ASIAN stocks fell yesterday, with the region's benchmark set for its biggest monthly decline since September 2001. The dual triggers are concern that the United States and Japan are heading for recessions, Bloomberg News reported.
Mitsubishi UFJ Financial Group Inc led Japanese banks lower after Goldman, Sachs & Co said the nation's economy may be contracting. Nippon Steel Corp dropped the most in five months after reporting lower profits.
Datang International Power Generation Co plunged after Chinese mainland's worst snowstorms in decades disrupted travel and cut energy supplies.
"The two scenarios confronting investors are either that Japan and the US only briefly slip into recession or that it will be long-lasting," said Masayuki Kubota, who helps oversee the equivalent of US$1.7 billion in assets at Daiwa SB Investments Ltd in Tokyo.
The MSCI Asia Pacific Index lost three percent to 141.51 as of 6:22pm in Tokyo yesterday, snapping a three-day, 10-percent rally. The benchmark has fallen 10 percent so far this year and volatility yesterday jumped to 62, the highest since October 1998. About 12 stocks retreated for each that rose.
The CSI 300 Index slumped 6.8 percent on the Chinese mainland, the market least favored by the region's mutual funds, according to Citigroup Inc. Japan's Nikkei 225 Stock Average lost four percent to 13,087.91. Hong Kong's Hang Seng Index plunged 4.3 percent.
Benchmarks in other markets open for trading retreated.
Standard & Poor's 500 Index futures expiring in March slid 1.2 percent recently in Asian trading, while those of the Dow Jones Euro Stoxx 50 Index fell 2.2 percent.
Mitsubishi UFJ, Japan's largest publicly traded bank, retreated 5.3 percent to 985 yen (US$9.25). Sumitomo Mitsui Financial Group Inc, the second-biggest, dropped 5.3 percent to 799,000 yen.
Japan's economy probably entered a recession amid "a slump in domestic demand," Tetsufumi Yamakawa, Goldman Sachs' chief Japan economist, said in a report yesterday. Factory production will fall from a fourth-quarter peak, while consumer spending and the construction industry are both slowing, the economist said.
A US government report due tomorrow is expected to show growth weakened to a 1.2 percent annual rate from October to December, a quarter of the previous three months' pace, according to the median estimate of economists in a Bloomberg News survey.
International Monetary Fund Managing Director Dominique Strauss-Kahn said on Saturday that cuts in interest rates alone are unlikely to reverse a US slowdown. The IMF will issue revised growth forecasts this week.
Kookmin Bank, South Korea's largest, fell 4.3 percent to 59,700 won (US$62.83), its steepest drop since November 21. HSBC Holdings Plc, Europe's No. 1 bank by market value, slipped 3.3 percent to HK$116.50 (US$14.92) in Hong Kong.
"The outlook for shares is still in doubt as there are a number of fronts that could potentially deteriorate," said Masatoshi Sato, of Mizuho Investors Securities Co in Tokyo.