Asian stocks fell, with a regional benchmark index heading for a three-week low, after Fitch Ratings said it may cut the credit ratings of European nations, dashing hopes policy makers will solve the region’s debt crisis.
HSBC Holdings Plc (5), Europe’s biggest lender, dropped 2.7 percent in Hong Kong on speculation the worsening European debt crisis will hurt bank earnings. Billabong International Ltd. (BBG) slumped 42 percent in Sydney after the Australian surfwear maker cut the outlook for its sales and earnings. Nissan Motor Co., Japan’s third-largest carmaker, gained 2.5 percent in Tokyo after saying it will spend 10 billion yen ($128.5 million) to buy back its own shares.
“Europe’s situation continues to be tough,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “We are likely to see more downgrades for government debt and banks. Stocks will take a hit every time that happens.”
The MSCI Asia Pacific Index dropped 1.5 percent to 110.78 as of 10:46 a.m. in Tokyo, heading for its lowest close since Nov. 25. About six shares fell for each that rose in the measure. That gauge declined 2.3 percent last week as signs of slowing economic growth in China and Japan and concern that Europe’s debt crisis is worsening overshadowed improving U.S. data.
Japan’s Nikkei 225 Stock Average (NKY) declined 0.7 percent. South Korea’s Kospi Index dropped 2.3 percent, while Australia’s S&P/ASX 200 fell 2.1 percent. Hong Kong’s Hang Seng slipped 1.6 percent.
‘Beyond Reach’
Futures on the Standard & Poor’s 500 Index (SPXL1) lost 0.2 percent today. The index rose 0.3 percent in New York on Dec. 16 as gains by commodity producers overshadowed concerns about the European debt crisis. Fitch Ratings put credit ratings for France, Belgium, Spain, Slovenia, Italy, Ireland and Cyprus under review for a downgrade, saying a “comprehensive” solution to Europe’s crisis is “technically and politically beyond reach.”
“There’s not going to be any upside until this situation is fixed,” Nick Maroutsos, who oversees the equivalent of about $3 billion as co-founder of Sydney-based Kapstream Capital, said in a Bloomberg Television interview. “Given that France might get downgraded, or we could see further sovereign defaults in the coming months, ultimately it’s going to put more pressure on the banks in the European region and also more pressure on the global environment.”
Europe Meeting
Finance ministers in the euro region will hold a conference call at 3:30 p.m. Brussels time today to meet a self-imposed deadline to channel additional bailout funds and put together new budget rules to stem the debt crisis and buoy investor confidence.
Stocks (MXAP) are extending losses today even after the U.S. Congress yesterday passed a $1 trillion spending bill to avert a government shutdown.
The MSCI Asia Pacific Index lost 18 percent this year through last week, compared with a 3 percent drop by the S&P 500 and a 15 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.5 times estimated earnings on average, compared with 12.3 times for the S&P 500 and 10.2 times for the Stoxx 600.
To contact the reporters on this story: Jonathan Burgos in Singapore atjburgos4@bloomberg.net; Masaaki Iwamoto in Tokyo at miwamoto4@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.
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