Asian stocks fell for the first week in three on mounting signs the deepening global recession is hurting corporate profits.
PetroChina Co, China's largest oil producer, lost 9.3 percent as crude prices plunged amid mounting signs of weakness in global economies. Toyota Motor Corp's forecast for its first-ever operating loss dragged South Korean rivals Hyundai Motor Co and Kia Motors Corp more than 16 percent lower on concern automobile demand is plummeting.
"The global economic situation is continuing to deteriorate," said Karma Wilson, the Sydney-based head of Asian equities at AMP Capital Investors, which manages about US$61 billion. "We're going to go through a very difficult earnings season, particularly in the first quarter. There's not a lot of positive news on the horizon at the moment."
The MSCI Asia Pacific Index fell 2.4 percent to 87.40 last week. Gauges of energy stocks and raw-material producers posted the biggest declines among the benchmark index's 10-industry groups last week. The MSCI Asia Pacific has slumped 45 percent in 2008, the worst annual performance in its two-decade history, as the most severe financial crisis since the Great Depression dragged economies worldwide into recessions. Losses and writedowns tied to the collapse of the United States subprime-mortgage market rose above US$1 trillion last week.
Analysts have cut their average earnings-per-share estimate for companies on the index by 29 percent since the beginning of the year, data compiled by Bloomberg News shows.
Output tumble
Japanese government reports last week showed that factory output tumbled in November, while unemployment rose and exports plunged the most on record.
The financial and economic turmoil has prompted countries including the US, China and Japan to slash interest rates and announce spending packages. Thai Prime Minister Abhisit Vejjajiva on Saturday pledged 300 billion baht (US$8.6 billion) to help counter a slump in Southeast Asia's second-largest economy. Petrochina retreated 9.3 percent to HKUS$6.36 (82 US cents) in Hong Kong. Oil & Natural Gas Corp, India's biggest energy exploration company, lost 9.6 percent to 642.95 rupees (US$13.44). Rio Tinto Group, the world's third-largest mining company, slumped 6.2 percent to AUS$36.59 (US$24.85) in Sydney as the prices of metals including copper fell.
First loss
Crude oil for February delivery gained 11.4 percent last week to US$37.73 a barrel in New York, paring its December slump to 23.5 percent.
Toyota, the world's second-largest car maker, on December 22 forecast its first operating loss since the company formed 71 years ago. Hyundai Motor, South Korea's largest car maker, retreated 16 percent to 38,000 won (US$29.26), while Kia lost 22 percent to 6,320 won. Toyota finished the week unchanged at 2,900 yen (US$32).
"I don't think you can simply say all the bad news has been discounted by the market," said Koichi Ogawa, chief portfolio manager at Tokyo-based Daiwa SB Investments Ltd. "We're still going to see more profit forecast downgrades."
Chinese shares dropped in spite of a 0.27-percentage point reduction in one-year interest rates by the nation's central bank.
(Shanghai Daily December 29, 2008)
