Asian Stocks Fall as Political Upheaval Imperils Global Recovery

Asian stocks fell, sending the regional index of reference for its biggest decline in a month, with regard mounted that the instability in the Middle East and North Africa could derail the global recovery.

Hyundai Engineering & Construction Co., which gets 38 percent of sales in the Middle East, fell 9.7 percent in Seoul. Chiyoda Corporation, a plant engineering company which receives nearly half its revenue from the Middle East, sank 4.4 percent in Tokyo. Air China Ltd. and Singapore Airlines Ltd. has been reduced by at least 2.4 percent of contracts for crude oil futures rose to their highest level in more than two years in London, curbing earnings outlook for major airline companies in the world.

“The big risk for the world is oil prices,” Arjuna Mahendran, Singapore-based head of investment strategy for Asia at HSBC Private Bank, said on Bloomberg Television. “If oil prices hit $120 a barrel in the next three months, that’s effectively a tax on U.S. consumers. That could slow down the phase of recovery that we’ve seen since last year.”

The MSCI Asia Pacific Index dropped 1.9 percent to 137.13 as of 7:25 p.m. in Tokyo, heading for its worst performance since Jan. 20. About nine stocks declined for each that advanced in the measure. The gauge climbed 3 percent last week, the most since the period ended Dec. 3, as reports showed a U.S. economic recovery and corporate earnings are improving.

Japan’s Nikkei 225 Stock Average sank 1.8 percent after Moody’s Investors Service changed the outlook for the country’s credit rating to negative from stable on concern the government won’t do enough to address the nation’s debt burden. China’s Shanghai Composite Index dropped 2.6 percent, while Hong Kong’s Hang Seng Index decreased 2.1 percent.

New Zealand’s NZX 50 Index slipped 0.7 percent after Christchurch was hit by a magnitude 6.3 earthquake. Australia’s S&P/ASX 200 Index fell 0.9 percent. South Korea’s Kospi Index declined 1.8 percent, while Taiwan’s Taiex Index slid 1.9 percent.

Libya Violence

Futures on the Standard & Poor’s 500 Index dropped 1.5 percent today. U.S. markets were shut for a holiday yesterday.

Violence in Libya intensified yesterday as the government attacked protesters and rebels claimed control of the second- biggest city, Benghazi, after Muammar Qaddafi’s son threatened “rivers of blood” unless the uprising ends. Oil surged to the highest price in more than two years in London on concern turmoil in the region will disrupt supplies.

Asian companies with businesses in the Middle East and North Africa declined.

Hyundai Engineering slumped 9.7 percent to 72,300 won in Seoul. Samsung Engineering Co., which won contracts in Bahrain and Saudi Arabia this month, dropped 5.6 percent to 177,500 won Seoul. Chiyoda, which is building facilities for the Saudi Arabian Oil Co., slipped 4.3 percent to 721 yen in Tokyo.

‘Wait and See’

Boustead Singapore Ltd., the engineering company that’s helping to build a water-infrastructure project in Libya, dropped 4.4 percent to 97.5 Singapore cents. Hyflux Ltd., a Singapore-based company that has water-desalination projects in Algeria and Libya, decreased 7.1 percent to S$1.95. Olam International Ltd., an agricultural commodities supplier that counts the Middle East and North Africa among its major markets, tumbled 9.3 percent to S$2.63 in Singapore.

“There’s uncertainty about what’s going on in the Middle East,” said Yasushi Noguchi, a strategist in Tokyo at SMBC Friend Securities Co. “Investors will increasingly be taking a wait-and-see stance.”

Airline stocks declined after Brent crude for April settlement on the London-based ICE Futures Europe exchange climbed yesterday by $3.22 to $105.74 a barrel, the highest since Sept. 22, 2008.

Air China, the world’s biggest airline by market value, declined 7 percent to HK$7.46 in Hong Kong. Singapore Airlines, the second-largest, dropped 2.4 percent to S$14. Korean Air Lines Co. slumped 10 percent to 62,100 won in Seoul, the most in the MSCI Asia Pacific Index.

Taiwan Airlines

China Airlines Ltd., Taiwan’s largest carrier, slid 4.7 percent to the lowest since Aug. 3. EVA Airways Corp., the No. 2, sank 6.8 percent, the biggest decline since August. Oil accounts for at least 40 percent of the airlines’ total cost, said Stone Lin, an analyst at Yuanta Securities Co. by telephone in Taipei.

Among stocks that advanced, BHP Billiton Ltd., the world’s biggest mining company, climbed 1.6 percent to a $46.58 in Sydney. The company agreed to buy Chesapeake Energy Corp.’s Fayetteville assets in central Arkansas for $4.75 billion in cash, entering the U.S. shale gas business.

Gold climbed above $1,400 an ounce to the highest price since Jan. 4 in London. Silver reached a 30-year high.

The MSCI Asia Pacific index gained 1.5 percent this year through yesterday, when the gains 6.8 percent, Standard & Poor’s 500 Index and 4.1 percent by the Stoxx Europe 600 Index. Stocks in Asia has a reference value of 14.2 times estimated profit, on average, compared to 14 times the S & P 500 and 11.4 times the Stoxx 600