Gloom spreads across Asia

By Chen Shiyin  |   2008-7-15  |     NEWSPAPER EDITION

ASIAN stocks fell yesterday for the first time in four days, led by transportat companies and drug makers, on speculation record oil prices will hurt earnings and as the United States investigates whether Ranbaxy Laboratories Ltd falsified any data.

Cathay Pacific Airways Ltd led airlines lower after oil surged beyond US$147 a barrel last Friday. Shipping lines declined, paced by Mitsui OSK Lines Ltd, as commodity-transportation rates slumped for the first time in a week, reported Bloomberg News.

Ranbaxy, India's largest drug maker, tumbled the most in three years, and Daiichi Sankyo Co, which is planning to buy Ranbaxy, dropped in Tokyo.

"Higher oil prices increase costs, so companies' margins will come under pressure," said Tim Leung, who oversees about US$1.5 billion at IG Investment Ltd in Hong Kong. "We could see some earnings downgrades."

The MSCI Asia-Pacific Index lost 1 percent to 132.22 at 5:15pm in Tokyo after gaining 0.6 percent. More than two stocks retreated for each one that advanced. Health-care-related companies had the biggest decline among the 10 industry groups.

Most benchmark indexes fell. Pakistan's stocks plunged 4.4 percent, the region's largest decline, after securities regulators removed a cap limiting share drops.

Australia's S&P/ASX 200 Index declined to the lowest since July 2006, and Japan's Nikkei 225 Stock Average retreated 0.2 percent to 13,010.16, the lowest since April 15.

United States markets fell last Friday, extending the longest stretch of weekly losses for the Standard & Poor's 500 Index since 2004, as growing concern about the health of Fannie Mae and Freddie Mac sent bank shares to an 11-year low.

S&P 500 futures rose 1 percent yesterday after Treasury Secretary Henry Paulson asked Congress for authority to buy unlimited stakes in Fannie Mae and Freddie Mac, aiming to stem a collapse in confidence in the two companies that buy or finance almost half of the US$12 trillion of US mortgages.

Financial companies have led declines on MSCI's Asian index.