Asian stocks fell the most in more than eight months, extending a global selloff sparked by the biggest plunge in Chinese shares in a decade. Sony Corp. and BHP Billiton Ltd. led declines.
Japan's Nikkei 225 Stock Average was set for its biggest slide since June, while Hong Kong's Hang Seng Index was heading for its largest decline in nine months. The Shanghai and Shenzhen 300 Index in China, Asia's second-largest economy, fell 0.3 percent, extending yesterday's 9.2 percent slump.
``Any fallout in the Chinese economy will ultimately affect many companies worldwide,'' said Shane Oliver, who helps manage $64 billion at AMP Ltd. in Sydney. Local Chinese investors ``own the overwhelming majority of shares there. Foreigners are mainly targeting other Asian markets where they have substantially more holdings.''
The Morgan Stanley Capital International Asia-Pacific Index fell 3.5 percent to 143.56 at 12:13 p.m. in Tokyo after rising to a record yesterday. The gauge was set for its biggest drop since June 13, as was the Nikkei 225, which slumped 3.6 percent.
The Shanghai and Shenzhen 300 gained as much as 1.2 percent earlier. Hong Kong's Hang Seng slid 3.1 percent, its largest fall since May 22. The Philippines' key stock index tumbled 6.4 percent, the biggest decline in the region. All other markets fell.
Toyota Motor Co. added to the drop in Japan after the yen strengthened against the dollar in New York, eroding the value of exporters' sales.
Shares in China yesterday fell the most since 1997 after the government approved measures to crack down on excess speculation that had driven shares to records. The rout wiped out $107.8 billion from the market value of China's companies, which had doubled in the past year.
Clamp Down
China's Shanghai and Shenzhen 300 Index ended last week at an all-time high, having jumped 13 percent in the previous six days. The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, yesterday plunged 8.8 percent, the steepest drop since Feb. 18, 1997.
Stocks fell after the State Council, China's highest ruling body, approved a special task force to clamp down on illegal share offerings and other banned activities in the market.
China's government has introduced several measures over the past year to cool an investment boom. Banks were urged to stop lending money for stock purchases and to recall outstanding loans, the China Banking Regulatory Commission said Dec. 31. The People's Bank of China, the central bank, ordered lenders to boost reserves four times in the past year to reduce money available for investment.
Hong Kong's Hang Seng extended yesterday's 1.8 percent decline. The Hang Seng China Enterprises Index, which tracks the so-called H shares of 37 mainland companies, slumped 4.6 percent.
Regional Sell-Off
Japan's Sony, the world's largest maker of computer-game consoles, fell 6 percent to 6,130 yen. South Korea's Posco, the world's third-largest steelmaker, slumped 4.4 percent to 356,000 won. China was the company's largest market after South Korea in 2005.
BHP, the world's biggest mining company by market value and production, lost 5 percent to A$27.40. Fiscal first-half sales to China rose 36 percent to $4 billion from a year earlier, the company said. Rio Tinto Group, the second-biggest by market value, dropped 4.8 percent to A$75.80. It generated 16 percent of its total sales from China in 2006.
``With capital flows being so global it's hard for action in a large country like China not to have an effect on other markets,'' said Amanda Smith, who helps manage $6 billion at ING New Zealand Ltd. in Auckland.
China Mobile Ltd., the world's largest cell-phone operator by users, dropped 4.7 percent to HK$71.45 in Hong Kong. PetroChina Co., China's largest oil producer, declined 3 percent to HK$9.08.
U.S. Economy
``It's not just a one-day drop,'' said Andy Mantel, managing director of Pacific Sun Investment Management in Hong Kong. ``There's more room in the downside. My strategy is to increase in cash and shorts.''
Shares also fell after U.S. durable goods orders fell 7.8 percent in January, reflecting the biggest slide in business equipment demand in three years, according to figures released yesterday by the Commerce Department in Washington.
The Dow Jones Industrial Average yesterday fell 3.3 percent while the Standard & Poor's 500 Index lost 3.5 percent, wiping out their year-to-date gains. Europe's Dow Jones Stoxx 600 Index slid 3 percent and emerging markets dropped.
Toyota, Japan's largest automaker, dropped 4.1 percent to 8,000 yen. Matsushita Electric Industrial Co., the world's No. 1 maker of consumer electronics, lost 3.7 percent to 2,375 yen.
Yen Strength
The yen rose the most in more than 19 months against the dollar amid a sell-off in U.S. stocks and as investors shunned emerging-market assets, prompting an unwinding of trades betting on a decline in the Japanese currency.
The currency rose 2.3 percent to 117.93 against the dollar late in New York yesterday, the biggest gain since July 2005. It was at 118.52 recently.
``China's drop yesterday shocked risk-money investors, as did the yen's climb,'' said Mitsushige Akino, who oversees about $468 million in assets at Ichiyoshi Investment Management Co. in Tokyo. ``Stocks should fall across the board.''
source:www.bloomberg.com
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