Sunday, April 19, 2009

Asian Stocks Decline on Share-Sale Concern; OneSteel Slumps

Asian stocks declined as worsening earnings forced companies to sell shares to shore up their balance sheets, diluting the value of existing investments.

OneSteel Ltd., the second-largest Australian producer of the alloy, tumbled 5.2 percent as it sold A$584 million ($418 million) of new shares. Toshiba Corp., the world’s No. 2 maker of flash memory chips, slumped 5.4 percent after the Nikkei newspaper said the company will raise 500 billion yen ($5.04 billion) through stock and bond issues. LG Chem Ltd., South Korea’s biggest chemicals producer, soared 18 percent following a three-week suspension.

The MSCI Asia Pacific Index lost 0.9 percent to 88.92 as of 10:40 a.m. in Tokyo. The benchmark is still up 26 percent from a more than five-year low reached on March 9. It erased its 2009 loss on April 17 amid increasing confidence the global economy is bottoming out and corporate earnings will recover.

“The market is expecting earnings downgrades for some of the cyclical stocks,” said Paul Xiradis, who manages the equivalent of $8 billion as chief executive officer of Ausbil Dexia Ltd. in Sydney. “There is more earnings deterioration to come, but it’s not going to be marked. There is also a bit of profit taking after a pretty strong run in a few names.”

Japan’s Nikkei 225 Stock Average slipped 1.1 percent to 8,814.05. Most benchmark indexes in Asia declined, except in China and the Philippines.

Futures on the Standard & Poor’s 500 Index lost 0.8 percent. The gauge rose 0.5 percent on April 17 as the Reuters/University of Michigan preliminary index of consumer sentiment climbed to the highest level since September.

OneSteel, which cut its profit forecast on April 16, slumped 5.2 percent to A$2.22. The company sold stock at A$1.80.

Toshiba dropped 5.4 percent to 314 yen. The electronics company will raise 300 billion yen through a share sale and another 200 billion from issuing subordinated bonds, the Nikkei newspaper reported on April 18. Toshiba said in a statement it has no plans to raise capital.