BLBG: Asian Stocks Drop as Sony Forecasts Annual Loss; BHP Declines
Asian stocks fell, set for a third weekly decline, after losses at Sony Corp. and Samsung Electronics Co. added to evidence the global recession is hurting corporate profits.
Sony, the world’s second-largest consumer electronics maker, plunged 6.9 percent in Tokyo after forecasting its first annual loss in 14 years. Samsung, the biggest maker of memory chips, slumped 4.4 percent after its first quarterly loss. Australia & New Zealand Banking Group Ltd. fell 6 percent after a former central bank governor predicted a long recession for the country.
“The bad news about earnings and economies is accumulating,” Soichiro Monji, chief strategist at Daiwa SB Investments Ltd., which manages the equivalent of $53 billion, said in an interview with Bloomberg Television. “Sony’s loss forecast was an order of magnitude greater than what some analysts had estimated.”
The MSCI Asia Pacific Index lost 2.2 percent to 81.13 at 2:09 p.m. in Tokyo, extending the gauge’s slide this week to 4.2 percent. All industry groups on the index fell. Japan’s Nikkei 225 Stock Average dropped 2.9 percent to 7,820.95, while Australia’s S&P/ASX 200 Index declined 3.8 percent.
Most markets open for trading declined. Taiwan was closed today and is shut next week for the lunar new year, as is China. Hong Kong is closed for the first three days of the week.
BHP Billiton Ltd., the world’s biggest mining company, lost 5.9 percent in Sydney on concern commodities demand will decline. LG Electronics Inc., Asia’s second-largest maker of mobile phones, and Nikon Corp., which makes camera and semi-conductor equipment, slumped more than 6 percent on analyst ratings.
Disappointing Profits
The MSCI Asia Pacific Index tumbled by a record 43 percent last year and is down 9.4 percent in 2009 as the financial crisis dragged the world’s biggest economies into recession. The Bank of Japan yesterday said the nation’s economy will shrink 1.8 percent in the year to March 31.
Economic concerns and disappointing earnings from Microsoft Corp. and Fifth Third Bancorp helped drag the U.S. Standard & Poor’s 500 Index down by 1.5 percent yesterday. Futures on the benchmark measure slipped 0.3 percent today.
“There’s a fair degree of pessimism,” said Don Gimbel, a Montana-based senior managing director who helps manage $2 billion of international equities at Carret & Co. “Many chief executive officers won’t have seen this kind of thing globally in their lifetimes. They’re running back to their textbooks to find out what to do.”
Profits at Asian companies outside Japan may decline 13 percent this year, Merrill Lynch & Co. analysts told reporters in Hong Kong on Jan. 21.
Sony, Samsung
Sony slumped 6.9 percent to 1,804 yen after joining Toyota Motor Corp. in forecasting losses as the global recession worsened. Sony said it expects a record 260 billion yen ($2.9 billion) operating loss for the year to March 31, while analysts had estimated a loss of 70 billion yen.
Samsung dropped 4 percent to 444,500 won after reporting a fourth-quarter net loss of 22.2 billion won ($16 million) as product prices fell. Excluding a tax credit, the company had an operating loss that was more than double the deficit projected by analysts in a Bloomberg survey.
Companies such as Sony and Samsung that sell to U.S. customers also fell after a government report yesterday showed the number of Americans filing first-time claims for unemployment benefits matched the highest level since 1982 in the week ended Jan. 17. A separate report showed U.S. home prices dropped the most on record.
Economic Turmoil
Canon Inc., the world’s biggest digital-camera maker, sank 4.9 percent to 2,550 yen. Australia’s James Hardie Industries NV, the biggest seller of home siding in the U.S., slumped 4.8 percent to A$4.01.
ANZ Bank paced a decline among the region’s financial shares after Bernie Fraser, former governor of the Reserve Bank of Australia, said the country’s recession will be “deeper and longer” than the last one in 1991. The RBA may more than halve its benchmark interest rate, he said.
ANZ slipped 6 percent to A$12.22 and National Australia Bank Ltd. fell 6.8 percent to A$16.88.
BHP slumped 5.9 percent to A$27.41. Alumina Ltd., partner in the world’s biggest producer of the material used to make aluminum, plunged 11 percent to A$1.175.
‘Strong Stomach’
Measures of raw materials and energy stocks on the MSCI Asia Pacific were the worst performing of the index’s 10 industry gauges last year as commodity prices tumbled.
Crude oil futures in New York dropped 1.8 percent in after- hours trading, taking its slump in the past year to 51 percent. A measure of six metals traded in London including copper and zinc declined 2.3 percent yesterday. The gauge is down 53 percent from a year ago.
“You’ve got to have a very strong stomach to be buying metals stocks while demand for metals is so weak,” Carret’s Gimbel said.
BlueScope Steel Ltd., Australia’s largest steelmaker, plunged 8.8 percent to A$3.33, as the World Steel Association said global crude steel production fell 24 percent in December from a year earlier. OneSteel Ltd., the second-largest Australian producer of the alloy, sank 10 percent to A$2.22.
Sims Metal Management Ltd., the world’s biggest recycler of scrap metal, fell 21 percent to A$14.70 in Sydney. The stock was the biggest decliner on the MSCI Asia Pacific Index today after the company said first-half profit dropped as much as 12 percent.
LG sank 6.1 percent to 68,100 won when Deutsche Bank AG cut its recommendation on the stock to “hold” from “buy” after LG reported an unexpected record quarterly loss. Nikon lost 7.6 percent to 929 yen after UBS AG gave it a “sell” rating, saying the company may lose market share.
