Asian stocks fell for the fourth day this week, as the Group of 20 nations warned Europe's debt crisis still threatens global growth, and as U.S. economic data signaled the recovery in the world's largest economy is slowing.
Esprit Holdings Ltd., a clothier that depends on Europe for about 80 percent of its sales, fell 1.3 percent in Hong Kong. James Hardie Industries SE (JHX), an Australian supplier of building materials that gets more than half of its sales from the U.S., slid 1.1 percent in Sydney. LG Chem Ltd. (051910) sank 9.2 percent in Seoul after the chemical maker's profit slumped. JFE Holdings, Inc., the No. 2 Japanese steelmaker, slid 3.3 percent in Tokyo after a report it may increase borrowing for investment.
The MSCI Asia Pacific Index declined 0.5 percent to 124.17 as of 5:07 p.m. in Tokyo, with more than five stocks falling for every three that rose in the gauge. The index is headed for a 0.7 percent decline this week. Volumes for benchmark equity indexes in Japan, Hong Kong and Singapore were at least 25 percent below their 30-day averages, according to data compiled by Bloomberg.
"I still think Europe overall is just buying time for its problem, which cannot be resolved in the short term," said Alex Au, Hong Kong-based managing director of Richland Capital Management Ltd., which oversees $300 million. "From time to time in the next few years I think we will see panic situations. The market is very thin and liquidity is low, so if someone wants to push the market down it won't be too difficult. Investors are holding a lot of cash."
The Asia-Pacific gauge, which includes companies from some emerging markets, pared its gains this year to 9.6 percent through yesterday, as U.S. and China's economic reports showed signs of a slowdown, and amid renewed concern about Europe's debt crisis.
Japan's Nikkei 225 Stock Average fell 0.3 percent. South Korea's Kospi index sank 1.3 percent, led by petrochemical companies after LG Chem missed earning's estimates.
Australia's S&P/ASX 200 Index and Hong Kong's Hang Seng Index rose 0.1 percent.
China's Shanghai Composite Index rose 1.2 percent on speculation the government will increase fiscal spending on infrastructure and ease monetary policy to bolster economic growth.
Finance chiefs from Canada and Australia joined the International Monetary Fund and U.S. in pressing Europe to intensify efforts to quell the turmoil as it spreads to Spain. The G-20 cited "the situation in Europe" first in a list of drags on the world economy, according to a draft statement obtained by Bloomberg News. Finance chiefs from the G-20 meets today in Washington.
Esprit sank 1.3 percent to HK$16.36 in Hong Kong. Canon Inc., a Japanese camera maker that gets almost a third of its sales from Europe, slumped 0.5 percent to 3,760 yen in Tokyo even after profit for the three months ended March increased.
German business confidence unexpectedly increased for a sixth month in April, according to a report released by Munich- based Ifo institute today after the close of markets in Japan, Hong Kong, Australia.
Futures on the Standard & Poor's 500 Index (SPXL1) rose 0.2 percent today. The gauge dropped 0.6 percent in New York yesterday after reports showed sales of previously owned U.S. homes in March unexpectedly fell, while more Americans than forecast filed applications for unemployment benefits last week.
A separate report showed manufacturing in the Philadelphia region expanded at a slower pace in April as orders and sales cooled.
James Hardie, Toyota
James Hardie retreated 1.1 percent to A$7.32 in Sydney, while Toyota Motor Corp. (7203), Asia's biggest carmaker by market value, fell 1.9 percent to 3,295 yen in Tokyo.
Stocks in the MSCI Asia Pacific Index are valued at 12.7 times estimated earnings on average, compared with 13.1 times for the S&P 500 and 10.7 times for the Stoxx Europe 600 Index.
LG Chem, South Korea's biggest chemicals maker, dropped 9.2 percent to 315,500 won in Seoul, the steepest drop on the MSCI Asia Pacific Index. (MXAP) The company said net income fell 42 percent from a year earlier to 380.9 billion won ($334 million) in the three months ended March 31, less than the 474 billion won average of 18 analyst estimates compiled by Bloomberg.
JFE Holdings slid 3.3 percent to 1,557 yen in Tokyo, even after swinging to a profit in the three months ended March 31. JFE said it will spend 1 trillion yen ($12.3 billion) in the next three years to expand overseas facilities and renovate domestic plants. That's about 25 percent more than the target in previous business plans. The Nikkei newspaper earlier reported may seek to sell bonds and increase borrowing to fund the investment.
Among stocks that rose, China Zhongwang Holdings Ltd., which makes industrial aluminum extrusion products, rose 7.4 percent to HK$3.19 in Hong Kong after saying it expects profit for the three months ended March 31 to rise from a year earlier.
Olympus Corp. jumped 6.4 percent to 1,286 yen in Tokyo. The camera maker's shareholders approved new management headed by former banker Yasuyuki Kimoto after it last year revealed it hid $1.7 billion in investment losses.
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