Asian Stocks Fall for Third Day; Financial Companies Lead Drop

Nov. 19 (Bloomberg) — Asian stocks fell for a third day, led by financial companies and commodity producers, as Mitsubishi UFJ Financial Group Inc. posted lower profit, South Korean bankruptcies rose and Oz Minerals Ltd. said earnings may decline.

Mitsubishi UFJ, Japan’s biggest bank, declined 6.6 percent after reporting lower net income as bad-loan costs rose. Babcock & Brown Ltd., the worst performing stock on the MSCI Pacific Index this year, lost 19 percent in Sydney after saying it will accelerate jobs cuts to avoid defaulting on debt. KB Financial Group Inc. paced declines in South Korea after corporate failures rose to a three-year high. Oz Minerals tumbled 19 percent after saying a drop in metal prices may reduce full-year profit.

“We’re not implementing any long-term ideas as the market is just not rewarding you for it,” said James Chua, investment analyst at Phillip Capital Management in Singapore, which oversees about $450 million. “Banks will definitely be affected by the global recession, it’s a question of how much. Commodities look expensive even at these levels.”

The MSCI Asia Pacific Index fell 1.1 percent to 79.04 at 1:04 p.m. in Tokyo, extending a two-day, 3.8 percent drop. Financial stocks were the biggest contributor to the measure’s retreat. More than two stocks declined for each that rose.

MSCI’s Asian gauge has halved in value in 2008 as global financial institutions lost almost $1 trillion and cut about 166,000 jobs since the subprime-mortgage market collapsed last year. Shares on the index are valued at 9.7 times trailing earnings and fell to 8.2 times last month, the lowest level since at least 1995, Bloomberg data shows.

Futures on the U.S. Standard & Poor’s 500 Index declined 1.4 percent. The S&P 500 advanced 1 percent yesterday, gaining in the last hour of trading as energy and technology shares rallied.

Nikkei, Kospi

Japan’s Nikkei 225 Stock Average lost 1.8 percent to 8,180.13. Mitsubishi Estate Co. led developers lower after saying the market for new tenants is softening.

South Korea’s Kospi Index slumped 3.8 percent, its seventh- straight decline, after UBS AG cuts its target for the measure. All other Asian benchmark indexes retreated, apart from the Philippines, China and Hong Kong.

Mitsubishi UFJ, Japan’s largest bank, dropped 6.6 percent to 510 yen. The company yesterday posted a 61 percent decline in quarterly profit on mounting losses from stockholdings and rising costs to get rid of bad loans.

Mizuho Financial Group Inc., Japan’s second-biggest bank, slid 5.3 percent to 217,700 yen. Sumitomo Mitsui Financial Group Inc., the third largest, lost 5.9 percent to 321,000 yen. Sumitomo Mitsui is considering raising as much as 400 billion yen ($4.1 billion) by selling preferred securities, a person familiar with the plan said.

Job Losses

Babcock, which has tumbled 99 percent this year, dropped 19 percent to 25 Australian cents in Sydney. The company said it will reduce headcount by almost two-thirds while it renegotiates debt agreements with bankers.

“Financials everywhere are being hit,” said Sean Fenton, who manages about $324 million at Tribeca Investment Partners in Sydney. “The risk of picking up bad debts increases a fair bit in a recession.”

KB, which owns South Korea’s largest bank, lost 3 percent to 29,200 won. Industrial Bank of Korea, the country’s biggest lender to smaller businesses, fell 5.7 percent to 6,320 won.

Some 203 companies went out of business in September, the Bank of Korea said. UBS cut its 12-month estimate for the Kospi by 26 percent on expectations earnings will continue to fall until the second quarter of next year.

Commodity Producers

OZ Minerals, the world’s second-largest zinc mining company, plunged 19 percent to 29 Australian cents after saying a drop in metal prices and higher output costs may cut full-year profit. Zinc has slumped 56 percent from a March high.

BHP, the world’s biggest mining company and Australia’s largest oil producer, slipped 4.4 percent to A$23.14, its lowest level since December 2005. Mitsubishi Corp., a Japanese trading company that gets half its profit from commodities, retreated 8.9 percent to 1,121 yen.

Gold fell for the second day, losing 1.3 percent to $732.70 an ounce, while aluminum slid to a three-year low in London. Crude oil lost 1 percent to $54.39 a barrel yesterday in New York on expectations U.S. inventories gained for an eighth week as fuel demand in the world’s largest user declines.

Woodside Petroleum Ltd. declined 4.3 percent to A$33.50.

`Softening’ Market

Mitsubishi Estate, Japan’s biggest developer by market value, lost 3.6 percent to 1,234 yen, while Mitsui Fudosan Co., the largest by revenue, fell 4.2 percent to 1,247 yen. An index of Japanese real-estate companies has fallen 24 percent this month, the most among the Topix index’s 33 industry groups.

“We are seeing a softening in the market for new tenants,” Toyohisa Miyauchi, executive vice president of Mitsubishi Estate, said in an interview.

Woolworths Ltd., Australia’s biggest retailer, declined 5.2 percent to A$24.89. The nation’s leading economic index fell in September, signaling it may slip into a recession, Westpac Banking Corp. and the Melbourne Institute said in Sydney today. That would end 17 straight years of economic expansion.

Taishin Financial Holding Co., a Taiwan financial-services company, gained 6.9 percent to NT$4.49. China’s Bank of Communications Ltd. may invest at least $100 million in Taishin once restrictions on financial-industry investments between China and Taiwan are eased, the Taipei-based Commercial Times reported.

Bank of Communications, China’s fourth-largest bank by value, dropped 2.3 percent to HK$4.30 in Hong Kong.