Asian stocks fell as UBS AG cut its profit outlook for BHP Billiton Ltd and the Bank for International Settlements said central banks are facing the limit of their ability to boost economic growth.
BHP Billiton led materials companies lower, sliding 1.4 per cent. Samsung Electronics fell 4.2 per cent, dragging technology stocks lower, as the world’s top mobile-phone maker investigated a complaint that one of its smartphones caught fire. Australia’s Billabong International Ltd slumped 34 per cent after selling A$155 million ($155 million) of new shares.
The MSCI Asia Pacific Index slid 0.6 per cent to 113.41 as of 5.32pm in Tokyo as five stocks fell for every two that rose. The Asian benchmark has lost 12 per cent from this year’s highest level in February, erasing this year’s advance, amid concern growth in the US and China is slowing as Europpe’s debt crisis deteriorates. Italy and Spain will sell debt tomorrow and European Union leaders will hold a two-day summit starting on Thursday.
“There is a question mark as to how many years we are going to see sub-par growth for,” Erwin Sanft, chief strategist for Pan-Asia equities at BNP Paribas SA in Hong Kong, said. “Growth has been disappointing across the board.”
South Korea’s Kospi Index sank 1.2 per cent,
Australia’s S&P/ASX 200 Index slipped 0.5 per cent and Japan’s Nikkei 225 Stock Average slid 0.7 per cent. Hong Kong’s Hang Seng Index retreated 0.5 per cent, while China’s Shanghai Composite Index dropped 1.6 per cent.
Central banks are being “cornered into prolonging monetary stimulus,” the Basel, Switzerland-based BIS said in its annual report, published on Sunday. “Both conventionally and unconventionally accommodative monetary policies are palliatives and have their limits.”
Futures on the Standard & Poor’s 500 Index slipped 0.7 per cent on Monday. The index rose 0.7 per cent in New York on June 22 as bank downgrades from Moody’s Investors Service were no worse than the firm had warned. The ratings firm cut Morgan Stanley by two levels rather than a threatened three grades. Banks rose the most among the 24 industry groups in the S&P 500.
“The volatility will remain,” said Savanth Sebastian, Sydney-based equities economist at Commonwealth Bank of Australia. “The market wants more clarity for what’s going on in Europe and that’s what is lacking.”
The Asia-Pacific benchmark index has lost 0.4 per cent this this year, compared with a 6.2 per cent advance by the S&P 500 and a 0.8 per cent gain by the Stoxx Europe 600 Index. Stocks in the Asian gauge are valued at 1.2 times book value, compared with 2.1 times for the S&P 500 and 1.4 times for the Stoxx 600, according to data compiled by Bloomberg. A number below 1 means companies can be bought for less than the value of their assets.
Billionaire investor George Soros called on Europe to start a fund to buy Italian and Spanish bonds, warning that a failure by leaders meeting this week to produce drastic measures could spell the demise of the currency. Policy makers should create a body to purchase sovereign debt in return for Italy and Spain implementing achievable budget cuts, Soros said in an interview in London on Sunday.
Italy is scheduled to sell inflation-linked securities maturing in 2016 and 2026 tomorrow as well as €3 billion ($3.8 billion) of zero-coupon bonds. Spain will offer three-and six-month bills the same day.
Citigroup reduced its 2012 gross domestic product forecast for China to 7.8 per cent from 8.1 per cent, citing anaemic domestic activity in the second quarter and further weakening of European demand.
BHP Billiton lost 1.4 per cent to A$31.07. UBS downgraded earnings estimates the company by 4 per cent due to Australia’s mining and carbon taxes. BHP will pay $715 million in mining tax and A$300 million ($302 million) in carbon tax in the year ending June 30, 2013, according to UBS analyst Glyn Lawcock.
The carbon tax will cost Rio Tinto Group $202 million, while the mining tax will cost the company $676 million in the 2013 calendar year, he said. Rio pared losses as of much as 1.6 per cent to close 0.2 per cent lower at A$55.90.
Samsung declined 4.2 per cent to 1.132 million won. A Galaxy S III smartphone owner in Ireland posted photos online June 20 showing the phone scorched on the bottom. Samsung’s local office has obtained the handset and is trying to identify the cause of the incident, James Chung, a Seoul-based spokesman for Samsung, said by phone.
Billabong slumped 34 per cent to 96 Australian cents in Sydney. The maker of Kustom shoes and Billabong clothing has had its recommendation cut to sell by analysts at Citigroup and UBS since reducing its earnings target on June 21 and announcing the share sale.
Yahoo Japan Corp fell 1.5 per cent to 24,870 yen as the government said it will question the company about plans to display advertisements based on users’ email messages.