Bloomberg News

Asia Stocks Drop as U.S. Jobs Data Dims Recovery Outlook

April 09, 2012

Samsung Electronics Co. slid 1.5 percent after U.S. payrolls grew in March at the slowest pace in five months. Photographer: SeongJoon Cho/Bloomberg

Samsung Electronics Co. slid 1.5 percent after U.S. payrolls grew in March at the slowest pace in five months. Photographer: SeongJoon Cho/Bloomberg

Asian stocks fell for a fourth day, the longest losing streak on the regional benchmark since November, as a weaker-than-expected U.S. jobs report cast doubt on the strength of the recovery in the world’s biggest economy and China’s inflation accelerated.

Toyota Motor Corp. (7203) fell 2.4 percent in Tokyo after U.S. payrolls grew at the slowest pace in five months and the yen rose against the dollar, damping the outlook for export earnings. China Vanke Co. led mainland developers lower after faster-than- estimated inflation damped bets policy makers will cut lending curbs. HTC Corp. dropped 6.8 percent in Taiwan after the smartphone maker posted its biggest drop in profit since listing.

The MSCI Asia Pacific Index dropped 0.6 percent to 124.16 as of 5:11 p.m. in Tokyo, with about seven stocks falling for each that rose. The measure lost 1.3 percent last week, the biggest weekly decline since the period ended Dec. 16. Volume on Japan’s Nikkei 225 Stock Average was 30 percent below the 30-day intraday average, as markets were shut for holidays in Hong Kong, Australia, New Zealand, Thailand and the Philippines.

“We’re seeing markets correct pretty quickly,” said Shintaro Takeuchi, a Tokyo-based portfolio manager at Tokio Marine & Nichido Fire Insurance Co., which oversees about $106 billion. “Companies aren’t willing to boost capital investment, leading to a sluggish rebound in employment. That means companies aren’t confident in a full-scale recovery.”

Rally Slows

The MSCI Asia Pacific Index rose 10 percent this year through last week on signs the U.S. economy is recovering. Gains slowed last month after China cut its target for economic growth, seeking to cool its property market and become less reliant on exports. The Standard & Poor’s 500 Index (SPXL1) advanced 11 percent since Dec. 30. The Stoxx Europe 600 Index gained 5.9 percent.

Japan’s Nikkei 225 fell 1.5 percent today after the yen strengthened to a one-month high against the dollar. A gauge of volatility on the measure rose 2.5 percent to 20.44, indicating traders expect a swing of about 5.9 percent over the next 30 days.

South Korea’s Kospi Index slid 1.6 percent amid heightened tension on the Korean peninsula. North Korea appears to be readying a nuclear weapons test after a long-range rocket launch scheduled for as early as this week, according to a report by South Korean intelligence officials. A gauge of volatility among core stocks on the Kospi rose 6.5 percent.

China Inflation

The Shanghai Composite Index, which tracks the bigger of China’s two main stock exchanges, slipped 0.9 percent. The Taiwan Taiex Index lost 1.4 percent, while Singapore’s Straits Times Index declined 1 percent. The BSE India Sensitive Index dropped 1.2 percent.

Futures on the S&P 500 Index sank 1 percent today amid signs a recovery in the U.S. jobs market may be losing steam. American employers last month added the fewest jobs since October, the Labor Department said on April 6, a market holiday in the U.S.

Japanese exporters fell after the yen reached 81.20 against the dollar today, the strongest since March 8. The yen’s appreciation damps the value of some overseas income for Japanese companies.

A strengthening currency also puts more pressure on the Bank of Japan to do more to stimulate the economy. Governor Masaaki Shirakawa and his colleagues may expand the bank’s asset purchases at a meeting on April 27 when inflation data becomes available, according to Morgan Stanley MUFG Securities Co., Mizuho Securities Co. and SMBC Nikko Securities Inc. The central bank concludes a meeting on interest-rate policy tomorrow.

Toyota, Canon

Toyota, Asia’s biggest automaker, fell 2.4 percent to 3,310 yen today. Canon Inc. (7751), a Japanese camera maker that gets more than 80 percent of its revenue abroad, dropped 1.7 percent to 3,780 yen.

Stocks fell in China after the government report on inflation suggested the central bank may have less room to ease monetary policy. Consumer prices gained 3.6 percent in March, exceeding the median economist estimate of 3.4 percent, amid rising wages and higher fuel prices, the National Bureau of Statistics said today.

China Vanke, the biggest mainland developer, slid 1.9 percent to 8.22 yuan. Gemdale Corp., the fourth largest, fell 2 percent to 5.96 yuan.

China Citic Bank Corp., the banking unit of the nation’s largest investment company, declined 2.3 percent to 4.19 yuan.

“Rebounding inflation will weigh on investor sentiment,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “Some of the expected monetary easing such as a reserve ratio cut may be delayed.”

HTC Falls

HTC, Asia’s second-largest smartphone maker, declined 6.8 percent to NT$545 after it said profit plunged 70 percent from a year earlier amid competition from Apple and Samsung.

Stocks on the MSCI Asia Pacific Index are valued at 1.4 times book value, compared with 2.3 times for the S&P 500 and 1.4 times for the Stoxx 600, according to Bloomberg data. A number below 1 means companies can be bought for less than value of their assets.

Defense contractors advanced in Seoul after satellite photographs of a nuclear test site near North Korea’s border with Russia and China show excavation consistent with preparations for previous tests in 2006 and 2009, according to a report obtained by Bloomberg News.

Speco Co., which makes parts for naval ships, rallied 15 percent to 3,895 won. Shares of the company have surged 65 percent since North Korea on March 16 said it planned to test a long-range rocket between April 12 and 16 to carry a satellite into orbit.

Victek Co., a maker of military communications equipment, jumped 15 percent to 3,260 won today. Huneed Technologies, which makes radio frequency walkie-talkies for military use, added 15 percent to 4,600 won.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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


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