Asia Stocks Drop Most in a Month on IMF Outlook, Radiation Risk
Asia Stocks Drop Most in a Month on IMF Outlook
, Radiation Risk
Asian stocks fell the most in almost a month after the International Monetary Fund yesterday cut its economic growth forecasts for the U.S. and Japan, where the government said problems at a stricken nuclear plant are worse than previously stated.
Honda Motor Co., Japan's No. 2 carmaker by market value, lost 1.4 percent, leading Japan's Nikkei 225 Stock Average toward its steepest decline since markets tumbled in the aftermath of the March 11 earthquake and tsunami. Tohoku Electric Power Co. fell 3.7 percent after a series of plus 6- magnitude aftershocks that have hit Japan in the past 24 hours. In Sydney, BHP Billiton Ltd., the world's No. 1 mining company, dropped 1.3 percent after crude oil and copper prices declined. Cnooc Ltd., a Chinese offshore oil producer, lost 3.6 percent in Hong Kong.
The MSCI Asia Pacific Index declined 1.4 percent, the most since March 15, to 134.63 as of 3:45 p.m. in Tokyo.
"Investor sentiment is deteriorating because it seems uncertainty is going to remain for a long period of time," Ikuo Mitsui, who helps manage $270 million at Vivace Capital Management Co. "There's concern about how disruptions to Japan's supply chain will affect the global economy. Higher gasoline prices mean a significant pressure on the U.S. consumption, so the impact of oil prices on the global economy is significant."
About eight stocks fell for each that rose in the MSCI Asia-Pacific index. The gauge has risen for three straight weeks as Japanese companies resumed production after last month's earthquake, and as an improving U.S. economy bolstered optimism the global recovery can be sustained.
Regional Benchmarks Slump:
Japan's Nikkei 225 Stock Average fell 1.7 percent, the most since March 15. As well as the 6.6 temblor yesterday, a magnitude-6.3 earthquake struck Chiba, the prefecture east of Tokyo, this morning and a magnitude 6.3 aftershock struck Fukushima prefecture this afternoon, according to the Japan weather agency. Also Japan raised the severity rating of its nuclear crisis to the highest level, matching the rating of the 1986 Chernobyl disaster, as increasing radiation prompts the government to widen the evacuation zone.
Australia's S&P/ASX 200 Index declined 1.5 percent and New Zealand's NZX 50 Index slipped 0.3 percent. South Korea's Kospi index retreated 1.6 percent, while Hong Kong's Hang Seng Index sank 1.5 percent, the biggest drop since March 17. China's Shanghai Stock Exchange Composite Index declined 0.1 percent and Taiwan's Taiex index slumped 1.7 percent.
Futures on the Standard & Poor's 500 Index lost 0.4 percent today. In New York yesterday, the S&P 500 dropped 0.3 percent after oil dropped from a 30-month high as the International Monetary Fund cut its growth forecast for the world's largest economy.
IMF Forecasts:
In Tokyo, Honda declined 1.4 percent to 2,862 yen. Toyota Motor Corp., the world's largest carmaker, lost 0.6 percent to 3,240 yen. Sony Corp., Japan's largest exporter of consumer electronics, retreated 2.9 percent to 2,502 yen.
In Sydney, James Hardie Industries SE, the largest seller of home siding in the U.S., fell 2.6 percent to A$5.74. In Seoul, Samsung Electronics Co., which receives 20 percent of its revenue from America, lost 1.3 percent to 882,000 won.
The U.S. economy will expand 2.8 percent this year, slowing from 2.9 percent last year and less than the 3 percent growth for 2011 forecast in January, the IMF said. The Washington-based fund also cut its estimate of Japan's growth to 1.4 percent from 1.6 percent in the previous forecast after the March 11 earthquake and tsunami.
Aftershocks Hit Japan:
Tohoku Electric lost 3.7 percent to 1,358 yen. The utility yesterday said about 220,000 homes, mostly in Iwaki city, were without power. Softbank Corp., Japan's third-biggest wireless carrier, slipped 1.9 percent to 3,320 yen, biggest drag on the Nikkei 225. Fast Retailing Co., Asia's biggest clothing chain, declined 1.3 percent to 11,740 yen.
Japan has been hit by a series of major aftershocks in the past 24 hours, a month after the record quake that triggered a tsunami on March 11, leaving 27,493 dead or missing and disabling Tokyo Electric Power Co.'s Fukushima Dai-Ichi nuclear plant. Japan's nuclear safety agency today raised the severity rating of the crisis at the Fukushima Dai-Ichi nuclear plant to 7, the highest level.
"After yesterday's quake, investors are likely to wonder whether there's more to come," said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. "That's likely to weigh on sentiment."
Estimated Earnings:
The MSCI Asia Pacific Index lost 0.9 percent this year through yesterday, compared with gains of 5.3 percent by the S&P 500 and 1.9 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.2 times estimated earnings on average, compared with 13.6 times for the S&P 500 and 11.3 times for the Stoxx 600.
Commodity producers declined today, with the subgroups for energy and materials producers falling the most among the 10 industry groups on the MSCI Asia Pacific Index.
BHP slumped 1.3 percent to A$48.89 in Sydney, the biggest drag on the MSCI index. In Hong Kong, Cnooc fell 3.2 percent to HK$19.80, the second-heaviest drag on the MSCI measure. PetroChina Co., the nation's No. 1 oil producer, slid 4.9 percent to HK$11.74. Inpex Corp., Japan's largest energy explorer, retreated 5.2 percent to 620,000 yen, its steepest decline since March 15.
Oil for May delivery tumbled from a 30-month high, dropping 2.5 percent to settle at $109.92 a barrel in New York yesterday, the most since Nov. 17. Oil for May delivery fell as much as 1.6 percent to $108.15 today.
Unwinding Positions:
Some traders may be "unwinding their positions to lock in the profit in commodities and the stock markets," said Ben Kwong, chief operating officer at KGI Asia Ltd.
Among other stocks that fell, Aluminum Corp. of China Ltd., the nation's largest producer of the metal, lost 1.7 percent to HK$7.61. China's Ministry of Finance is considering a reduction of export rebates for some aluminum products to 9 percent from 13 percent, the China Securities Journal reported, without citing anyone.
Alumina Ltd., partner in the world's biggest producer of the material used to make aluminum, dropped 6 percent to A$2.53 in Sydney, its steepest drop since January 29.
Alcoa Inc., the largest U.S. aluminum producer, said sales increased 22 percent to $5.96 billion from $4.89 billion a year earlier, missing the average estimate of $6.06 billion from eight analysts in the Bloomberg survey.
With assistance from Toshiro Hasegawa and Kana Nishizawa in Tokyo.
Source: www.businessweek.com
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