By Patrick Rial and Ian Sayson Oct. 22 (Bloomberg) -- Asian stocks stocks slumped, sending the Nikkei 225 Stock Average and the Kospi Index down more than 5 percent, on mounting signs that the global economic slowdown is hurting corporate profits. NEC Electronics plunged the most on record after reversing its profit forecast to a loss. Mitsubishi UFJ Financial Group Inc., Japan's largest listed bank, slumped 8.7 percent after a newspaper said earnings probably dropped by half. Singapore Petroleum Co. fell after third-quarter profit tumbled 99 percent. Stocks extended declines and U.S. futures slumped on speculation Argentina will default for the second time in a decade. ``Whether you are talking about the U.S. or over here, there is no escaping the drop-off we're going to have in profits,'' said Jun Morita, a fund manager at Chiba Bank Ltd. in Tokyo, which has $3.1 billion in tradable securities. ``The market is taking any bad news on earnings as a signal to sell.'' The MSCI Asia Pacific Index declined 4.8 percent to 88.32 as of 1:58 p.m. in Tokyo. The gauge rallied 6.2 percent in the past two days as money market rates dropped around the globe, boosting confidence the financial crisis is abating. The cost of protecting bonds from default soared around the region today as investors sought to protect themselves from risk. The index has plunged 44 percent this year, set for its worst annual performance since it was created in 1987, as credit market turmoil caused losses and writedowns of more than $660 billion at financial institutions and slowed global growth. World's Cheapest The slump has brought shares on the index to 1.2 times book value, making Asian equities cheaper than those in the U.S. and Europe. The S&P traded at 1.8 times book value, while stocks in Europe's Dow Jones Stoxx 600 Index are valued at 1.4 times. Japan's Nikkei 225 Stock Average declined 5.4 percent to 8,799.61, led by Konica Minolta Holdings Inc., after the yen surged to a four-year high against the euro. South Korea's Kospi index fell 5.7 after Posco announced steel production cuts and Samsung Electronics Co. scrapped its bid for SanDisk Corp. Equity benchmark indexes throughout the region dropped. Standard & Poor's 500 Index futures lost 0.8 percent in trading today, reversing earlier gains. Argentina's government plans to seize $29 billion of private pension funds stoked concern the country may be nearing default on its sovereign debt. When the country moved to tap savings in 2001 it presaged the end of debt payments. ``A default is the last thing markets would like to have at this point,'' said Olan Caperina, who helps manage about $6.7 billion at BPI Asset Management Inc. in Manila. ``It could trigger another round of sell-offs and undermine whatever confidence that's left in the markets.'' U.S. stocks slid yesterday as companies from Texas Instruments Inc. to Freeport-McMoRan Copper & Gold Inc. reported profit and revenue that missed analysts' estimates. The S&P 500 Index lost 3.1 percent. Semiconductor Declines NEC Electronics, Japan's third-biggest chipmaker, tumbled by its daily limit of 20 percent to 1,210 yen, the steepest fall since the stock was listed in July 2003. The company yesterday said it will probably have a net loss of 8 billion yen ($79.8 million) this year because demand for semiconductors slumped, reversing an earlier forecast to break even. NEC Corp., which owns 70 percent of the company, declined 12 percent to 329 yen. Powerchip Semiconductor Corp., Taiwan's largest memory-chip maker, lost 3.4 percent to NT$4.61 after reporting a third- quarter loss that was more than double analysts' estimates after prices fell because of oversupply. Samsung, the world's biggest computer-memory maker, slipped 2.1 percent to 508,000 won after saying it scrapped plans to buy SanDisk, citing ongoing turmoil in financial markets and the declining value of the target. Bank Profits Toshiba Corp., which partners with SanDisk in flash memory production, jumped as much as 3.2 percent to 382 yen on relief the company won't be squeezed out of the market. The shares were recently down 3 percent. Mitsubishi UFJ fell 8.7 percent to 775 yen. The bank's first-half profit may fall about 50 percent because of higher costs to dispose of bad loans and writedowns on its shareholdings, the Nikkei newspaper said today. Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. may post earnings that are lower than their estimates, the newspaper said. Mizuho lost 6.3 percent and Sumitomo Mitsui sank 6.6 percent. ``We've only just started to see the impact of the growth slowdown on the real economy,'' said Angus Gluskie, who helps oversee A$450 million at White Funds Management in Sydney. ``The companies that have been reporting now haven't been materially impacted by the slowdown yet.'' Posco Posco, the largest steelmaker in South Korea, tumbled 5.3 percent to 304,000 won. Nippon Steel Corp., the world's second- biggest producer, lost 6.2 percent to 319 yen. BlueScope Steel Ltd., Australia's largest steelmaker, slid 4.9 percent to A$4.51. Posco said today it will slash output of stainless steel by about a third this quarter, reining in production to cope with a slowdown in demand. Shoji Muneoka, chairman of the Japan Iron & Steel Federation and president of Nippon Steel, said yesterday Japanese producers may lower output this quarter on slower demand. Singapore Petroleum, the only refiner traded on the Singapore exchange, tumbled 15 percent to S$2.57, set for its biggest loss in a decade. Third-quarter profit plunged 99 percent from a year earlier as falling crude prices caused the company to write down the value of its inventory. BHP Billiton Ltd., the world's biggest mining company, declined 7 percent to A$27.25 after the London Metal Exchange Index fell 3.3 percent to the lowest level since November 2005. Ratings Cut First-quarter iron ore output rose 15 percent, crude-oil and condensates output surged 43 percent, while production from Escondida -- the world's largest copper mine -- slumped 32 percent in the September quarter, BHP said today. Sumitomo Metal Mining Co., Japan's biggest nickel maker, tumbled 8.5 percent to 787 yen after Credit Suisse Group cut its rating on the shares to ``neutral'' from ``outperform,'' citing lower forecasts for metals prices. Konica Minolta, the world's second-largest maker of film used in liquid-crystal displays, tumbled 12 percent to 760 yen. The company sees an 850 million yen drop in operating profit for every 1 yen gain against the euro, according to KBC Securities. Olympus Corp., which generates more than a quarter of its sales in Europe, slumped 10 percent to 2,165 yen. Yen Strengthens The yen strengthened to as much as 127.01 per euro today, the highest since May 2004. The stronger yen reduces the value of sales generated overseas. Mazda Motor Corp., 33 percent owned by Ford Motor Co., dropped 10 percent to 255 yen on speculation Ford may unload its stake in the company to raise cash. Mazda also counts Europe as its second-largest market. Hyundai Motor Co., South Korea's biggest, lost 7.4 percent to 54,100 won. Isuzu Motors Ltd., Japan's third-biggest maker of commercial vehicles, tumbled 8.6 percent to 192 yen. Citic Pacific Ltd. fell for a second day, declining 9.2 percent to HK$5.92, after falling 55 percent yesterday on the news that the unit of China's biggest state-owned investment company may lose as much as $2 billion on currency bets. Hong Kong lawmakers urged regulators to investigate Citic Pacific's delay in disclosing its currency-hedging loss, the South China Morning Post said. The cost of protecting corporate bonds in Australia, as measured by credit-default swaps, soared 65 basis points to a record today. In Indonesia and the Philippines the cost to insure government debt surged 100 basis points. To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Satoshi Kawano in Tokyo at Skawano1@bloomberg.net

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