japan has been in a recession since November 2007, according to a government panel that dates the economic cycle, amid parliamentary gridlock that has blocked the passage of a 10 trillion yen ($111 billion) stimulus plan. The Australian government last week passed a A$42 billion ($27 billion) package.
Fisher & Paykel plummeted 35 percent to 65 New Zealand cents. The company, which makes about 80 percent of its sales outside the country, said it may break even in the 12 months ending March 31, after reporting a profit of NZ$54.2 million ($28 million) a year earlier.
Brambles lost 12 percent to A$5.65 as the slump in first- half profit prompted the company to cut operations in the U.S. and eliminate 750 jobs.
In China, Citic Securities rose 4.1 percent to 26.47 yuan. Haitong Securities Co., China's second-largest brokerage, jumped 4.2 percent to 14.49 yuan.
Government plans to aid industries from shipbuilding to textiles sparked a stock-market rally that has driven trading volumes to the highest level since Bloomberg began compiling the data on Jan. 3, 2006.
‘Defensive' Shares
Shikoku Electric gained 3.3 percent to 2,960 yen. Toho Gas Co. climbed 4.3 percent to 533 yen, while Tokyo Electric Power Co., Asia's biggest generator, rallied 2.8 percent to 2,760 yen.
"Defensive shares are being bought in part because of the awful GDP number," said Yoshinori Nagano, a senior strategist at Daiwa Asset Management Co., which oversees about $96 billion. "It's hard to bet on whether the global economy will start recovering later this year."
BlueScope Steel Ltd., Australia's largest steelmaker, fell 3.9 percent to A$3.20 after raising less than expected in a share sale. The company raised A$113 million from a stock sale to existing shareholders. BlueScope Steel said Dec. 10 it wanted to raise A$250 million.
