Bloomberg News

Asian Stocks Drop as Reports Stoke Global Growth Concerns

August 31, 2012

Asian stocks fell, with the regional benchmark index heading for its first monthly decline since May, as investors await a speech by U.S. Federal Reserve Chairman Ben S. Bernanke and as reports showed lower industrial output in South Korea and Japan amid slowing economic growth.

Sharp Corp. (6753) sank 13 percent as Taiwan’s Foxconn Technology Group founder Terry Gou ended a visit to Japan without announcing the conclusion of a deal to invest in the Japanese electronics maker. China Shipping Container (2866) Lines Co. slid 5.7 percent after brokerages including Jefferies Group Inc. downgraded ratings and price targets for the nation’s second- largest shipping company. Samsung Electronics (005930) Co. climbed 1.5 percent, reversing losses, as a Tokyo court ruled the mobile- phone maker didn’t infringe Apple Inc.’s patents.

The MSCI Asia Pacific Index slipped 0.6 percent to 117.63 as of 7:57 p.m. in Tokyo, heading for its lowest close since Aug. 3. The gauge is poised for a 2.2 percent decline this week, the most since the period ended July 13, extending this month’s losses to 1 percent. Investors speculated Bernanke won’t announce further stimulus in his speech today at a meeting of central bankers in Wyoming.

“There’s been doubts about the U.S. recovery momentum and heightened uncertainties in Europe and Asia,” said Ng Soo Nam, Singapore-based chief investment officer at Nikko Asset Management, which oversees about $165 billion. “If the bad numbers persist, we should see some policy support from governments.”

Factory Output

Japan’s Nikkei 225 Stock Average (NKY) dropped 1.6 percent. The nation’s industrial output unexpectedly fell last month, adding to signs that weak global demand is undermining the economy’s recovery. Falling consumer prices pointed to little progress in the fight against deflation.

South Korea’s Kospi Index slid 0.1 percent. The country’s industrial production fell for a second month in July as Europe’s debt crisis crimped demand for exports.

Hong Kong’s Hang Seng Index fell 0.4 percent. The city’s retail sales grew in July at the slowest pace since September 2009. China’s Shanghai Composite Index fell 0.3 percent. Australia’s S&P/ASX 200 Index was little changed.

Futures on the Standard & Poor’s 500 Index added 0.6 percent today. The gauge lost 0.8 percent yesterday after a report showed more Americans than forecast filed applications for unemployment benefits last week, a sign the labor market is faltering amid a slowing economy.

Consumer spending in the U.S. rose 0.4 percent after being little changed in June, Commerce Department figures showed yesterday in Washington. That was less than the median estimate of economists for a 0.5 percent gain.

Weak Rebound

“The U.S. economy has stopped deteriorating, but it’s far away from having a strong rebound,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc. “Uncertainty is increasing in Europe, dragging down markets.”

Consumer stocks, industrial companies and raw material producers posted the biggest decline among the 10 industry groups in the MSCI Asia Pacific Index.

Exporters to the U.S. and Europe fell. Toyota Motor Corp., the world’s biggest carmaker by market value, dropped 2.4 percent to 3,095 yen in Tokyo. Honda Motor Co., which gets about half of sales from North America and Europe, decreased 2.4 percent to 2,472 yen. Li & Fung Ltd., the world’s largest supplier of toys and clothes to retailers including Wal-Mart Stores Inc., slipped 2 percent to HK$12.60 in Hong Kong.

Sharp, the maker of Aquos televisions, slumped 13 percent to 198 yen as Foxconn founder Gou ended a visit to Japan without finalizing a deal to buy 9.9 percent of the loss-making company. Foxconn Technology Co. dropped 1.3 percent to NT$114 in Taipei.

Wider Loss

China Shipping Container dropped 5.7 percent to HK$1.48, extending losses for a sixth day, the longest streak since November. The company’s stock rating was cut to hold from buy and its share-price estimate halved by Jefferies after the shipper reported a wider first-half loss. BOCOM International Holdings Co. cuts its target price by 19 percent to HK$1.72 and kept its neutral rating.

Nippon Steel Corp. (5401), which is merging with Sumitomo Metal Industries Ltd. to create the world’s second-largest steelmaker, dropped 5.6 percent to 151 yen. The companies widened their first-year loss forecasts on a combined 240 billion yen ($3.1 billion) in impairment charges. Sumitomo Metal slid 5.1 percent to 111 yen.

China Eastern Airlines Corp., the nation’s second-largest carrier by passengers, fell 1.3 percent to HK$2.36 after saying first-half profit tumbled 65 percent from a year earlier to 806.9 million yuan ($127 million) because of higher fuel costs and currency losses.

Indecent Assault

Of the 597 companies in the Asia-Pacific index that have reported quarterly earnings since July 1, and for which Bloomberg has estimates, more than half failed to meet projections, according to data compiled by Bloomberg.

Agile Property Holdings Ltd., a Chinese developer in which JPMorgan Chase & Co. owns a stake, dropped 4.6 percent to HK$8.90 after its Chairman Chen Zhuo Lin was arrested by police in Hong Kong in connection with an allegation of indecent assault.

“The arrest put a bad name on the company,” said Sylvia Wong, a Hong Kong-based property analyst for UOB Kay Hian Ltd. “We don’t think will affect the business operation.”

The MSCI Asia Pacific Index (MXAP) fell 8.3 percent from this year’s high on Feb. 29 through yesterday. Stocks on Asia’s benchmark index were valued at 12.4 times estimated earnings on average, compared with 13.6 for the S&P 500 and 11.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Among stocks that rose, Samsung Electronics, the world’s biggest mobile-phone maker by sales, gained 1.5 percent to 1.233 million won, erasing earlier losses of 0.7 percent. A Tokyo court ruled the South Korean company’s smartphones and a tablet computer didn’t infringe on an Apple invention for synchronizing music and video with servers.

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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