Singapore: Asian stocks dropped for a third time in four days as concern mounted Europe’s debt crisis will spread and South Korea proceeded with an artillery drill that has prompted threats of retaliation from North Korea.
HSBC Holdings Plc, Europe’s biggest lender by market value, fell 1.1% in Hong Kong. Ricoh Co., a producer of office equipment that gets 23% of sales from Europe, declined 1.9% in Tokyo. Sony Corp. dropped 1.2% after the maker of Bravia televisions said sales of TVs will fall short of its target in the full-year. Santos Ltd, Australia’s third-largest oil and gas producer, jumped 4.1% after agreeing to sell part of its Australian gas project.
Europe’s debt problems are continuing to affect risk appetite, said Yoji Takeda, who helps manage about $1.1 billion at RBC Investment (Asia) Ltd in Hong Kong. There’s also a slight concern on escalating tensions in the Korean peninsula, though it’s unlikely to develop into a major skirmish. Asian equities are still attractive given the region’s strong economic growth.
The MSCI Asia Pacific Index fell 0.3% to 133.20 as of 8 pm in Tokyo, with more than two stocks declining for each that advanced. The gauge climbed to a two-and-a-half year intraday high on 14 December as US economic reports boosted confidence in a global recovery, easing concerns that Europe’s debt crisis and China’s measures to slow inflation will hurt growth.
South Korea’s Kospi Index declined 0.3%, paring earlier losses of as much as 1.5%. The government went ahead with a live-firing drill on Yeonpyeong Island, a month after North Korea shelled the island close to a disputed sea border off the peninsula’s west coast, killing four people.
Japan’s Nikkei 225 Stock Average dropped 0.9%. China’s Shanghai Composite Index declined 1.4% and Hong Kong’s Hang Seng Index slid 0.3%. Australia’s S&P/ASX 200 Index lost 0.6%. India’s sensitive index gained 0.1%.
Futures on the Standard and Poor’s 500 Index fell 0.2% on Monday. The gauge rose 0.1% in New York on 17 December to 1,243.91, its highest close since September 2008, as better-than-projected earnings forecasts at Oracle Corp. and Research In Motion Ltd. plus the takeover of a regional bank overshadowed concern Europe’s debt crisis will spread.
European stocks fell on 17 December as an agreement among the region’s leaders to create a crisis-management mechanism failed to ease concern that some euro-area nations can’t repay their debts. Ireland’s credit rating was cut five levels by Moody’s Investors Service on 17 December.
HSBC dropped 1.1% to HK$79.25. Standard Chartered Plc, the British bank that receives three quarters of earnings from Asia, slipped 1.7% to HK$210 in Hong Kong.
“The concern for investors with Europe is that you will continue to see sovereign-debt blowups that could impact the global economy,” said Don Williams, who helps manage about $1.8 billion at Platypus Asset Management Ltd in Sydney. A gauge of information-technology companies had the second-biggest decline among 10 industry groups in the MSCI Asia Pacific Index.
Ricoh slipped 1.9% to 1,168 yen in Tokyo. HTC Corp., the Taiwanese handset maker that counts Europe as its second- biggest market after America, declined 0.8% to NT$865. LG Display Co., the world’s No. 2 flat-screen panel maker that gets about 18% of sales from Europe, sank 2.6% to 39,200 won in Seoul.
Sony Corp., the world’s third-largest maker of TVs, fell 1.2% to 2,930 yen. “Sales of televisions in the year ending March 31 may miss a target of 25 million units by a little bit,” vice-president Hiroshi Yoshioka said on Monday, without elaborating.
Drugmakers in China tumbled after the Economic Observer reported that the government may cut medicine prices by an average of 40%.
Kangmei Pharmaceutical Co. sank 4.6% to 21.15 yuan in Shanghai. Beijing Tiantan Biological Products Corp. retreated 2.8% to 23.22 yuan while North China Pharmaceutical Co. dropped 2.6% to 16.46 yuan.
Shares of bulk-shipping companies fell after the Baltic Dry Index of shipping rates for commodities decreased 1.4% in London on 17 December to its lowest level since 5 August, extending its decline to a ninth day.
China Cosco Holdings Ltd, China’s biggest dry-bulk carrier, dropped 1.2% to HK$8.03 in Hong Kong. STX Pan Ocean Co. declined 2.6% to 11,400 won. Hyundai Merchant Marine Co. decreased 4.6% to 39,750 won.
The MSCI Asia Pacific Index increased 11% in 2010 through 17 December, compared with gains of 12% by the S&P 500 and 9% by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 14.7 times estimated earnings on average at the close on 17 December, versus 14.6 times for the S&P 500 and 12.3 times for the Stoxx 600.
Japan’s Nikkei 225 has underperformed the regional benchmark as it has fallen 2.3% this year through 17 December, according to Bloomberg data. Kathy Matsui, chief Japan equity strategist for Goldman Sachs Group Inc. in Tokyo, is telling clients to buy automakers and technology producers because profits will rise as the yen retreats against the dollar after reaching a 15-year high in October.