Bloomberg News

Asian Stocks Fall as Topix Snaps 13-Week Winning Streak

February 15, 2013

Asian stocks fell, with Japan’s Topix Index snapping the longest weekly winning streak in 40 years, as the yen rose and profit reports from Trend Micro Inc. and Rio Tinto Group disappointed investors.

Rio Tinto declined 2.7 percent in Sydney after the miner reported its biggest loss in at least 15 years. Trend Micro tumbled 6.1 percent after the Japanese anti-virus software maker’s net income fell 23 percent. Auckland International Airport Ltd. slumped the most in four years after a New Zealand pension fund reduced its stake in the nation’s busiest terminal.

The MSCI Asia Pacific Index slid 0.1 percent to 133.75 as of 6:21 p.m. in Tokyo after closing yesterday at the highest level since August 2011. The gauge has risen 0.5 percent this week. About five stocks fell for every three that rose. Equity markets in China, Taiwan and Vietnam were shut today for public holidays.

“There is a risk of a correction, but it may be shallow,” said David Cassidy, Sydney-based head of equity strategy at UBS AG. “People aren’t positioned for this rally and they are still scrambling to buy. So I wouldn’t be getting too bearish on equities right now.”

Japan’s Nikkei 225 Stock Average slid 1.2 percent, led by banks and exporters, as investor weighed whether Group of 20 nations leaders will pressure Japan on the yen’s depreciation. Russian Deputy Finance Minister Sergei Storchak later said in Moscow that the group’s communique won’t include the phrase “currency war.” The broader Topix Index lost 1.3 percent, halting a 13-week advance, the longest such streak since 1973.

Yen Rises

The yen rose against its most major counterparts and yields on 10-year Japanese government bonds fell two basis points to 0.745 percent. The currency extended its advance after Reuters reported that Toshiro Muto, chairman of Daiwa Institute of Research and former deputy governor for the Bank of Japan, is the leading candidate for the governor’s position. A stronger Japanese currency cuts the overseas earnings outlook for exporters.

Australia’s S&P/ASX 200 Index slipped 0.1 percent, falling from the highest level since September 2008. South Korea’s Kospi Index added 0.1 percent, while Hong Kong’s Hang Seng Index rose 0.1 percent and Singapore’s Straits Times Index retreated 0.2 percent.

Gains in Asian shares in 2013 have lagged the U.S. as fewer companies beat profit forecasts. The MSCI Asia Pacific Index gained 3.3 percent this year through yesterday, compared with a 6.7 percent advance for the Standard & Poor’s 500 Index.

Of the 331 companies on the MSCI Asia Pacific Index that have reported earnings this quarter and for which Bloomberg has estimates, 51 percent exceeded profit expectations. That compares with the 73 percent of S&P 500 companies that topped profit forecasts.

Relative Value

The Asian benchmark trades at 14.8 times average estimated earnings compared with 13.7 for the S&P 500 and 12.4 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Rio Tinto declined 2.7 percent to A$70.15. Kirin Holdings Co. retreated 4.9 percent to 1,171 yen as Japan’s largest beverage maker forecast operating profit growth this year of less than a third of the five-year average.

Trend Micro declined 6.1 percent to 2,581 yen. Net income for 12-months ended Dec. fell to 13.4 billion yen ($145 million) from 17.3 billion yen a year earlier.

Futures on the S&P 500 slid 0.2 percent. The gauge yesterday climbed 0.1 percent to a five-year high as a drop in jobless claims and Warren Buffett’s deal for H.J. Heinz Co. overshadowed concern over shrinking economies in Europe and Japan.

Europe GDP

Gross domestic product in the euro area shrank 0.6 percent in the fourth quarter from the previous three months, the worst performance since the first quarter of 2009.

Auckland International Airport fell 5.8 percent to NZ$2.77 in Wellington. The New Zealand Superannuation Fund sold 100 million shares to institutional investors at NZ$2.76 each.

Showa Shell Sekiyu K.K., the Japanese refining unit of Royal Dutch Shell Plc, surged 13 percent to 589 yen after saying net income will rise to 26 billion yen in the 12 months through December from 1 billion yen a year earlier.

Geely Automobile Holdings Ltd. advanced 7.7 percent to HK$4.64 in Hong Kong, extending yesterday’s gain, after January sales volume swelled at the unit of the Chinese owner of Volvo Cars Corp.

Japanese banks were one of the biggest contributers to declines on the MSCI Asia Pacific gauge. Mizuho Financial Group Inc. lost 5.8 percent to 196 yen. Sumitomo Mitsui Financial Group Inc., Japan’s second-largest bank by market value, declined 3.2 percent to 3,640 yen. The lenders had their investment ratings cut at UBS Ag, which said recent gains were an overreaction to expectations for monetary easing.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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


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