ASIAN stocks fell the most in six weeks yesterday, with all 10 industry groups in the region's benchmark index declining, on concerns that rising raw-materials costs and slowing consumer spending will cut profits.
According to Bloomberg News, Nissan Motor Co dragged car makers lower after Merrill Lynch & Co cut its rating. Bridgestone Corp, the world's largest tire maker by sales, retreated after rubber futures rose to the highest in 28 years. China Mobile Ltd tumbled the most since September 2001 after the government unveiled an industry reorganization plan to help smaller competitors.
"Inflation is an extremely big problem, as it means profit margins are going to be squeezed," said Koshi Kumagai, head of investment management in Tokyo at BNP Paribas Asset Management, which manages about US$438 billion in assets. "We're not going to see any significant reasons to buy in the next few months, and benchmarks are in for some declines."
The MSCI Asia Pacific Index lost 2.1 percent to 147.44 in Tokyo, its biggest retreat since April 14 and extending a four-day, 2.5 percent decrease. Almost eight stocks declined for each that advanced.
Rally snapped
The measure's five-day drop has snapped a 17-percent, two-month rally. The gauge had surged to within 1.8 percent of erasing its loss this year as the Federal Reserve's bailout of US banks and a surge in commodities producers restored investor confidence in stocks. Relief that the worst of credit-market turmoil may be over has been overshadowed by concern that rising prices will increase costs.
All Asian benchmark indexes fell yesterday. Japan's Nikkei 225 Stock Average retreated 2.3 percent to 13,690.19, and China's CSI 300 Index dropped 3.2 percent. Thailand's SET Index sank 2.2 percent even after a report showed that economic growth accelerated in the first quarter.
Vietnam's VN Index declined for a 16th-straight day, and Pakistan's main index fell for a third day.
LG Electronics Inc, Asia's second-largest maker of mobile phones, sank to the lowest since April 17 on speculation that Nokia Oyj will cut its prices in the US, pressuring competitors to follow suit. The shares dropped 3.8 percent to 140,500 won.
Samsung Electronics Co, LG's larger rival, lost 4 percent to 679,000 won, its weakest close since April 24.
Nissan Motor, Japan's third-largest car maker, lost 2.7 percent to 875 yen, its lowest close since April 24.
Merrill Lynch lowered its rating to "neutral" from "buy," citing a "tough" United States market. Analysts estimate that Japan's top three car makers get more than half of their operating profit from North America.
US stocks posted their biggest weekly retreat since February on concern a worsening housing recession and rising energy costs will prolong the slump in corporate profits.