Asian stocks fell, with the regional benchmark index retreating from a one-month high, as Spain’s borrowing costs climbed to a Euro-area record and optimism faded that Greece’s election result will calm the debt crisis.
Esprit Holdings Ltd, a clothier that counts Europe as its largest market, declined 2 per cent in Hong Kong. Pacific Basin Shipping Ltd slid 6.3 per cent after Hong Kong’s biggest operator of dry-bulk ships predicted a first-half loss. Fairfax Media Ltd. sank 8.5 per cent in Sydney amid reports Gina Rinehart, Asia’s richest woman, is seeking three seats on the publisher’s board and power to fire editors.
The MSCI Asia Pacific Index dropped 0.2 per cent at 115.62 as of 5.25pm in Tokyo, with about five shares falling for every four that rose. More than $5 trillion (Dh18.36 trillion) has been erased from global equities since March amid concern growth is slowing in the US and China, and as Europe’s debt crisis intensified.
“We see Europe escalating rather than solving its problems,” said Tim Riordan, of Parker Asset Management Ltd, a hedge fund in Sydney that has about $200 million under management. “The focus is rolling on to Spain, and with bond yields going over 7 per cent, this has been a red flag in the past. You’re in a bit of a downward spiral and this leads us to be fairly cautious.”
Japan’s Nikkei 225 Stock Average fell 0.8 per cent. Australia’s S&P/ASX 200 Index slid 0.3 per cent. Hong Kong’s Hang Seng Index lost 0.1 and China’s Shanghai Composite Index both slid 0.7 percent. Trading volumes were below the 30-day moving average across the region, except in India, according to data compiled by the Bloomberg News.
Futures on the Standard & Poor’s 500 Index lost 0.1 per cent today. The gauge added just 0.1 per cent yesterday as optimism about Greece’s attempts to form a coalition government was tempered by a surge in Spanish bond yields to a Euro-era record of 7.29 percent.
German Chancellor Angela Merkel said Greece should not be given more leeway to comply with austerity measures needed to secure international aid after pro-bailout parties won enough seats to form a majority in parliament.
Companies that do business in Europe fell as Spain, which has asked Euro-region governments for as much as 100 billion euros (Dh464.4 billion) to help shore up its banks, reported a jump in bad loans in April to 8.72 per cent of total lending, the highest since 1994.
Esprit slipped 2 per cent to HK$10.04 (Dh4.75). Hutchison Whampoa Ltd, which operates ports in Germany and Spain, fell 0.7 per cent to HK$66.4 in Hong Kong. Canon Inc, a camera maker that gets about 31 per cent of sales from Europe, dropped 1.2 per cent to 3,200 yen (Dh148.53) in Tokyo.
Group of 20 chiefs, who began a two-day meeting in Mexico on Monday, focused their response to Europe’s financial crisis on stabilising the region’s banks, raising pressure on Merkel to expand rescue measures as contagion engulfed Spain.
The MSCI Asia-Pacific Index, which lost 10 per cent through yesterday from this year’s highest level in February, traded at 1.2 times book value, compared with 2.1 times for the S&P 500 and 1.3 times for the Stoxx 600, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.
Pacific Basin dropped 6.3 per cent to HK$3.25. The shipping company predicted a first-half loss after writing down the value of its vehicle-carrying fleet by $190 million as a global glut of vessels and the European debt crisis damped rates.
Tsingtao Brewery Co slumped 7.8 per cent to HK$46.60 in Hong Kong, the most since May 2010, as billionaire investor Chen Fa Shu agreed to sell HK$1.5 billion in shares of the Chinese beer maker at a discount.
Fairfax Media plunged 8.5 per cent to 59.5 Australian cents (Dh2.2) in Sydney. Rinehart, who yesterday raised her stake in the publisher of the Sydney Morning Herald to 19 per cent, is seeking three board seats and the power to fire editors, the Herald reported today.
“What this will do is destroy the credibility of the Fairfax mastheads,” Communications Minister Stephen Conroy told reporters yesterday. “And if you were to start turning it into just a pro-mining industry gazette, well, I don’t think you would say the rest of the shareholders in Fairfax would be too excited.”