Asian stocks fell to a seven-week low, led by mining companies and automakers, after surprise job losses in the US heightened concern that the world's biggest economy is in recession.
Toyota Motor Corp, which got 37 percent of its sales from North America last fiscal year, retreated after the yen climbed to an eight-year high. BHP Billiton Ltd, the world's biggest mining company, declined on concern metals demand will weaken. Malaysia's stock benchmark tumbled the most since 1998 after Prime Minister Abdullah Ahmad Badawi's coalition lost its two-thirds majority in parliament.
"The weakness in the US economy, coupled with high commodity prices, is combining to eat into margins for many Asian companies," said Ivan Tham, who helps oversee the equivalent of US$5 billion in Asian assets at City of London Investment in Singapore. In Malaysia, "the fear is that Badawi's mandate now is a lot less strong," he said.
The MSCI Asia Pacific Index slumped 1.7 percent to 137.26 at 5:23pm in Tokyo, the lowest since Jan. 22. The gauge is down 13 percent this year amid fears of mounting credit-market losses and a US recession that have wiped about US$5 trillion from global stock markets.
Japan's Nikkei 225 Stock Average fell 2 percent to 12,532.13, while China's CSI 300 Index dropped 4.1 percent to a seven-month low. All regional markets retreated apart from Hong Kong and Sri Lanka. Eight of the MSCI benchmark's 10 industry groups declined today.
Meanwhile, in Hong Kong, Sun Hung Kai Properties Ltd (新鴻基地產) slumped after CLSA Asia-Pacific Markets cut its recommendation on the stock for the first time in three years. China Railway Construction Corp (中國鐵道) rose 28 percent in its first day of trading in Shanghai, the country's worst debut since 2006.
The US Standard & Poor's 500 Index lost 0.8 percent on Thursday after a government report showed last month's payrolls fell the most in five years. Economists had estimated an increase.
The US dollar weakened to 101.43 against the yen on Thursday, the lowest since January 2000, as odds firmed that the US Federal Reserve will cut interest rates by 0.75 percentage point at a policy meeting next Monday to stimulate growth, futures trading shows.
The Fed's key rate now stands at 3 percent.
Toyota, which counts North America as its biggest market, sank 2.4 percent to ?5,200. Every ?1 gain in the Japanese currency against the dollar trims ?35 billion (US$342 million) from Toyota's annual operating profit, according to the company.
Sony Corp, reliant on the US for 27 percent of sales, lost 5 percent to ?4,380. Japanese stocks fell even after a government report showed machine orders jumped the most in seven years in January.
"The global economy is deteriorating more rapidly than here in Japan," said Kiyoshi Ishigane, who helps oversee US$61 billion in assets at Mitsubishi UFJ Asset Management Co. in Tokyo. "The strong machinery orders is a good sign, but it doesn't change the fundamental outlook of worsening figures to come."
"If you get a slowdown in growth around the world you're going to have commodity stocks come back a bit," said Steven Marsh, who helps manage the equivalent of US$632 million at Trust Co in Sydney.
Malaysia's Kuala Lumpur Composite Index tumbled 11 percent, the most since Sept. 8, 1998, at the height of the Asian financial crisis. The decline triggered an automatic hour-long trading suspension. Badawi's National Front coalition in an election on Saturday lost the two-thirds majority it held in parliament, sparking concern the opposition will delay state projects.
The stock fell 36 percent to 1.23 ringgit (US$0.38). UEM World Bhd, a state-controlled builder developing Malaysia's biggest property project, plummeted 23 percent.
"We're entering uncharted territory," said Mushtaq Ibrahim, who manages about US$1.4 billion at Amanah SSCM Asset Management Bhd. Foreign investors "have been selling down the market in the last month over external factors, now they have this domestic issue that will cause them more worries," he said.
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