Bloomberg/Singapore
Asian stocks fell yesterday, led by banks and exporters, as US lawmakers failed to reach an agreement to raise the federal debt limit, increasing the prospect of a default that may threaten the global recovery, and as Greece’s credit rating was cut by Moody’s Investors Service.The MSCI Asia Pacific Index lost 0.9% 137.81 in Tokyo. About three stocks fell for each that gained on the gauge.The measure rose 2.5% last week, erasing the regional benchmark index’s loss for the year, as steps by European leaders toward easing the region’s sovereign debt crisis, including fresh aid for Greece, boosted the earnings outlook for Asia’s banks and exporters.Japan’s Nikkei 225 Stock Average lost 0.8% while South Korea’s Kospi index declined 1%. Australia’s S&P/ASX 200 Index slipped 1.6%.Hong Kong’s Hang Seng Index slumped 0.7%, and China’s Shanghai Composite index declined 3%, the biggest decline among regional benchmarks, along with the Shenzhen Composite Index, which dropped 3.8%.Toyota Motor, the world’s biggest car maker by market value, slid 1.4% in Tokyo, leading consumer discretionary stocks lower. Honda Motor, the Japanese automaker which receives 44% of its revenue from North America, declined 1.6%.Commonwealth Bank of Australia, the nation’s biggest lender by market value, slipped 1.9% in Sydney. China Railway Construction Corp tumbled 6.7% in Hong Kong to its lowest level on record after two high-speed trains collided in China, killing at least 36 people.“The ongoing saga of needing to raise the debt ceiling in the US is likely to remain a concern for stock markets as the deadline heads closer with no apparent signs of agreement,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150bn.“If talks fail, we should expect a credit-rating downgrade and another turn downwards in the US economy.”Asian exporters to the US declined on concern failure to reach an agreement on debt talks may damp the economic recovery and jeopardise their earnings prospects.Toyota, which receives 28% of its sales from North America, slid 1.4% to ¥3,290. Honda dropped 1.6% to ¥3,185. Samsung Electronics, which counts America as its second-biggest market for revenue, declined 0.4% to 847,000 won in Seoul.Asian banks also declined on concern credit rating agencies may lower their outlook for US debt, further roiling credit markets. Both S&P and Moody’s Investors Service are weighing a downgrade of the US credit rating.The amount of US Treasuries held in Japan was estimated at $912.4bn at the end of May, the highest since at least 2000, according to US Treasury data compiled by Bloomberg. China is the largest holder of US debt, with $1.16tn at the end of May, the data show.Mitsubishi UFJ Financial Group, Japan’s largest listed lender by market value, lost 2% to ¥399.Sumitomo Mitsui Financial Group Japan’s No2, fell 1.3% to ¥2,497. Commonwealth Bank of Australia declined 1.9% to A$49.54 in Sydney.“The outcome of US debt talks was one of the big concerns for investors, so this will trigger a mini sell-off in stock markets,” said Prasad Patkar, who helps manage the equivalent of $1.7bn at Sydney-based Platypus Asset Management Ltd. “Failure to reach a debt deal would jeopardise the US’s credit rating, and this has the potential to cause a seizure in global credit markets.”Stocks also fell as Moody’s Investors Service cut Greece’s sovereign credit rating by three steps to Ca from Caa1, saying the European Union’s financing package for the debt-laden nation implies “substantial economic losses” for private creditors.