The Fluctuation on Asian Stocks

Asian stocks declined, a day after the region's benchmark index rallied the most in a decade, as concern earnings will deteriorate overshadowed a $2 trillion global bank rescue.

Posco, Asia's third-largest steelmaker, plunged 8.4 percent in Seoul after saying demand will decline this quarter, while BHP Billiton Ltd. lost almost 4 percent as oil dropped. Kawasaki Kisen Kaisha Ltd., Japan's third-biggest shipping line operator by sales, tumbled 8.8 percent after marine transport rates slumped to a three-year low. China Construction Bank Corp. fell 4.8 percent after Citigroup Inc. said Chinese lenders' profits may fall in 2009 as bad loans rise.

``Markets are still on a downward phase,'' Masahiko Ejiri, who helps manage about $30 billion at Mizuho Asset Management Co., said in Tokyo. ``We have to have some kind of evidence that the financial rescue plan is working. Many are anticipating weaknesses in economies.''

The MSCI Asia Pacific Index declined 1.9 percent to 94.81 as of 11:51 a.m. in Tokyo, led by producers of commodities and consumer discretionary goods. The index has dropped 40 percent this year on concern frozen credit markets will trigger a global recession.

Japan's Nikkei 225 Stock Average lost 1.4 percent to 9,311.22, led by Yamaha Motor Co. after saying it will halt some production. Hong Kong's Hang Seng Index dropped 1.9 percent. All other benchmark indexes in the region fell apart from Indonesia.

Standard & Poor's 500 Index futures slid 1.4 percent. The S&P fell 0.5 percent to 998.01 yesterday, after gaining the most since the 1930s the previous day.

Steel Demand

Posco, Asia's third-largest steelmaker, slumped 8.4 percent to 355,000 won in Seoul, as investors shrugged off a 40 percent gain in third-quarter profit. The last three months of the year will be ``very difficult,'' Chief Financial Officer Lee Dong Hee said yesterday. JPMorgan Chase & Co. cut its recommendation on the stock to ``neutral'' from ``overweight,'' citing the weakening outlook for demand.

Nippon Steel Corp., the world's second-largest mill, lost 12 percent to 323 yen in Tokyo. JFE Holdings Inc., the second biggest in Japan, retreated 7.5 percent to 2,330 yen.

BHP, Australia's largest oil producer, slipped 3.6 percent, to A$29.89. Woodside Petroleum Ltd., the second biggest, dropped 2.7 percent to A$39.33.

Crude oil lost 3.2 percent to $78.63 a barrel yesterday in New York amid skepticism that plans for rescuing banks will be enough to boost economic growth and fuel demand. The contract fell to $78.53 in after-hours trading.

Yamaha, Mazda

A U.S. plan to inject $250 billion into financial institutions followed an announcement that France, Germany, Spain, the Netherlands and Austria committed $1.8 trillion to guarantee bank loans and take stakes in lenders.

Shipping companies, among the most sensitive to the economic outlook, plunged throughout the region as freight rates slumped. The Baltic Dry Index, a measure of commodity-shipping costs, lost 8.5 percent yesterday, a seventh consecutive drop and the lowest level since August 2005.

Kawasaki Kisen tumbled 8.8 percent to 454 yen. Cosco Corp. Singapore Ltd., the shipbuilding and repair unit of China's biggest shipping company, fell 13 percent to 87.5 cents. Citigroup Inc. cut its ratings on Cosco to ``hold'' from ``buy,'' saying the credit crisis will hurt project financing.

Hanjin Shipping Co., South Korea's biggest shipping line, declined 5.2 percent to 22,900.

``This isn't a situation where we can be at all optimistic about the world economy,'' said Hisakazu Amano, head of fund management at T&D Asset Management Co., which oversees the equivalent of $39 billion in Tokyo.

Yamaha, Mazda

Yamaha Motor slumped 11 percent to 1,100 yen. The world's second-largest motorcycle maker will halt production at its plant in Manaus, Brazil, for 10 days as the global credit crisis crimps demand, while Nikko Citigroup Ltd. lowered the shares to ``sell,'' citing the stronger yen and outlook for falling sales.

Mazda Motor Corp., 33 percent owned by Ford Motor Co., slumped 9.6 percent to 284 yen after the Nikkei newspaper said the company has suspended plans to build a factory in conjunction with the U.S. automaker.

Telecom Corp., New Zealand's largest telephone company, dropped 5.8 percent to NZ$2.43 after cutting its earnings forecast as much as 8 percent due to capital spending costs.

China Construction Bank, the nation's second-biggest lender, fell 4.8 percent to HK$4.14. Industrial and Commercial Bank of China Ltd., which more than doubled its profit since 2005, lost 2.5 percent to HK$4.30. Bank of Communications Ltd., China's fifth largest, slumped 4 percent to HK$6.19.

Citigroup analyst Simon Ho and Franco Lam cut their earnings estimates for domestic banks by an average 20 percent for 2009 and 26 percent for 2010. The non-performing loan ratio of the nation's six largest publicly traded banks is likely to rise to 3 percent, they said in a note.

Bank of East Asia Ltd., which became the first Hong Kong bank to have a run on it in more than a decade, jumped 1.8 percent to HK$22.50 after the city's government said yesterday it will guarantee bank deposits.