Asian Stocks Drop for Third Week on Growth, Earnings Concerns

Jan. 24 (Bloomberg) -- Asian stocks slumped for a third week amid mounting concern the financial crisis is reigniting as the deepening global recession cut into corporate profits.

HSBC Holdings Plc, Europe’s largest bank, lost 11 percent for the week after the U.K. and U.S. governments were forced to provide new bailouts for banks and Nouriel Roubini said credit losses could surpass $3 trillion. Sony Corp. plunged 13 percent after forecasting a record loss, while Samsung Electronics Co., the world’s largest liquid-crystal display television maker, dropped 5.8 percent after posting its first quarterly loss.

The MSCI Asia Pacific Index slid 5.2 percent this week to 80.32, the lowest level since Dec. 5. The benchmark measure fell for a third consecutive week, the first time since October it has done so.

“Market jitters remain as banks’ asset quality worsens in slowing economies,” said Kim Young Il, head of equities at Korea Investment Trust Management Co. in Seoul, which manages the equivalent of $6.2 billion. “The attention is now on whether this signals a second round in the financial crisis.”

Financial companies posted the biggest declines on the benchmark index, which slumped by a record 43 percent last year as the credit crunch tipped the world’s largest economies into recession, forcing companies to cut jobs amid slumping profits.

Japan’s Nikkei 225 Stock Average lost 5.9 percent in the week as the yen’s climb to the highest since 1995 against the dollar added to exporters’ woes. Most benchmark indexes retreated across the region, except in China, where the central government unveiled additional measures to support the economy.

‘Effectively Insolvent’

Concerns banks will be nationalized weighed on shares of lenders throughout the world. The U.K. government moved to raise its stake in Royal Bank of Scotland Group Plc, while Bank of America Corp. received a bailout and was forced to slash its dividend to 1 cent.

HSBC tumbled 11 percent to HK$57.45. Morgan Stanley and Goldman Sachs Group Inc. have predicted the bank, which gets about a fifth of its revenue in North America, may have to raise additional capital.

U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” New York University Professor Nouriel Roubini, who predicted last year’s economic crisis, said on Jan. 20. Institutions worldwide have so far reported writedowns and losses of more than $1 trillion.

Mizuho Financial Group Inc., Japan’s second-largest listed lender, dropped 15 percent to 212 yen. National Australia Bank Ltd., the country’s biggest by assets, slumped 12 percent to A$16.94.

Sony, Samsung Electronics

Sony, the maker of PlayStation3 game consoles, lost 13 percent to 1,802 yen. The company said it expects a record 260 billion yen ($2.9 billion) operating loss for the year ending in March amid falling demand, the strong yen and costs to restructure its business.

“Sony’s loss forecast was an order of magnitude greater than what some analysts had estimated,” Soichiro Monji, chief strategist at Daiwa SB Investments Ltd., which manages the equivalent of $53 billion, said in an interview with Bloomberg Television. “The bad news about earnings and economies is accumulating.”

China this week reported its slowest rate of growth in seven years as the economy expanded at an annualized 6.8 percent pace in the fourth quarter. South Korea’s central bank also said the country’s economy shrank a 5.6 percent last quarter, the biggest decline since the Asian financial crisis a decade ago.

Samsung lost 5.8 percent to 442,000 won as it reported a fourth-quarter net loss amid slumping demand for its computer chips, televisions and mobile-phone handsets. Angang Steel Co., China’s second-largest steelmaker, tumbled 21 percent to HK$6.45 in Hong Kong after saying 2008 profit plunged 55 percent.