Asian stocks tumbled, extending a global rout, as a deepening world recession drove down commodity prices and heightened concern company earnings will collapse as manufacturing shrinks.
JFE Holdings Inc., the world’s third-largest steelmaker, slumped 9.5 percent in Tokyo as US and European factory output declined. Woodside Petroleum Ltd. lost 10 percent in Sydney after crude sank to the lowest level in three years. Taiwan Semiconductor Manufacturing Co. slid 7 per cent after cutting profit targets. Australia’s benchmark S&PôASX 200 Index extended declines to 4.2 percent after the central bank reduced interest rates by one percentage point.
“The world is in recession and earnings will fall next year for most companies the world over including Asia,” said Hugh Young, managing director at Aberdeen Asset Management Ltd. in Singapore, which oversees about $45 billion in assets. “Asia is in pretty good shape for surviving, not in great shape for growing.”
The MSCI Asia Pacific Index dropped 4.4 per cent to 79.01 in Tokyo. Almost 10 stocks fell for each that rose. The gauge has lost 50 per cent this year, the steepest decline on record. Shares now trade at an average of 1.05 times book value, compared with as high as 2.6 times last year.
Japan’s Nikkei 225 Stock Average lost 6.4 per cent to 7,863.69. Hong Kong’s Hang Seng Index fell 5 per cent. Sun Hung Kai Properties Ltd., the city’s second-largest developer, declined 5.5 per cent after HSBC Holdings Plc raised rates on new home loans by the most in 10 years.
Thailand’s SET Index fell 1.8 per cent, erasing earlier gains, after the country’s constitutional court dissolved the ruling party, forcing Prime Minister Somchai Wongsawat to step down. All other Asian benchmark indexes retreated except China.
Futures on the Standard & Poor’s 500 Index rose to 0.7 per cent. The S&P 500 dived 8.9 per cent yesterday, wiping out half the gains made last week. Investors bought treasuries, driving yields on two-, 10- and 30-year debt to the lowest on record, after Federal Reserve chairman Ben S Bernanke said the central bank may purchase securities.
“Investors are once again becoming terrified of taking risk,” said Ayako Sera, a strategist at Sumitomo Trust & Banking Co. in Tokyo, which manages $266 billion in assets.
The MSCI World Index of 23 developed markets has tumbled 48 per cent this year, wiping out $30 trillion in equity value.
