Tuesday 22 January 2008

Asia Stocks Fall, Extending Global Slump as Bear Market Spreads

Asian stocks plunged for a second day, sending the region's benchmark to its biggest decline since April 1990, on concern the global economy is slowing.

BHP Billiton Ltd. fell after metals and oil prices dropped, pushing Australia's stock index to its steepest loss in almost 20 years. PetroChina Co., the nation's largest oil explorer, slumped, helping drag Hong Kong's Hang Seng Index to the biggest two-day drop since October 1997. Toyota Motor Corp. declined as Japan's benchmark sank to the lowest since September 2005.

``We're in panic territory,'' said Patrick Chang, who helps manage $4.5 billion at CIMB-Principal Asset Management Bhd. in Kuala Lumpur. ``The markets are pricing in a recession. We won't see a bottom for the next one-to-two weeks.''

The MSCI Asia Pacific Index tumbled 6.5 percent to 132.06 at 7:29 p.m. in Tokyo, following Europe into a bear market and extending a global slump that has wiped more than $5 trillion from stock markets this year. Standard & Poor's 500 Index futures point to a 4.7 percent decline when U.S. trading starts.

Japan's Nikkei 225 Stock Average sank 5.7 percent to 12,573.05. Australia's All Ordinaries Index fell 7.3 percent, the most since October 1989. India's Sensitive Index fell 5 percent, paring an earlier loss of as much as 13 percent.

S&P 500 Index futures were at 1,255.3 in after-hours trading in Chicago, compared with the index's close of 1,325.19 on Jan. 18. That would bring the benchmark's drop from its October high to 20 percent as losses from subprime mortgages mount, causing gridlock in global credit markets. A 20 percent decline defines a bear market. U.S. trading was closed yesterday for the Martin Luther King public holiday.

`Crash'

Europe's Dow Jones Stoxx 600 Index sank 5.7 percent yesterday, pushing it into a bear market. Asia's MSCI index is 24 percent below its November high and fell the most today since Japan's stock-market bubble was deflating in April 1990.

BHP fell 6.9 percent to A$31, taking this year's drop to 23 percent. Rio Tinto Group, defending a takeover bid from BHP, lost 12 percent to A$101, the steepest decline since December 1987.

``This has been a crash and it might take a year to get back to where it was last week,'' said Michael Birch, who helps manage the equivalent of $140 million at Wallace Funds Management in Sydney. ``It might be the second half of the year before people have the confidence to weigh back in.''

PetroChina Co., the nation's largest oil explorer and the first company to exceed $1 trillion in stock value, sank 15 percent to HK$9.62. PetroChina has tumbled by more than half since its Nov. 1 record high, stripping about $500 billion from its market worth.

Oil, Metals

Crude oil traded near a six-week low at $86.64 after oil for February delivery declined 2.1 percent yesterday. A measure of six metals traded on the London Metal Exchange, including copper and zinc, slid 3.4 percent yesterday, the most in two months. Copper and zinc fell by the 4 percent exchange-imposed daily limit in Shanghai today. Energy and materials stocks were the two biggest percentage decliners on the MSCI regional benchmark.

Inpex Holdings Inc., Japan's largest oil producer, dropped 9.6 percent to 913,000 yen. Fortescue Metals Group Ltd., Australia's fourth-largest mining company by market value, plunged 12 percent to A$5, taking its slide from a Dec. 28 record to 41 percent.

Bank of China Ltd., whose shares were suspended from trading in Shanghai today pending an ``important'' announcement, dropped 8.6 percent to HK$3.08 in Hong Kong. The company, which has the largest subprime-related holdings among Asian banks, may have to write down the value of overseas securities by 35 billion yuan ($4.8 billion) BNP Paribas SA said yesterday in a note to clients.

Subprime

HSBC Holdings Plc, the world's third-largest bank by market value, fell 8.1 percent to HK$104.40, the lowest since September 2003. Babcock & Brown Ltd., Australia's second-largest investment bank, tumbled 19 percent to A$14.99.

``The mood in the market continues to be bearish,'' said Hans Kunnen, who helps manage $128 billion at Colonial First State Global Asset Management in Sydney. He said investors in Colonial's funds have been switching from equities to cash and fixed-interest investments, declining to be more specific.

Toyota, Japan's largest automaker, dropped 7.2 percent to 4,880 yen, rounding a 19 percent 2008 fall. Sony Corp., the world's No. 2 consumer-electronics maker, declined 6.9 percent to 5,110 yen.

Samsung Electronics Co., South Korea's largest exporter, slid 5 percent to 536,000 won. Hyundai Heavy Industries Co., the world's biggest shipbuilder, dropped 3 percent to 325,000 won. The Korea Exchange briefly suspended program selling orders on the main Kospi market as well as the junior Kosdaq market midday because of volatility.

`Optimists Wiped Out'

Taiwan Semiconductor Manufacturing Co., the No. 1 maker of custom-made chips, lost 6.9 percent to NT$49.60, the biggest drag on the island's Taiex index.

``The correction hasn't finished and will continue until the optimists have been wiped out,'' said Taku Yamamoto, who helps oversee about $107 billion at the Pension Fund Association in Tokyo.

Bridgestone Corp., the world's largest tiremaker by sales, slumped 5.1 percent to 1,561 yen, after the Nikkei newspaper reported its operating profit may drop 7 percent this year because of higher rubber prices. Hitachi Cable Ltd., a Tokyo- based cable-maker, tumbled 13 percent to 479 yen, the most since December 2000, after Goldman, Sachs & Co. cut it to ``neutral'' from ``buy.''

Consolidated Media Holdings Ltd., Australia's second-biggest publicly traded media company, surged 9.6 percent to A$4.23, the most since December 3, in Sydney after attracting a A$3.3 billion ($2.8 billion) takeover bid from Lachlan Murdoch and James Packer.

Hong Kong Tumbles

In Hong Kong, China Mobile Ltd., the world's biggest phone company, dropped 7.5 percent to HK$108.90. China Life Insurance Co., the largest insurer, plunged 16 percent to HK$27.60, a five- month low. China Mobile has lost almost a third of its value since its Oct. 29 high, and China Life has tumbled by almost half.

Reliance Industries Ltd., India's largest company, slumped 7.3 percent to 2,358.05 rupees and ICICI Bank Ltd., the nation's biggest bank, slid 4.1 percent to 1,124.75 rupees.

India's Finance Minister P. Chidambaram urged investors to ``stay calm'' after the Sensex plunged the most in almost 16 years, triggering a one-hour trading halt. It has now slumped almost 20 percent from its closing peak on Jan. 8. Declines today turned Australia and the Philippines into bear markets.

``The bears are now in control,'' said Jonathan Ravelas, who helps oversee $3.7 billion at BDO Unibank Inc. in Manila. ``All good things must come to an end.''