Bloomberg News

Asian Stocks Decline, Erase Monthly Advance, on Earnings

October 26, 2012

Asian Stocks Decline, Poised to Erase Monthly Gain on Earnings

Yamaha Corp., a musical instruments maker, retreated 7.3 percent to 722 yen, the second-steepest drop in the MSCI Asia Pacific Index, after saying in a preliminary report that its first-half net income was 3.3 billion yen ($41.1 million), almost half the 6 billion yen estimated by the company. Photographer: Daniel Acker/Bloomberg

Asian stocks fell, with the regional index erasing this month’s gains, after companies including Fanuc (6954) Corp. and China Unicom (Hong Kong) Ltd. reported earnings that missed estimates.

Fanuc, an industrial robot manufacturer, slid 3.1 percent in Tokyo, while China Unicom, the nation’s No. 2 mobile-phone company, sank 7.6 percent in Hong Kong. Woongjin Coway Co., a maker of water purifiers, surged 12 percent in Seoul after its parent agreed to stick with a plan to sell a controlling stake in the company to MBK Parters Ltd.

The MSCI Asia Pacific Index fell 1.1 percent to 121.31 as of 7:41 p.m. in Tokyo, with about seven stocks falling for each that rose. The gauge is headed for a 1.8 percent decline for the week, its steepest drop since August. The measure rebounded about 12 percent through yesterday from this year’s low on June 4, as central banks in Europe, the U.S. and China added stimulus to prop up growth.

“The general economy is starting to improve from a low level,” said Tim Schroeders, a portfolio manager who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “But earnings as a whole have been disappointing. It may take a couple of quarters from here on before things increase markedly.”

The MSCI Asia Pacific Index traded at 13 times estimated earnings on average, compared with 13.5 for the Standard & Poor’s 500 Index and 12 for the Stoxx Europe 600 Index.

Japan’s Nikkei 225 Stock Average (NKY) dropped 1.4 after the yen strengthened from a four-month low.

Rally Snaps

Hong Kong’s Hang Seng Index fell 1.2 percent, snapping 10 days of gains. Taiwan’s Taiex Index slid 1.8 percent, China’s Shanghai Composite Index dropped 1.7 percent and Australia’s S&P/ASX 200 Index (AS51) retreated 0.9 percent.

South Korea’s Kospi Index sank 1.7 percent after Bank of Korea data today showed the nation’s gross domestic product expanded 1.6 percent in the three months through September from a year earlier, the slowest pace in three years.

Of the 136 MSCI Asia Pacific Index (MXAP) members that have reported earnings, and for which Bloomberg News has estimates, about 59 percent have fallen short of projections.

Yamaha Corp. (7951) retreated 8 percent to 717 yen, the steepest drop in the MSCI Asia Pacific Index, after the Japanese maker of musical instruments said first-half net income was 3.3 billion yen ($41.1 million), about half its 6 billion yen forecast.

Fanuc fell 3.1 percent to 12,570 yen. Net income dropped 9.8 percent from a year earlier to 67 billion yen in the six months ended Sept. 30, missing the company’s 75 billion yen guidance.

Smartphone Switch

Canon Inc. (7751), the world’s largest camera maker, fell 3.2 percent to 2,560 yen in Tokyo after cutting its annual profit forecast by 6.4 percent as consumers switch to taking pictures with smartphones.

China Unicom (762) retreated 7.6 percent to HK$12.72 in Hong Kong after third-quarter net income rose 27 percent to 2.02 billion yuan ($324 million). The result, derived from nine-month earnings reported by the Beijing-based company, compares with the 2.21 billion-yuan median estimate in a Bloomberg News survey.

Futures on the Standard & Poor’s 500 Index slid 0.8 percent today. U.S. jobless claims fell last week, returning to a level that shows the labor market is making limited progress.

A Commerce Department report today may show the world’s largest economy grew at a 1.8 percent annual rate in the third quarter, according to the median estimate of economists surveyed by Bloomberg. The U.S. economy expanded 1.3 percent in the prior three months.

Woongjin Coway

Among stocks that rose, Woongjin Coway surged 12 percent to 39,200 won in Seoul after its parent agreed it will proceed with a contract to sell MBK a 31 percent stake in the company. Woongjin Holdings Co. (016880), Coway’s biggest shareholder, jumped by the daily limit of 15 percent.

Macquarie Group Ltd. (MQG), Australia’s largest investment bank, advanced 3.5 percent to A$30.85 after saying its first-half rose increased 18 percent from a year earlier on increased earnings from its fixed-income, currency and commodity trading business.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

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


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