Toyota predicting 1st loss in 71 years; Hyundai & Samsung Hurting: Asian Deep Trouble

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Asian Stocks Fall as Global Recession Deepens; Hyundai Retreats

By Sarah Jones and Shani Raja

Dec. 23 (Bloomberg) -- Asian stocks fell for a third day as Toyota Motor Corp. forecast a loss and China cut interest rates by less than some economists expected, fanning concerns a global recession will deepen.

Hyundai Motor Co. led carmakers lower, falling 8.7 percent after announcing production cuts and Toyota predicted its first operating loss in 71 years. Bendigo & Adelaide Bank Ltd. slid 7.5 percent after selling shares to boost capital. BHP Billiton Ltd. paced declines among commodity companies as metal and oil prices fell.

“Investors are cashing in,” said Lim Chang Gue, who helps to manage about $42 billion at Samsung Investment Trust Management Co. in Seoul. “We’re continuing to witness negative news flow, all of which is confirming that global economic activity is tapering off quickly.”

The MSCI Asia Pacific excluding Japan Index dropped 2.5 percent to 238.65 at 11:55 a.m. in Hong Kong. Japan’s markets are closed for a public holiday. China’s CSI 300 Index declined 3.3 percent, while South Korea’s Kospi Index fell 2.7 percent. All other markets fell except the Philippines.

The broader MSCI Asia Pacific Index, which includes Japan, has lost 44 percent in 2008, the worst annual performance in its two-decade history, as the credit crisis dragged the world’s biggest economies into recessions. New Zealand’s economy contracted for the third straight quarter, a government report showed today.

Raising Capital

U.S. stocks fell yesterday, dragging the Standard & Poor’s 500 Index down by 1.8 percent, amid signs of declining earnings. Goldman Sachs Group Inc. said the recession will hurt profit at Monsanto Co., the world’s largest producer of seeds.

“It’s hard to keep these markets propped up when the news flow keeps being so negative,” said Philip Schwartz, who manages $750 million at International Value Equities in New York. “Economic news continues to be very, very weak.”

The MSCI Asia Pacific Index’s decline this year has taken the average valuation of its constituents to 13 times estimated earnings, about a quarter below the level at the start of this year. The S&P 500 is at 12 times profit, while the Dow Jones Stoxx 600 Index, the benchmark gauge for European equities, is at 8.9 times.

Toyota’s American depositary receipts slumped 5.4 percent in New York yesterday after the company said it will post a 150 billion yen ($1.7 billion) loss in the year through March. It previously forecast profit of 600 billion yen. Bridgestone Corp., the world’s largest tiremaker by sales, also slashed its profit forecast yesterday.

Debt Downgrade

Hyundai Motor, South Korea’s largest automaker, plunged 8.7 percent to 41,750 won. Kia Motors Corp. dropped 8.8 percent to 7,180 won. Sales this year will reach about 4.2 million vehicles, missing an earlier projection of 4.8 million, the automakers said yesterday.

Also in Seoul, Hynix Semiconductor Inc., the world’s second-largest computer-memory chipmaker, tumbled 8.4 percent to 7,520 won after its debt rating was cut by Moody’s Investors Service, which cited a “challenging” operating environment.

Bendigo & Adelaide Bank declined 7.5 percent to A$10.86 after the Australian regional lender sold A$175 million ($120 million) of shares at A$10 apiece to boost capital. The price is a 15 percent discount to yesterday’s close of $11.74.

HFA Holdings Ltd., an Australian hedge-fund manager with $5.8 billion in assets, plunged by a record 56 percent to 4 Australian cents in Sydney after the company halted redemptions from three of its funds.

China’s Rate Cut

BHP, the world’s biggest mining company and Australia’s largest oil producer, fell 4.2 percent to A$28.39 in Sydney. Crude oil futures dropped 1.7 percent to $39.25 in after-hours trading, taking its plunge this year to 59 percent. Copper and gold slipped 0.3 percent.

Woodside Petroleum Ltd., Australia’s No. 2 oil producer, dipped 1.5 percent to A$32.26. PetroChina Co., the nation’s largest producer, slumped 4.3 percent to HK$6.52 in Hong Kong.

Chinese stocks dropped on concern the central bank’s interest-rate cut will fail to buttress the world’s fourth- largest economy. The People’s Bank of China lowered the one-year lending rate by 0.27 percentage point, less than the 54 basis points expected by Citigroup Inc. and HSBC Holdings Plc.

Citic Securities Co., the nation’s biggest brokerage by market value, fell 2.7 percent to 20.46 yuan in Shanghai. China Mobile Ltd., the world’s biggest phone company by market value, lost 1 percent to HK$76.20 in Hong Kong.

“This rate cut is an indication that economic activity in China is slowing much faster than anticipated,” said Roberto Lampl, who manages $4 billion in emerging-market stocks, including Chinese shares, at ING Investment Management in The Hague. “Chinese authorities are using monetary policy to reignite demand because of this weaker-than-expected economic environment.”