Bloomberg News

Asian Stocks Decline as Japan’s Topix Snaps Win Streak

February 15, 2013

Asian stocks dropped for the first week in three, with Japan’s Topix Index halting its longest winning streak in 40 years, after earnings reports from Nissan Motor Co. and Gree Inc. disappointed investors.

Nissan sank 5.6 percent in Tokyo after the carmaker’s earnings missed estimates on slumping sales in China. Gree, the social-network site operator headed by Japan’s youngest billionaire, fell 22 percent after cutting a profit forecast on game delays. Chow Sang Sang Holdings International Ltd., a Hong Kong-based jeweler, climbed 4.3 percent as mainland tourists flooded the city during the Lunar New Year holiday.

The MSCI Asia Pacific Index fell 0.2 percent to 132.84, closing the week within 1 percent of its highest since August 2011. Markets in China, Taiwan and Vietnam were shut for the holidays and the trading week was shortened in Hong Kong, Singapore, South Korea and Japan.

“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.”

The MSCI Asia Pacific Index has advanced about 10 percent since November, led by Japanese shares, as Prime Minister Shinzo Abe pledged to beat deflation and pushed the central bank to ease monetary policy. Asia’s benchmark trades at 14.7 times average estimated earnings compared with 13.7 for the Standard & Poor’s 500 Index and 12.3 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Australia’s S&P/ASX 200 Index climbed 1.3 percent this week. Hong Kong’s Hang Seng Index gained 1 percent. Singapore’s Straits Times Index rose 0.4 percent.

Nuclear Tension

South Korea’s Kospi Index added 1.6 percent. The benchmark retreated Feb. 12. after North Korea conducted its third nuclear test and warned of further action.

Topix, Japan’s broadest share gauge, declined 1.6 percent, halting a 13-week run of gains that was the longest such streak since 1973. Shares slid as the yen strengthened, the Bank of Japan refrained from adding stimulus, and a report showed the economy shrank for a third quarter.

The benchmark Nikkei 225 Stock Average added 0.2 percent after dropping the previous week.

Japanese shares gained early in the week after Haruhiko Kuroda, a possible contender to take over from Bank of Japan Governor Masaaki Shirakawa, said a case could be made for more easing. Reuters yesterday cited people close to the selection process as saying the leading candidate is Toshiro Muto, a former BOJ deputy governor who opposed low-interest rates. Shirakawa steps down next month.

Tougher Stance?

Group of 20 finance chiefs meeting in Moscow debated adopting a tougher stance on exchange rates as they prepare to reiterate a pledge against competitive devaluations. The yen fell after a G-20 official said there isn’t a plan to echo a Group of Seven promise to avoid using policies to target exchange rates.

Nissan dropped 5.6 percent to 932 yen this week in Tokyo. Japan’s second-biggest carmaker reported third-quarter profit that fell short of analysts’ estimates after sales tumbled in China and new models trailed competitors in the U.S.

Toyota Motor Corp. and Honda Motor Co. (7267:US) each slid more than 2 percent.

Gree slumped 22 percent to 1,086 yen after the social- network operator cut its profit goal on new game delays and slower-than-expected overseas sales. Games including “One Piece” were postponed after it took time to remove a feature from existing titles that were ruled illegal, the company said.

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.

Holiday Sales

Hong Kong retailers climbed. More than 380,000 tourists visited during the holiday, up from 286,000 a year earlier, the South China Morning Post reported, citing the city’s immigration department.

Chow Sang Sang gained 4.3 percent to HK$21.70. Chow Tai Fook Jewellery Group Ltd. rose 2.6 percent to HK$11.94.

Commonwealth Bank rose 3.4 percent to A$67.03 in Sydney after the lender’s net income rose 1 percent to a record. Chief Executive Officer Ian Narev was able to preserve interest margins even after six central-bank rate cuts.

Leighton Holdings Ltd. surged 12 percent to A$22.68 after Australia’s largest construction company returned to profit as it completed major projects and cut debt. The builder completed a toll road in Brisbane and a desalination plant in Victoria, which along with another venture caused more than A$1.3 billion ($1.3 billion) of losses and impairments.

To contact the reporter on this story: 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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