Post by ferryfast admin on May 28, 2011 11:39:02 GMT -5
Asian Stocks Drop for Fourth Week on European Debt Crisis, Falling Profits
By Shani Raja - May 27, 2011 6:26 PM CT
www.bloomberg.com/news/2011-05-27/asian-stocks-drop-for-fourth-week-on-european-debt-crisis-falling-profits.html
Asian stocks fell, dragging the region’s benchmark index to its biggest string of weekly losses in two years, as concern deepened over Europe’s debt crisis and amid speculation a slowing global recovery will crimp earnings.
Esprit Holdings Ltd. (330), which counts Europe as its biggest market, dropped 5.8 percent in Hong Kong after Fitch Ratings cut Greece’s credit rating and Standard & Poor’s said Italy’s was at risk. Austal Ltd. (ASB), an Australian shipbuilder, sank 4.4 percent in Sydney after lowering its full-year earnings forecast. Tokyo Electron Ltd., Japan’s biggest manufacturer of chip-making equipment, declined 2.4 percent in Tokyo on profit concerns.
“Issues like the softening growth rate of business activity and Europe’s debt problems have prompted investors to look for reasons to sell,” said Angus Gluskie, who manages about $350 million at White Funds Management Pty. in Sydney. “Long-term investors are sitting on the sidelines and short- term traders are selling into the market. It’s opening up some good value in many stocks, and I suspect we’ll see buying start to emerge.”
The MSCI Asia-Pacific Index declined 0.2 percent to 134.34 this week, its fourth straight drop, completing the biggest string of weekly losses since June 2009. The gauged dropped over the previous three weeks as Japan’s economy contracted, disappointing U.S. economic data fueled concern about the global recovery and China restricted bank lending, stoking concern anti-inflation policies may slow growth in the world’s second- biggest economy.
Luxury Retailers
Japan’s Nikkei 225 (NKY) Stock Average fell 0.9 percent. South Korea’s Kospi index retreated 0.5 percent and Australia’s S&P/ASX 200 Index dropped 1 percent in the week. Hong Kong’s Hang Seng index slipped 0.4 percent, even as luxury retailers surged after data showed visitors to Hong Kong increased.
Esprit, a Hong Kong-based clothier that gets about 83 percent of sales from Europe, declined to HK$28.60 in Hong Kong. Cosco Pacific Ltd. (1199), which operates container facilities at Piraeus, Greece’s largest port, dropped 5.1 percent to HK$15.04.
Fitch Ratings cut Greece three levels to B+, four steps below investment grade, from BB+. Fitch said even a “soft” restructuring of debt being studied by European Union policy makers would be considered a default. Fitch said Greece could face a further reduction in its creditworthiness.
Europe’s debt crisis is not limited to Greece. Italy’s Treasury said it will “intensify” structural changes in the economy and push ahead with measures to balance the budget by 2014 after Standard & Poor’s said its debt rating is at risk of a downgrade.
‘Risk of Contagion’
“The biggest concern about Europe is the risk of contagion and of credit markets drying up globally,” said Prasad Patkar, who helps manage about $1.8 billion at Platypus Asset Management Ltd. in Sydney. “The memory of the global financial crisis is fresh in everyone’s mind, and everybody’s preference is that we don’t go there again.”
European services and manufacturing growth slowed more than economists forecast in May, data showed. A composite index based on a survey of euro-area purchasing managers in both industries fell to a seven-month low of 55.4 from 57.8 in April, London- based Markit Economics said May 23.
Separately, the Federal Reserve Bank of Chicago’s gauge of economic activity unexpectedly dropped below zero in April. The national index, which draws on 85 economic indicators, was minus 0.45 in April versus 0.32 in March. A reading below zero indicates below-trend growth in the national economy.
Raw Materials
Reports last week showed manufacturing in the New York region expanded at a slower pace than anticipated in May as the cost of raw materials surged, and that Japan’s economy shrank more than estimated in the first quarter, sending the nation to its third recession in a decade.
