Bloomberg News

Asia Stocks Fall a Second Week on Spain, BOJ Disappointment

April 27, 2012

Asian Stocks fell for a second week as concern about Europe’s debt crisis and the Bank of Japan’s policy announcement disappointed investors. Losses were limited after Federal Reserve Chairman Ben S. Bernanke said he’s ready to do more to support growth if needed.

Sony Corp. (6758), a consumer-electronics maker that gets more than a fifth of its revenue in Europe, dropped 3.5 percent in Tokyo. Fanuc Corp., the world’s largest maker of controls that run machine tools, tumbled 7.4 percent in Tokyo after forecasting a decline in operating profit. Huabao International Holdings Ltd., a maker of flavors for cigarettes, slumped 7.4 percent in Hong Kong after a short-seller questioned its finances.

The MSCI Asia Pacific Index (MXAP) slid 0.1 percent to 124.30, after dropping 0.7 percent the previous week. The gauge has dropped more than 2 percent this month amid concern Europe’s debt crisis and a slowdown in the Chinese economy will overshadow a U.S. economic recovery.

“It’s a time of a greatly unsettled atmosphere in Europe,” Quintin Price, the global investment chief for fundamental equities at BlackRock Inc., said in a Bloomberg Television interview from Hong Kong. BlackRock has about $3.68 trillion in assets. “You see this resistance to austerity. Europe continues to be central.”

BOJ Easing

Japan’s Nikkei 225 Stock Average (NKY) fell 0.4 percent this week, dropping for a fourth week. Japanese shares yesterday reversed an earlier surge that came after the Bank of Japan added stimulus, as investors interpreted a statement on price gains as a sign an end to deflation may damp prospects for further easing.

“Investors are worried the BOJ may tighten its monetary policy, not ease it,” said Koichi Kurose, chief economist at Resona Bank Ltd. in Tokyo.

South Korea’s Kospi (KOSPI) Index added less than 0.1 percent. Australia’s S&P/ASX 200 Index lost 0.1 percent. Hong Kong’s Hang Seng Index declined 1.3 percent this week. The Shanghai Composite Index, which tracks the larger of China’s stock exchanges, lost 0.4 percent after a survey on April 23 showed the nation’s manufacturing may contract for a sixth month in April.

Stocks also fell after Spain’s sovereign credit rating was cut on April 26 for the second time this year by Standard & Poor’s on concern that the country will have to provide further fiscal support to banks as the economy contracts.

Austerity Revolt

A revolt against spending cuts in The Netherlands prompted Prime Minister Mark Rutte to submit his cabinet’s resignation on April 23. The backlash against austerity measures in Europe has expanded in recent weeks after Spain struggled to meet European Union-imposed deficit targets and election campaigns in Greece faced anti-austerity rumblings.

Companies that do business in Europe fell for the week. Sony lost 3.5 percent to 1,316 yen. Esprit Holdings Ltd. (330), a clothier that counts Europe as its biggest market, slid 2.3 percent to HK$15.98 in Hong Kong. Cosco Pacific Ltd. (1199), which operates container facilities at Greece’s Piraeus port, declined 2.1 percent to HK$11.02.

Losses in stocks were limited after Bernanke on April 25 said the Fed stands ready to add to its stimulus if necessary even after leaving its policy unchanged and upgrading its view of the U.S. economy for this year. U.S. new and pending home sales advanced in March, data showed this week.

Electronics

Fanuc Corp. tumbled 7.4 percent to 13,590 yen in Tokyo after saying on April 25 that operating profit may slide 3.1 percent in the six months ending September as a weaker global economy saps sales.

Samsung Electronics Co., Asia’s biggest consumer- electronics maker, advanced 7.2 percent to 1.374 million won after reporting better-than-estimated first-quarter profit as surging sales of Galaxy smartphones outweighed slumping earnings at its chip business. Net income jumped 81 percent from a year earlier to 5.05 trillion won ($4.5 billion), the Suwon, South Korea-based company said yesterday, beating the 4.24 trillion- won average of 29 analyst estimates compiled by Bloomberg.

Among other stocks that fell this week, Huabao International Holdings declined 7.4 percent to HK$3.98 in Hong Kong. The company suspended trading in Hong Kong after a report on the Anonymous Analytics website said Huabao consistently reported margins of more than 70 percent, while its industry peers were in the 40 percent to 50 percent range. Huabao said it’s preparing a response to “incorrect and misleading allegations” about the company in an “orderly manner.”

The week’s decline has brought the value of stocks on the regional index to 1.36 times book value, compared with 2.25 times for the Standard & Poor’s 500 Index and 0.75 times for the Stoxx Europe 600 Index.

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

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


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