Asian Markets Keeps the Bear on the Warpath

Bear warpath

Feb. 23 (Bloomberg) — Asian stocks slumped, led by financial and commodity companies, as losses at Japan’s Norinchukin Bank and BlueScope Steel Ltd. heightened concerns that the global recession is deepening.

Sumitomo Mitsui Financial Group Inc., Japan’s third-biggest bank, slid 4.7 percent as concern the U.S. government will take over financial companies sent stocks there lower on Feb. 20. BlueScope, Australia’s largest steelmaker, tumbled 9.6 percent in Sydney after saying it may have a loss this half and cutting its dividend payment. Toyota Motor Corp., the world’s largest carmaker, fell 2.3 percent after the Nikkei English News said the company will cut global vehicle production.

“There is a worry that the recession will be deeper and more prolonged than previously expected,” said Prasad Patkar, who helps manage $1 billion at Sydney-based Platypus Asset Management. “My sense is that the current consensus is for a recovery in first half of next year. The new lows are telling you that the market believes a recovery will be muted.”

The MSCI Asia Pacific Index fell 1 percent to 75.30 at 9:42 a.m. in Tokyo, The gauge tumbled 7 percent last week, the sharpest decline since the period ended Oct. 24, and has lost 15 percent in 2009 as the economic slowdown hurts corporate profits.

Japan’s Nikkei 225 Stock Average lost 1.4 percent to 7,315.66. Australia’s S&P/ASX 200 Index fell 1.2 percent. New Zealand’s NZX 50 Index lost 0.6 percent, set to close at the lowest since May 2004.

Toshiba Corp., Japan’s biggest chipmaker, slumped 10 percent after the Yomiuri newspaper reported the company is considering raising funds to strengthen its finances. Newcrest Mining Ltd., Australia’s largest gold producer, rallied 2.3 percent as bullion exceeded $1,000 an ounce for the first time since March.

Biggest Bankruptcy

Futures on the U.S. Standard & Poor’s 500 Index lost 0.6 percent today. The gauge dropped 1.1 percent on Feb. 20. Citigroup Inc. and Bank of America Corp. tumbled as Senator Christopher Dodd, chairman of the Banking Committee, said it may be necessary to nationalize some banks for “a short time.”

Sumitomo Mitsui dropped 4.7 percent to 2,825 yen. Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, lost 3.5 percent to 414 yen.

Norinchukin Bank, which isn’t listed, said on Feb. 20 that it will raise 1.9 trillion yen ($20 billion) through share sales. Norinchukin, owned by more than 4,000 shareholders including farm, fishing and forestry cooperatives, lost at least $10 billion on overseas asset-backed securities following the collapse of the American housing market.

Tokyo-based SFCG Co., which provides small enterprises with loans, today said it filed for protection from creditors with 338 billion yen in liabilities, making it Japan’s biggest bankruptcy this year.

Mounting Losses

The MSCI Asia Pacific’s finance gauge is the worst performer of the broader index’s 10 industry measures this year as losses from the financial crisis swelled. The International Monetary Fund said last month bank losses worldwide from toxic U.S.-originated assets may reach $2.2 trillion.

“Investors are increasingly wondering which businesses can survive in the coming months,” Tomochika Kitaoka, a strategist at Tokyo-based Mizuho Securities Co., said in an interview with Bloomberg Television.

BlueScope tumbled 9.6 percent to A$2.82 as the global slowdown forced steelmakers to cut output, prompting the company to say today that it may have a second-half loss. BlueScope, which reported a three-fold increase in first-half profit, cut its interim dividend by 77 percent.

Toyota, Toshiba

Rio Tinto Group, the world’s No. 3 mining company, lost 4 percent to A$48.26. BHP Billiton Ltd., Rio’s largest rival, declined 1.3 percent to A$29.49. Copper in New York lost 3.7 percent on Feb. 20 in New York as the global economic slump increased stockpiles of the metal. Futures rose 1.5 percent in after-hours trading.

Toyota dropped 2.3 percent to 3,020 yen. The company will cut worldwide vehicle production by 20 percent this calendar year on slumping demand, the Nikkei reported, without saying where it got the information.

Toshiba tumbled 10 percent to 207 yen following the Yomiuri’s Feb. 20 report that the company is considering raising more than 300 billion yen.

Newcrest gained 2.7 percent to A$33.93 following a two-day, 9 percent slump. Gold rose 2.6 percent to $1,002.20 an ounce on Feb. 20 as investors flocked to the metal as a safe haven. Prices increased 0.5 percent today.