Asian stocks fall for third week on oil, credit market concerns
Sunday, 29 June 2008
Asian stocks fell for a third week, ending the regional benchmark's worst first half in 16 years, as record oil prices dimmed earnings prospects and concern grew that credit market losses haven't reached an end.
Toyota Motor Corporation, the world's second-largest automaker, led declines after saying surging gasoline prices may crimp demand for cars. Mitsubishi UFJ Financial Group Inc fell as Citigroup Inc prepared to cut jobs and UBS AG forecast the US bank will write down more assets. Brambles Limited, the world's largest supplier of industrial pallets, advanced in Australia after saying it expects "solid" profit growth.
"People's fears about inflation are materialising as commodity prices rise," said Yang Jeung Won, chief investment officer in Seoul at Samsung Investment Trust Management Company, which oversees $7.8 billion in equities. "Financials are going to teeter on shaky ground for a while to come."
The MSCI Asia Pacific Index lost 2.2 per cent to 136.96 this week. It's fallen about 13 per cent in the first six months of 2008, its worst performance since a 23 per cent drop in 1992. A gauge tracking consumer stocks led losses among 10 industry groups on the index.
Japan's Nikkei 225 Stock Average sank 2.9 per cent this week to 12,544.36, extending its losing streak to a seventh day, the longest since November. New Zealand's NZX 50 Index fell to its lowest since December 2005, dropping 1.7 per cent to 3,226.91 after the economy shrank in the first quarter, putting the country on the brink of its first recession in 10 years.
US stocks tumbled on June 26, sending the Dow Jones Industrial Average to its worst June since the Great Depression, as higher oil, credit-market write downs and a slowing economy threatened to extend a yearlong profit slump.
Toyota, the world's second-largest carmaker, tumbled 6.3 per cent to 5,070 yen this week. The company said it may cut its 2008 sales target to reflect slowing demand in the US Hyundai Motor Company, South Korea's largest automaker, fell 7.3 per cent to 72,500 won this week.
Automakers also fell after Japan's May core consumer prices climbed 1.5 per cent from a year earlier after rising 0.9 per cent in April. Crude oil surpassed $141 for the first time as a weaker dollar spurred investment in commodities.
Matsushita Electric Industrial Company, the world's largest consumer-electronics maker, lost 4.6 per cent to 2,295 yen this week. Samsung Electronics Company, Asia's biggest mobile-phone maker, slid 3.7 per cent to 643,000 won, the lowest since April 1, after Goldman Sachs Group Inc said second-quarter operating profit will be "weaker than expected" and cut its price estimate by 3.2 per cent.
"We've entered a period of global stagflation, with record oil prices and slowing growth," said Leslie Phang, Singapore-based head of investments at the private clients unit of Schroders Plc, which manages $260 billion assets worldwide. "Central bankers have got to decide whether they want to sacrifice growth or live with inflation."
The US Federal Reserve on June 25 left its benchmark rate at 2.0 per cent, saying faster inflation may accompany some strengthening in the economy.
Toyota Motor Corporation, the world's second-largest automaker, led declines after saying surging gasoline prices may crimp demand for cars. Mitsubishi UFJ Financial Group Inc fell as Citigroup Inc prepared to cut jobs and UBS AG forecast the US bank will write down more assets. Brambles Limited, the world's largest supplier of industrial pallets, advanced in Australia after saying it expects "solid" profit growth.
"People's fears about inflation are materialising as commodity prices rise," said Yang Jeung Won, chief investment officer in Seoul at Samsung Investment Trust Management Company, which oversees $7.8 billion in equities. "Financials are going to teeter on shaky ground for a while to come."
The MSCI Asia Pacific Index lost 2.2 per cent to 136.96 this week. It's fallen about 13 per cent in the first six months of 2008, its worst performance since a 23 per cent drop in 1992. A gauge tracking consumer stocks led losses among 10 industry groups on the index.
Japan's Nikkei 225 Stock Average sank 2.9 per cent this week to 12,544.36, extending its losing streak to a seventh day, the longest since November. New Zealand's NZX 50 Index fell to its lowest since December 2005, dropping 1.7 per cent to 3,226.91 after the economy shrank in the first quarter, putting the country on the brink of its first recession in 10 years.
US stocks tumbled on June 26, sending the Dow Jones Industrial Average to its worst June since the Great Depression, as higher oil, credit-market write downs and a slowing economy threatened to extend a yearlong profit slump.
Toyota, the world's second-largest carmaker, tumbled 6.3 per cent to 5,070 yen this week. The company said it may cut its 2008 sales target to reflect slowing demand in the US Hyundai Motor Company, South Korea's largest automaker, fell 7.3 per cent to 72,500 won this week.
Automakers also fell after Japan's May core consumer prices climbed 1.5 per cent from a year earlier after rising 0.9 per cent in April. Crude oil surpassed $141 for the first time as a weaker dollar spurred investment in commodities.
Matsushita Electric Industrial Company, the world's largest consumer-electronics maker, lost 4.6 per cent to 2,295 yen this week. Samsung Electronics Company, Asia's biggest mobile-phone maker, slid 3.7 per cent to 643,000 won, the lowest since April 1, after Goldman Sachs Group Inc said second-quarter operating profit will be "weaker than expected" and cut its price estimate by 3.2 per cent.
"We've entered a period of global stagflation, with record oil prices and slowing growth," said Leslie Phang, Singapore-based head of investments at the private clients unit of Schroders Plc, which manages $260 billion assets worldwide. "Central bankers have got to decide whether they want to sacrifice growth or live with inflation."
The US Federal Reserve on June 25 left its benchmark rate at 2.0 per cent, saying faster inflation may accompany some strengthening in the economy.