Business

Asian stocks post weekly decline on growth concerns

By  Kana Nishizawa and Monami Yui
Updated: 2010-08-16 18:06

Asian stocks fell last week, dragging a regional stock index to its first five-day decline in more than a month, as concern intensified that global growth is slowing. Electronics maker Sony Corp, which receives 22 percent of its sales from the US, fell 4.2 percent as the yen reached a 15-year high against the dollar, threatening to lower the value of export earnings. James Hardie Industries, the biggest seller of home siding in the US, tumbled 11 percent after forecasting a lower-than-estimated profit. PetroChina Co lost 5.6 percent in Hong Kong as oil declined.

The MSCI Asia Pacific Index fell 3.7 percent last week to 117.86, the first decline since the week to July 2. The index has slumped about 8.7 percent from its high this year on April 15 as Europe's debt crisis, China's measures to curb property-price inflation and disappointing economic reports in the US fueled concern global growth may stall.

"A slowdown in the global economy is now obvious and that is cooling investor sentiment," said Tomomi Yamashita, a fund manager in Tokyo at Shinkin Asset Management Co, which oversees about $5.8 billion. "There are no attractive positions to take right now in markets."

Japan's Nikkei 225 Stock Average sank 4 percent last week, as the yen's strengthening against the dollar dragged the index briefly into a bear market, or 20 percent below its high this year on April 5.

Australia's S&P/ASX 200 Index slid 2.3 percent. Hong Kong's Hang Seng Index dropped 2.8 percent. The mainland's Shanghai Composite Index lost 1.9 percent after government data showed the country's industrial production and import growth slowed.

Sony dropped 4.2 percent to 2,613 yen last week in Tokyo. Honda Motor Co, Japan's second-largest carmaker, fell 4.2 percent to 2,789 yen, and Canon Inc, which receives more than 80 percent of its revenue abroad, slid 4.3 percent to 3,580 yen.

Yen strengthens

The yen appreciated to as much as 84.73 against the dollar last week, the strongest level since July 5, 1995. A higher yen cuts the value of overseas income at Japanese companies when converted into their home currency.

"Investors are worried about the future of the US economy," said Naoteru Teraoka, who helps oversee about $22 billion in Tokyo at Chuo Mitsui Asset Management Co. "That drives up the yen, increasing uncertainty about the prospects for Japanese earnings."

Concerns about economic growth faltering dragged down the MSCI Asia Pacific Index by as much as 9.6 percent this year.

Companies in the gauge trade at almost 14 times estimated earnings. The ratio sank to 13.8 times on May 18, the lowest level since December 2008.

In the US, companies hired fewer workers than forecast in July, according to Labor Department data on Aug 6. Separately, Goldman Sachs Group Inc cut its 2011 growth forecasts for Japan and the US on Aug 7.

James Hardie said it would report a full-year operating profit, excluding asbestos-related expenses, of between $110 million and $125 million, missing analyst expectations of $143 million to $164 million range.

Commodity producers fell as growth concerns dragged on oil and metal prices. PetroChina Co, the Chinese mainland's biggest oil producer, lost 5.6 percent to HK$8.61 in Hong Kong. Rio Tinto Group, the world's No 3 mining company, dropped 2.4 percent to A$71.43 in Sydney.

Bloomberg News