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| Asian stocks fall on stimulus concern, UBS loss |
| Bloomberg / Nov 04, 2009, 00:18 IST |
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Asian stocks fell, led by banks and developers, as UBS reported a wider-than-estimated loss amid investor concern that the withdrawal of stimulus measures will cause the global recovery to falter.
National Australia Bank sank 1.8 per cent as the country’s central bank raised interest rates for the second time in four weeks. Sino Land Co. dropped 4.4 per cent in Hong Kong on concern the government will enact measures to curb property speculation. India’s Suzlon Energy and Reliance Communications slumped more than 5 per cent after their quarterly results missed analyst estimates.
The MSCI Asia Pacific excluding Japan Index lost 1.1 per cent to 384.74 as of 3:54 p.m. in Hong Kong, with almost two stocks declining for each that rose.
The gauge has surged 88 per cent from a three-month low on March 2 on signs that government stimulus measures are reviving the global economy.
“We’re tending towards the view that we will see some relapse next year as people basically lose faith in governments’ ability to continue to come to the rescue,” said Peter Elston, a Singapore-based strategist at Aberdeen Asset Management, which had about $234 billion under management as of September 30.
Japanese markets are closed for a holiday. Hong Kong’s Hang Seng Index fell 1.7 per cent, South Korea’s Kospi Index lost 0.6 per cent and India’s Sensitive Index declined 0.4 per cent. China’s Shanghai Composite Index climbed 1.2 per cent.
Among stocks that gained today, Hyundai Motor Co. added 2.9 per cent in Seoul as Ford said it expects to be “solidly profitable” in 2011. Zijin Mining Group Co., China’s No. 1 gold producer, rose 1.6 per cent in Hong Kong after the precious metal climbed to a one-week high.
US factory index
Futures on the US Standard & Poor’s 500 Index lost 0.3 per cent, reversing earlier gains, as UBS, Switzerland’s largest bank, reported a fourth consecutive quarterly loss and Lloyds Banking Group announced a $34 billion rights offer. The S&P 500 advanced 0.7 per cent yesterday as the Institute for Supply Management’s factory index rose to a three-year high.
National Australia Bank, the country’s third-largest by market value, lost 1.8 per cent to A$28.39, while Westpac Banking Corp., the second biggest, dropped 0.6 per cent to A$25.43.
Australia’s central bank raised its overnight cash rate target to 3.5 per cent from 3.25 per cent, as forecast by 18 of 22 economists surveyed by Bloomberg News. The rest expect a half-point increase.
Australia on October 6 became the first Group of 20 nation to raise interest rates amid signs of strength in its economy, while the Bank of Japan said last week it will let its programs of buying corporate debt expire at the end of the year.
October decline
Investor concern about the withdrawal of stimulus policies and lower-than-estimated profits at companies from PetroChina to National Australia Bank have dragged the MSCI Asia Pacific Index, which includes Japan, down by 5.2 per cent from this year’s high on October 20.
The measure lost 1.3 per cent last month, the first drop since February. Stocks on that MSCI gauge trade at an average 22 times estimated profit, the lowest level since May 14, according to Bloomberg data. That’s still higher than the 13.7 times at the start of the year.
“Further improvements in the economic and corporate news will help justify valuations,” said Jason Teh, who helps manage $3.2 billion at Investors Mutual in Sydney. “A lot of stocks have had a good run, making it harder to find value in this market.” Suzlon, the country’s biggest maker of wind-turbine generators, tumbled 8.3 per cent to Rs 61.3 as its loss in the three months ended September 30, including that of units, widened on slowing equipment orders.
Government stabilisation
Reliance Communications, India’s second-largest mobile-phone operator, slumped 5.7 per cent to Rs 165.8 on October 31. It reported a 52 per cent tumble in second-quarter net income.
In Hong Kong, Sino Land dropped 4.4 per cent to HK$14.06. Sun Hung Kai Properties, Hong Kong’s No. 1 property developer by market value, declined 3.1 per cent to HK$114.10.
Hong Kong Chief Executive Donald Tsang said yesterday the government is “closely” monitoring the local property market and has tools available to stabilise it if necessary. The Hong Kong Monetary Authority last month raised down-payment requirements for luxury homes for the first time since 1991. “People seem to have recognised that their dream about continually rising property shares has burst,” said Castor Pang, a research director at CINDA International Holdings, a Hong Kong brokerage.
Hyundai motor
In Seoul, Hyundai Motor rose 2.9 per cent to 105,000 won. The company controlled 4.4 per cent of the US auto market at the end of September, according to Autodata Corp. Kia Motors Corp., which got 30 per cent of its revenue last year in North America, gained 2.8 per cent to 18,150 won.
Ford, the only major US auto maker to avoid bankruptcy, posted a quarterly pre-tax profit of $1.1 billion, or 26 cents a share, compared with a year-earlier loss of $3 billion, or $1.32. Ford beat the 20 cents a share adjusted loss estimated by an average of 11 analysts surveyed by Bloomberg.
Zijin Mining rose 1.6 per cent to HK$7.78 after gold futures in New York gained 1 per cent in after-hours trading. Prices jumped 1.3 per cent to $1,054 an ounce in New York yesterday, the highest closing level since October 23.
Newcrest Mining, Australia’s largest gold producer, climbed 3.9 per cent to A$33.38, while Lihira Gold added 4.3 per cent to A$3.17.
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