Bloomberg News

Asia Stocks Drop as Europe Concern Offsets Japan Stimulus

April 27, 2012

Pedestrians are reflected on an electronic stock board outside a securities firm in Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg

Pedestrians are reflected on an electronic stock board outside a securities firm in Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg

Asian stocks fell, with the regional benchmark index snapping a two-day gain, as a cut in Spain’s credit rating overshadowed Japan’s move to expand economic stimulus and corporate earnings that beat estimates.

Nippon Sheet Glass Co., which gets 39 percent of sales from Europe, dropped 1.9 percent in Tokyo. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s No. 1 lender, slid 0.3 percent, erasing gains of as much as 3.1 percent after the central bank statement was released. Samsung Electronics Co., which became the world’s biggest mobile-phone vendor last quarter, climbed 2.5 percent in Seoul after profit beat analysts’ estimates.

“Europe isn’t getting any healthier,” said Pauline Dan, Hong Kong-based chief investment officer at Samsung Asset Management Co., which manages $100 billion. “Market volatility may increase in the short term if the situation in Europe remains unclear. Earnings may not be sustainable given that we’re seeing sub-par economic growth globally.”

The MSCI Asia Pacific Index dropped 0.2 percent to 124.05 as of 5:18 p.m. in Tokyo, with two shares falling for each that rose. The gauge earlier jumped as much as 0.4 percent as the Bank of Japan expanded its asset-purchase fund to 40 trillion yen ($494 billion) from 30 trillion yen to boost the economy.

Japan’s Nikkei 225 Stock Average (NKY) declined 0.4 percent, erasing gains of as much as 1.4 percent. A report that showed the nation’s industrial production rose less than estimated in March underscored views of some lawmakers that the central bank’s stimulus measures are insufficient to beat deflation.

China’s Shanghai Composite Index fell 0.4 percent. Hong Kong’s Hang Seng Index and Australia’s S&P/200 ASX 200 slipped 0.3 percent. South Korea’s Kospi Index (KOSPI) climbed 0.6 percent.

Europe Concerns

The MSCI Asia Pacific Index is headed for a 0.1 percent loss this week on speculation Europe will struggle to contain its sovereign-debt crisis amid political uncertainties. Spain’s credit rating was cut by Standard & Poor’s on concern the nation may have to bail out its banking sector.

Stocks of companies that do business in Europe fell. Nippon Sheet Glass slipped 1.9 percent to 104 yen in Tokyo. Hutchison Whampoa Ltd. (13), which operates ports in Germany and Spain, dropped 1.1 percent to HK$74 in Hong Kong.

Shares of Japanese lenders gave up earlier gains as investors were disappointed with a central bank stimulus program that expanded long-term government bond purchases and cut a short-term lending facility for banks by 5 trillion yen.

“It cited weak demand, but this simply underlines the fact that there is little evidence that Japan’s recovery is being held back by problems with the cost or availability of credit,” Julian Jessop, London-based chief global economist at Capital Economics Ltd., wrote in a note after the BOJ announcement.

Nintendo, Foxconn

Mitsubishi UFJ slid 0.3 percent to 387 yen. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second-biggest lender, fell 0.4 percent to 2,584 yen after rising as much as 2 percent.

Nintendo Co. sank 5.6 percent to 10,900 yen in Tokyo after the maker of Wii game consoles forecast profit this fiscal year that missed analysts’ estimates. Foxconn International Holdings Ltd. slumped 16 percent to HK$3.78 in Hong Kong after the handset maker said first-half losses will widen.

Profit surpassed expectations at 134 of 271 MSCI Asia Pacific Index companies that posted quarterly earnings since April 10, while 108 fell short, according to data compiled by Bloomberg News.

Samsung, PetroChina

Samsung Electronics gained 2.5 percent to 1.347 million won in Seoul after reporting first-quarter net income jumped 81 percent from a year earlier to 5.05 trillion won ($4.4 billion). PetroChina Co. climbed 3 percent to HK$11.64 in Hong Kong after posting an unexpected increase in profits.

The MSCI Asia Pacific Index (MXAP) rose 9.2 percent this year through yesterday, compared with gains of 11.3 percent by the S&P 500 and 5.2 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.8 times estimated earnings on average, compared with multiples of 13.3 for the S&P 500 and 10.8 for the Stoxx 600.

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

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net


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