Auto and tech firms pound Asian stocks

By Chen Shiyin  |   2008-6-20  |     NEWSPAPER EDITION

ASIAN stocks fell yesterday for the first time in five days, led by auto makers and technology companies, on concern that the decline in the US dollar and slowing United States demand will hurt earnings.

Honda Motor Co, which gets about half of its sales from North America, dropped after brokerages said US vehicle sales may plunge. Samsung Electronics Co, Asia's largest maker of chips and mobile phones, and Sony Corp slumped as the US dollar's retreat against the won and the yen threatened to erode the value of US sales. National Australia Bank Ltd led financial stocks lower on speculation that credit-market losses will widen, Bloomberg News reported.

"There's a flight to safety because there's so much uncertainty in terms of earnings," said Leslie Phang, the Singapore-based head of investments at the private-clients unit of Schroders Plc, which oversees about US$260 billion globally. "We're certainly not seeing the last of the credit crunch."

The MSCI Asia Pacific Index lost 2.2 percent to 141.30 as of 5:38pm in Tokyo, halting a four-day 3-percent rally. Japan's Nikkei 225 Stock Average dropped 2.23 percent to 14,130.17, its largest loss since May 26. All other markets in Asia declined, except Indonesia.

US stocks retreated on Wednesday, sending the Dow Jones Industrial Average to a three-month low, after FedEx Corp, the country's second-biggest package-shipment company, said it will post its first quarterly loss in 11 years and Fifth Third Bancorp cut its dividend. Standard & Poor's futures expiring in September slipped 0.2 percent recently.

MSCI's Asian index has dropped 10 percent this year amid signs of slowing expansion in the US and about US$400 billion of writedowns and credit losses. A Merrill Lynch & Co survey released on Wednesday showed investors are the most pessimistic in a decade as earnings and economic growth deteriorate.

Honda, Japan's No. 2 car maker, lost 3.4 percent to 3,700 yen (US$34), its biggest drop since May 9. Toyota Motor Corp, Japan's biggest, declined 3.2 percent to 5,490 yen. Hyundai Motor Co, South Korea's biggest, retreated 2.2 percent to 79,400 won (US$77).

US auto sales may fall in June to as low as 12.5 million, according to reports from Citigroup Inc and Deutsche Bank AG. That would be the lowest since the 12-million rate in March 1993 and as much as 20 percent below June 2007 levels.

Samsung fell as much as 4.1 percent to 675,000 won, while LG Electronics Inc, Asia's second-largest mobile phone maker, tumbled 5.5 percent to 129,000 won. Sony lost 2.6 percent to 5,220 yen.