Bloomberg News

Most Asian Stocks Drop as Europe Crisis, U.S. Drag on Earnings

February 03, 2012

Feb. 3 (Bloomberg) -- Most Asian stocks fell, dragging a regional benchmark index from a three-month high, as companies from Singapore Airlines Ltd. to Hynix Semiconductor Inc. reported weaker earnings amid Europe’s debt crisis and an uncertain U.S. economic outlook.

Nippon Sheet Glass Co., a Japanese glassmaker, slumped 12 percent in Tokyo after forecasting a 3 billion yen ($39 million) loss for the year ending March 31 on slumping demand in Europe, its top market. Singapore Airlines, the world’s No. 2 carrier by market value, fell 3.6 percent as third-quarter profit tumbled 53 percent. Hynix Semiconductor, the world’s second-largest maker of computer-memory chips, slid 3.7 percent after posting a wider-than-expected loss.

“There’s still a lot of headwinds out there in terms of global growth, particularly in Europe,” said Belinda Allen, a senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “We’ll have to see whether U.S. data can continue to improve before we can feel a bit more confident on putting more money on risk assets.”

The MSCI Asia Pacific Index fell 0.1 percent to 124.41 as of 7:18 p.m. in Tokyo, paring this week’s gain to 1.1 percent. About five shares fell for every four that rose in the gauge, which posted in January its biggest monthly advance since September 2010 on signs China will ease lending curbs, the U.S. economy is improving and Europe is containing its debt crisis.

China Policy

The Nikkei 225 Stock Average declined 0.5 percent. South Korea’s Kospi Index slipped 0.6 percent, while Australia’s S&P/ASX 200 Index lost 0.4 percent. Hong Kong’s Hang Seng Index added 0.1 percent, after swinging between gains and losses at least nine times.

China’s Shanghai Composite Index rose 0.8 percent after a report showed the nation’s non-manufacturing industries expanded at a slower pace last month, spurring speculation the central bank may take more measures to boost economic growth.

“Though China’s growth is slowing, it won’t be a hard landing,” said Zhang Ling, general manager at Shanghai River Fund Management Co. “Monetary policy is starting to ease and the market’s expectations of a reserve-requirement cut are rising. Stocks are also really cheap now.”

Futures on the Standard & Poor’s 500 Index advancedd 0.2 percent. The gauge added 0.1 percent in New York yesterday as reports showed claims for U.S. jobless benefits fell last week and productivity cooled in the fourth quarter.

‘Outlook Remains Uncertain’

U.S. Federal Reserve Chairman Ben S. Bernanke told lawmakers in prepared remarks yesterday that the U.S. economy still faces risks, including from fiscal deficits that must be reduced in the long term.

“Fortunately, over the past few months, indicators of spending, production, and job-market activity have shown some signs of improvement,” Bernanke said. “The outlook remains uncertain, however, and close monitoring of economic developments will remain necessary.” He also said the Fed expects inflation to “remain subdued.”

Companies that receive revenue from Europe declined amid concern the region’s debt crisis won’t be contained. Greece and its creditors have yet to come to an agreement about a week since discussions with bondholders started.

A Greek debt deal could be reached “in the coming weeks, maybe days,” said Josef Ackermann, chairman of the Institute of International Finance. Ackermann, also Chief Executive Officer of Deutsche Bank AG, may travel to Athens this weekend for talks over a swap involving Greek debt with a face value of 200 billion euros.

Earnings Performance

Samsung Electronics Co., Asia’s biggest maker of consumer electronics that gets about 20 percent of sales from Europe, fell 1.3 percent to 1.066 million won in Seoul. Shimano Inc., the Japanese bicycle parts maker that counts Europe as its biggest market, slipped 3.9 percent to 3,795 yen in Tokyo.

Nippon Sheet Glass, which is also dependent on Europe, slumped 12 percent to 132 yen after forecasting a 3 billion-yen full-year loss and saying it will cut 3,500 jobs.

More than half of the 288 companies on the Asian benchmark index that have reported earnings since Jan. 9 have missed estimates, according to data compiled by Bloomberg News.

Singapore Airlines slipped 3.6 percent to S$10.61 after saying third-quarter net income tumbled 53 percent to S$135 million ($108 million). That compares with the S$162 million average of three analyst estimates in a Bloomberg survey.

The MSCI Asia Pacific Index gained 9.4 percent this year through yesterday, compared with increases of 5.4 percent by the S&P 500 and 6.4 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 1.3 times book value. That compares with 2.2 times for the S&P 500 in the U.S. and 1.5 times for the Europe Stoxx 600.

Hynix, Sony

Hynix Semiconductor sank 3.7 percent to 26,300 won in Seoul after reporting a fourth-quarter net loss of 239.9 billion won ($214.8 million), exceeding the average 161.7 billion won loss estimate by 25 analysts compiled by Bloomberg.

Hyundai Heavy Industries Co., the world’s largest shipbuilder, plunged 7.7 percent to 293,000 won after saying fourth-quarter operating profit slumped 62 percent.

Among stocks that advanced, Sony Corp., Japan’s biggest consumer electronics maker, surged 8.1 percent to 1,435 yen in Tokyo, after incoming Chief Executive Officer Kazuo Hirai said he will close down some underperforming businesses to help revive the unprofitable company.

“The shares are rising on expectations that the company will be on track for rebuilding,” Makoto Sengoku, a market analyst at Tokai Tokyo Securities Co., said by phone. “All the bad factors have already been reflected.”

China Shipping Container Lines Co., part of the nation’s second-largest shipping line, jumped 8.5 percent to HK$2.17 in Hong Kong trading after telling investors it plans to raise rates to boost revenue.

--Editors: Nick Gentle, Jason Clenfield.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net


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