Tokyo Electron Ltd. (8035), Japan’s biggest manufacturer of chip- making equipment, declined to 4,465 yen in Tokyo this week, leading chipmakers lower after Applied Materials Inc., the world’s largest producer of chipmaking equipment, forecast third-quarter profit and sales that missed analyst estimates.
Elpida Memory Inc. (6665), the world’s third-largest maker of computer memory, slumped 3 percent to 1,093 yen.
In Sydney, Austal dropped to A$2.82 after lowering its full-year profit forecast, citing the “unprecedented strength” of the Australian dollar alongside “softness” in Europe’s ferry market.
Among stocks that rose this week, Korea Zinc surged 9.2 percent to 392,000 won in Seoul. Jiangxi Copper advanced 5.5 percent to HK$26.10 in Hong Kong. Cnooc Ltd., China’s biggest offshore oil producer, climbed 5.1 percent to HK$19.06.
Copper, Zinc
Goldman Sachs suggested buying oil, copper and zinc even as it cut forecasts for Asian earnings and economic growth. The brokerage advised a return to raw materials after suggesting to investors last month they sell copper and oil.
Goldman raised its three-, six- and 12-month forecasts for Brent crude futures as Libyan supply cuts lead to the “effective exhaustion” of spare production capacity in the Organization of Petroleum Exporting Countries.
Luk Fook Holdings (International) Ltd. jumped 8.1 percent to HK$32.20, and Emperor Watch & Jewellery Ltd. surged 8.2 percent to HK$1.32. Hong Kong-based jewelry retailers advanced after exports of Swiss watches to Hong Kong, already the largest market for the timepieces, jumped 54 percent in value terms in April from a year before, according to figures from the Federation of the Swiss Watch Industry.
Separately, visitors to the city last month rose 20 percent from a year earlier, according to data from the Hong Kong Tourism Board.
In Seoul, Yoosung Enterprise Co. jumped 87 percent this week. The company, which supplies auto parts to Hyundai Motor Co. and Kia Motors Corp. said it resumed production after police broke up a week-long strike at its plant.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.
By Shani Raja - May 27, 2011 6:26 PM CT
www.bloomberg.com/news/2011-05-27/asian-stocks-drop-for-fourth-week-on-european-debt-crisis-falling-profits.html
Asian stocks fell, dragging the region’s benchmark index to its biggest string of weekly losses in two years, as concern deepened over Europe’s debt crisis and amid speculation a slowing global recovery will crimp earnings.
Esprit Holdings Ltd. (330), which counts Europe as its biggest market, dropped 5.8 percent in Hong Kong after Fitch Ratings cut Greece’s credit rating and Standard & Poor’s said Italy’s was at risk. Austal Ltd. (ASB), an Australian shipbuilder, sank 4.4 percent in Sydney after lowering its full-year earnings forecast. Tokyo Electron Ltd., Japan’s biggest manufacturer of chip-making equipment, declined 2.4 percent in Tokyo on profit concerns.
“Issues like the softening growth rate of business activity and Europe’s debt problems have prompted investors to look for reasons to sell,” said Angus Gluskie, who manages about $350 million at White Funds Management Pty. in Sydney. “Long-term investors are sitting on the sidelines and short- term traders are selling into the market. It’s opening up some good value in many stocks, and I suspect we’ll see buying start to emerge.”
The MSCI Asia-Pacific Index declined 0.2 percent to 134.34 this week, its fourth straight drop, completing the biggest string of weekly losses since June 2009. The gauged dropped over the previous three weeks as Japan’s economy contracted, disappointing U.S. economic data fueled concern about the global recovery and China restricted bank lending, stoking concern anti-inflation policies may slow growth in the world’s second- biggest economy.
Luxury Retailers
Japan’s Nikkei 225 (NKY) Stock Average fell 0.9 percent. South Korea’s Kospi index retreated 0.5 percent and Australia’s S&P/ASX 200 Index dropped 1 percent in the week. Hong Kong’s Hang Seng index slipped 0.4 percent, even as luxury retailers surged after data showed visitors to Hong Kong increased.
