Most Asian Stocks Drop on Record Spanish Borrowing Costs - Bloomberg Most Asian Stocks Drop on Record Spanish Borrowing Costs - Bloomberg

Tuesday, June 19, 2012

Most Asian Stocks Drop on Record Spanish Borrowing Costs - Bloomberg

Most Asian Stocks Drop on Record Spanish Borrowing Costs - Bloomberg

Most 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. (330), a clothier that counts Europe as its largest market, declined 2 percent in Hong Kong. Pacific Basin Shipping Ltd. slid 6.3 percent after Hong Kong’s biggest operator of dry-bulk ships predicted a first-half loss. Lynas Corp. jumped 8.6 percent in Sydney after a Malaysian parliamentary committee said the Australian miner should be allowed to start refining rare earths in the Southeast Asian country once it fulfills and health and safety conditions.

The MSCI Asia Pacific Index was little changed at 115.77 at 7:52 p.m. in Tokyo, with about five shares falling for every four that rose. More than $5 trillion has been erased from global equities since March amid concern growth is slowing in the U.S. 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 percent, 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 (NKY) fell 0.8 percent. Australia’s S&P/ASX 200 Index slid 0.3 percent. 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.

Spanish Yields

Futures on the Standard & Poor’s 500 Index lost 0.1 percent today. The gauge added just 0.1 percent 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 ($126 billion) to help shore up its banks, reported a jump in bad loans in April to 8.72 percent of total lending, the highest since 1994.

Esprit slipped 2 percent to HK$10.04. Hutchison Whampoa Ltd., which operates ports in Germany and Spain, fell 0.7 percent to HK$66.4 in Hong Kong. Canon Inc. (7751), a camera maker that gets about 31 percent of sales from Europe, dropped 1.2 percent to 3,200 yen in Tokyo.

G-20 Meeting

Group of 20 chiefs, who began a two-day meeting in Mexico yesterday, focused their response to Europe’s financial crisis on stabilizing the region’s banks, raising pressure on Merkel to expand rescue measures as contagion engulfed Spain.

The MSCI Asia-Pacific Index (MXAP), which lost 10 percent 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 percent 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, Fairfax

Tsingtao Brewery Co. slumped 7.8 percent 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 ($193 million) in shares of the Chinese beer maker at a discount.

Fairfax Media Ltd. sank 8.5 percent 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 company closed at 59.5 Australian cents in Sydney. Rinehart yesterday raised her stake in the publisher of the Sydney Morning Herald to 19 percent, 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.”

Among stocks that rose, Lynas jumped 8.6 percent to A$1.105. Radiation exposure at the world’s biggest rare-earths refining facility it is building in Malaysia is “low and safe,” a committee headed by Higher Education Minister Khaled Noordin said in a report tabled in parliament today.

To contact the reporters on this story: Jonathan Burgos in Singapore at; Adam Haigh in Sydney at

To contact the editor responsible for this story: Nick Gentle at

June 19 (Bloomberg) -- Mark Mobius, executive chairman of Templeton Emerging Markets Group, speaks about the outlook for emerging-market stocks, China central bank monetary policy and his investment strategy. Mobius is buying more equities in emerging markets as economic growth remains buoyant in China and valuations plunge from historical averages. He also discusses Europe's debt crisis. Mobius spoke in Singapore with Bloomberg's Weiyi Lim. (Source: Bloomberg)

Stocks slip as euro debt crisis fears fix on Spain -

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European stocks, which gave up early gains to end down or flat on Monday, were set for a cautious start, with financial bookmakers calling the main indexes to open flat to 0.3 percent higher. U.S. index futures were down around 0.1 percent.

Sunday's election result removed concerns that Greece could imminently be forced out of the euro zone, but it brought no relief to broader worries that the two-and-a-half-year-old debt crisis is spreading to some of the bloc's larger economies.

Yields on both Italian and Spanish bonds rose on Monday, with Spain's 10-year yield climbing to a euro-era high above the 7 percent mark that has already proved unsustainable for Greece, Portugal and Ireland.

European authorities have already agreed to a 100 billion euro rescue for Spain's troubled banks, and data showing bad loans in the sector had climbed to their highest since April 1994 heightened concerns that the euro zone's fourth largest economy could be driven to seek a full-blown bailout.

"The jump in Spanish borrowing costs shows very clearly that global leaders are running out of time to find the solution to the euro zone crisis," said Michiyoshi Kato, senior vice president of forex sales at Mizuho Corporate Bank in Tokyo.


The euro traded around $1.2605 on Tuesday, up about 0.2 percent on the day but down around 0.4 percent from Friday's close.

Leaders from the Group of 20 countries meeting in Mexico will press Europe to take bold action to combat the region's debt crisis, according to a draft communique prepared for the two-day summit.

Commodities, which had raced higher on Monday in a broad rally of riskier assets, were mixed.

Brent crude slipped 15 cents to $95.90 a barrel, but copper rose 0.3 percent to around $7,530 a tonne. Gold was virtually unchanged around $1,628 an ounce.

Investors were reluctant to commit large bets ahead of a two-day Federal Reserve policy meeting starting on Tuesday, with attention focused on whether the U.S. central bank will unveil any more stimulus measures to support a flagging recovery.

The market consensus was that further quantitative easing - effectively creating money to purchase assets - was unlikely for now, but that recent disappointing economic data could prompt the Fed to extend its long-term bond-buying programme, known as Operation Twist, by a few months from the current June deadline.

The liquidity boost delivered by previous doses of monetary stimulus from the Fed has lifted global equities and most commodities, and markets have become highly sensitive to the waxing or waning of expectations of more such measures.

In currency markets, the euro's recovery from its two-year low at $1.2288 hit on June 1 has been driven by a broad weakness in the U.S. dollar based on speculation about more Fed easing.

"I think we won't see a full-fledged QE 3, but an extension of Operation Twist is likely," said Teppei Ino, currency analyst at the Bank of Tokyo-Mitsubishi UFJ. "No action from the bank would have the euro go back towards its low of June 1."

(Additional reporting by Luke Pachymuthu in Singapore, Jongwoo Cheon in Seoul and Antoni Slodkowski in Tokyo; Editing by Eric Meijer)

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