Bloomberg News

Most Asian Stocks Decline on Japan Data, Spain Downgrade

October 11, 2012

Most Asian stocks fell after Japanese machinery orders dropped more than estimated and Standard & Poor’s downgraded Spain’s credit rating.

Fanuc Corp. (6954), the world’s largest maker of controls that run machine tools, slipped 2.7 percent in Tokyo. Esprit Holdings Ltd., a Hong Kong-based clothier that counts Europe as its biggest market, dropped 2 percent. Industrial & Commercial Bank of China Ltd., the world’s biggest lender by market value, gained 4.3 percent as Central Huijin Investment Ltd., a unit of China’s sovereign wealth fund, said it increased stakes in the nation’s top four lenders.

The MSCI Asia Pacific Index (MXAP) slid less than 0.1 percent to 120.56 as of 7:31 p.m. in Tokyo, with almost three shares falling for every two that rose on the gauge. The measure is set for its biggest weekly drop since August after the International Monetary Fund cut its global growth forecasts and warned of a steeper slowdown unless the U.S. and Europe address threats to their economies.

“The situation remains difficult,” said Angus Gluskie, managing director at White Funds Management in Sydney who manages more than $350 million. “Investors need to remain cautious, and it’s not a time to bet big. It’s worth keeping an eye on how the U.S. election is shaping up as well as how the European development is shaping up.”

The Asian benchmark equity gauge traded at 12.7 times estimated earnings as of yesterday, compared with 13.6 times for the S&P 500 and 11.9 times for the Stoxx Europe 600 Index.

Rate Cut

South Korea’s Kospi Index lost 0.8 percent. The nation’s central bank reduced its key interest rate today for a second time this year and pared its forecast for the country’s 2012 economic growth to 2.4 percent from 3 percent.

Australia’s S&P/ASX 200 Index fell 0.2 percent, paring losses of as much as 0.7 percent. The nation’s employers hired almost three times the number of workers economists forecast last month, according to a statistics bureau report today. Still, the jobless rate rose to 5.4 percent, the highest level since April 2010, as more people sought employment.

Japan’s Nikkei 225 (NKY) Stock Average declined 0.6 percent. China’s Shanghai Composite Index fell 0.8 percent and Hong Kong’s Hang Seng Index added 0.4 percent.

The BSE India Sensitive Index rose 0.9 percent before the release of data tomorrow that may show growth in the nation’s factory output accelerated in August.

Machinery Orders

Futures on the S&P 500 Index gained 0.4 percent today. The index declined 0.6 percent in New York yesterday. The current earnings season is forecast to show profits and sales of S&P 500 listed companies fell in unison for the first time in three years, according to analysts’ estimates compiled by Bloomberg.

Japanese machinery makers declined as orders fell 3.3 percent in August, exceeding economist estimates for a 2.3 percent drop, a sign that companies will reduce spending as global demand slows.

Fanuc dropped 2.7 percent to 12,120 yen in Tokyo. Kubota Corp., a maker of farming equipment, slid 1.7 percent to 777 yen. Komatsu Ltd. (6301), Japan’s biggest maker of construction equipment, fell 1.1 percent to 1,493 yen.

Lynas Corp. slumped 15 percent to 73 Australian cents. Deutsche Bank AG cut its rating on the stock to sell from hold as a court ruling further delayed production at Lynas’s Malaysian rare-earth refinery.

Spain Rating

Companies that do business in Europe dropped after S&P downgraded Spain’s debt rating to one level above junk, citing mounting economic and political risks as the government considers a second bailout.

Esprit slipped 2 percent to HK$12.66 in Hong Kong. Hutchison Whampoa Ltd., the owner of retail chains, utilities and port companies that gets more than half of its revenue from Europe, lost 1.2 percent to HK$75.20.

Suzlon Energy Ltd. declined 2.4 percent to 16.15 rupees in Mumbai. India’s biggest maker of wind turbines will default on $209 million of debt today after failing to get an extension on repayments, two people familiar with the matter said.

Chinese Lenders

Chinese lenders rallied. after Central Huijin Investment said it will continue “related market operations” after raising stakes in the nation’s biggest lenders.

ICBC (1398), a China’s largest bank is known, climbed 4.3 percent to HK$4.89 in Hong Kong. China Construction Bank Corp., the second-biggest, gained 3.1 percent to HK$5.66. Agricultural Bank of China Ltd. rose 2.6 percent to HK$3.18. Bank of China Ltd. added 2.7 percent to HK$3.04.

China Railway Construction Corp. (1186) surged 7.1 percent to HK$7.36, its highest close since April 2011, after saying a unit recently won two projects worth 5.2 billion yuan ($828 million).

Japan’s utility companies advanced and were among the biggest gainers on the Nikkei 225. Kansai Electric Power Co. rose 5.2 percent to 591 yen. Kyushu Electric Power Co. gained 5.4 percent to 650 yen.

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