Esprit, a Hong Kong-based clothier that gets about 83 percent of sales from Europe, declined to HK$28.60 in Hong Kong. Cosco Pacific Ltd. (1199), which operates container facilities at Piraeus, Greece’s largest port, dropped 5.1 percent to HK$15.04.
Fitch Ratings cut Greece three levels to B+, four steps below investment grade, from BB+. Fitch said even a “soft” restructuring of debt being studied by European Union policy makers would be considered a default. Fitch said Greece could face a further reduction in its creditworthiness.
Europe’s debt crisis is not limited to Greece. Italy’s Treasury said it will “intensify” structural changes in the economy and push ahead with measures to balance the budget by 2014 after Standard & Poor’s said its debt rating is at risk of a downgrade.
‘Risk of Contagion’
“The biggest concern about Europe is the risk of contagion and of credit markets drying up globally,” said Prasad Patkar, who helps manage about $1.8 billion at Platypus Asset Management Ltd. in Sydney. “The memory of the global financial crisis is fresh in everyone’s mind, and everybody’s preference is that we don’t go there again.”
European services and manufacturing growth slowed more than economists forecast in May, data showed. A composite index based on a survey of euro-area purchasing managers in both industries fell to a seven-month low of 55.4 from 57.8 in April, London- based Markit Economics said May 23.
Separately, the Federal Reserve Bank of Chicago’s gauge of economic activity unexpectedly dropped below zero in April. The national index, which draws on 85 economic indicators, was minus 0.45 in April versus 0.32 in March. A reading below zero indicates below-trend growth in the national economy.
Raw Materials
Reports last week showed manufacturing in the New York region expanded at a slower pace than anticipated in May as the cost of raw materials surged, and that Japan’s economy shrank more than estimated in the first quarter, sending the nation to its third recession in a decade.
Tokyo Electron Ltd. (8035), Japan’s biggest manufacturer of chip- making equipment, declined to 4,465 yen in Tokyo this week, leading chipmakers lower after Applied Materials Inc., the world’s largest producer of chipmaking equipment, forecast third-quarter profit and sales that missed analyst estimates.
Elpida Memory Inc. (6665), the world’s third-largest maker of computer memory, slumped 3 percent to 1,093 yen.
In Sydney, Austal dropped to A$2.82 after lowering its full-year profit forecast, citing the “unprecedented strength” of the Australian dollar alongside “softness” in Europe’s ferry market.
Among stocks that rose this week, Korea Zinc surged 9.2 percent to 392,000 won in Seoul. Jiangxi Copper advanced 5.5 percent to HK$26.10 in Hong Kong. Cnooc Ltd., China’s biggest offshore oil producer, climbed 5.1 percent to HK$19.06.
Copper, Zinc
Goldman Sachs suggested buying oil, copper and zinc even as it cut forecasts for Asian earnings and economic growth. The brokerage advised a return to raw materials after suggesting to investors last month they sell copper and oil.
Goldman raised its three-, six- and 12-month forecasts for Brent crude futures as Libyan supply cuts lead to the “effective exhaustion” of spare production capacity in the Organization of Petroleum Exporting Countries.
Luk Fook Holdings (International) Ltd. jumped 8.1 percent to HK$32.20, and Emperor Watch & Jewellery Ltd. surged 8.2 percent to HK$1.32. Hong Kong-based jewelry retailers advanced after exports of Swiss watches to Hong Kong, already the largest market for the timepieces, jumped 54 percent in value terms in April from a year before, according to figures from the Federation of the Swiss Watch Industry.
Separately, visitors to the city last month rose 20 percent from a year earlier, according to data from the Hong Kong Tourism Board.
In Seoul, Yoosung Enterprise Co. jumped 87 percent this week. The company, which supplies auto parts to Hyundai Motor Co. and Kia Motors Corp. said it resumed production after police broke up a week-long strike at its plant.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.