Shanghai/Sydney: Asian stocks fell, led by commodity producers, after oil, copper and gold prices plunged on concern a US recession will reduce demand for raw materials.
BHP Billiton Ltd, the world’s largest mining company, tumbled the most in more than 20 years in Sydney. PetroChina Co., the country’s biggest oil producer, declined in Hong Kong after reporting less-than-estimated profit. National Australia Bank Ltd led financial companies lower after the cost of protecting Asian bonds from default increased.
“The US is still the biggest contributor to global growth, so any slowdown will have implications for commodity prices,” said Jason Teh, who helps manage the equivalent of $5.3 billion (Rs21,465 crore) at Investors Mutual Ltd in Sydney. “It’s going to be a one-way street for resources today.”
Losing ground: The BHP Billiton headquarters in Melbourne. The world’s largest mining firm tumbled the most in more than 20 years in Sydney.
The MSCI Asia Pacific excluding Japan Index fell 2.1% to 427.45 as of 6.14pm in Hong Kong, snapping a two-day, 3.6% advance. About three stocks dropped for every two that rose. The benchmark has slumped 19% this year, poised for its worst quarter in more than six years, on concern the US will sink into a recession amid mounting losses tied to the country’s subprime mortgage industry.
Australia’s S&P/ASX 200 Index lost 3.1%, the most in two weeks, in shortened trading on Thursday, while Hong Kong’s Hang Seng Index dropped 3.5%. Indian markets are shut on Thursday and Friday because of holidays. Japan’s markets are closed for Thursday, in addition to Indonesia, the Philippines and Malaysia. Other markets, including Hong Kong, will shut on Friday for Easter holidays until 25 March.
“People are nervous about the long weekend,” said Ivan Leung, who helps manage $400 billion as chief investment strategist in Hong Kong at JPMorgan Private Bank. “If you’re expecting any surprise, it’s likely to be a negative one.”
Stocks gained in Taiwan, where Jim Rogers, co-founder with George Soros of the Quantum Hedge Fund, said he’s investing on expectations this week’s presidential election will lead to improved ties with China. China’s equities rebounded on speculation the government will cut a tax on stock trading.
Korean Air Lines Co. and Asiana Airlines Inc. climbed in Seoul after saying they will raise fuel surcharges by as much as 42%. Ping An Insurance (Group) Co. fell to a nine-month low after agreeing to buy half of a Fortis asset-management unit.
An index measuring producers of raw materials tumbled the most in two months, the biggest decline among the 10 industry groups on MSCI’s Asian index.
BHP, also Australia’s largest oil producer, lost 8.3% to A$33.87 (Rs1,272), the most since October 1987. Rio Tinto Group, the world’s third largest mining company, fell 7.7% to A$116.29.
A measure of six metals traded on the London Metal Exchange, including copper and nickel, slid 2.8%. Gold futures plunged the most since June 2006 to $945.30 an ounce in New York.
Crude oil fell to $104.48 a barrel after a government report showed US demand dropped and after the dollar rebounded against the euro.
Copper has more than quadrupled in price in the past five years, while crude oil has risen fivefold since the end of 2001, as demand for commodities by China and India increased and as the dollar’s weakening against major currencies boosted the attractiveness of commodities as a store of value. Gold, a traditional hedge against inflation, has more than tripled in price over the past seven years.
PetroChina dropped 6.8% to HK$9.17 (Rs48), the lowest level since May. Profit in the second half climbed 3.7% to 63.8 billion yuan (Rs36,557 crore), less than the median estimate of 72.2 billion yuan in a Bloomberg News survey.
National Australia, the country’s largest bank, fell 2.3% to A$29.11. Commonwealth Bank of Australia, the second biggest, declined 1.8% to A$39.30.
Korean Air, the nation’s largest carrier, gained 3% to 55,200 won (Rs2,208). Asiana, South Korea’s No. 2 carrier, advanced 2.4% to 6,480 won. The two airlines will levy as much as $122 in fuel surcharges on long-haul routes from next month, a 42% increase, according to a statement on their websites.
Jet fuel, the single biggest cost for the two carriers, reached a record $131.55 a barrel on 17 March.
Ping An, China’s second largest insurer, fell 6.1% to HK$49.90, the lowest since June 2007, after it agreed to pay €2.15 billion (Rs13,652.5 crore) for half of a Fortis asset management unit.
Citic Securities Co., China’s largest publicly traded brokerage, jumped 1.6% to 58.90 yuan, reversing an earlier loss of 7%. “There’s speculation that the government will announce a cut in the stamp duty to prop up the market,” said Wu Kan, who manages the equivalent of $41 million at Dazhong Insurance Co. in Shanghai.
Zhang Shidong in Shanghai contributed to this story.