Asian stocks fell, dragging the MSCI Asia Pacific Index to its biggest slump in almost three weeks, after disappointing earnings forecasts at U.S. companies fueled concerns about growth in the world’s largest economy.
Canon Inc., which makes 27 percent of its sales in the Americas, declined 4.5 percent in Tokyo after its investment rating was cut by Credit Suisse Group AG. Samsung Electronics Co., which receives 20 percent of its revenue from America, sank 1.8 percent in Seoul. BHP Billiton Ltd., the world’s No. 1 mining company, fell 2.1 percent in Sydney on concern Australia’s new prime minister will pursue a mining tax.
“People are somewhat circumspect about the prospects for global growth,” said Tim Schroeders, who helps manage about $1.1 billion at Pengana Capital Ltd. in Melbourne. “Doubts about how strong the U.S. recovery is and its trajectory, particularly for the second half of 2010, have increased.”
The MSCI Asia Pacific Index lost 1.6 percent to 115.29 at 7:20 p.m. in Tokyo, the most since June 7. The index has risen 5.9 percent from a 10-month low on May 25 amid reports of improved U.S. manufacturing and consumer sentiment and as China ended the yuan’s peg to the dollar. The gauge has fallen 0.8 percent this week as reports of declining new and existing home sales in the U.S. rattled investor confidence.
Japan’s Nikkei 225 Stock Average slumped 1.9 percent, even after the statistics bureau said consumer prices fell at a slower pace in May. South Korea’s Kospi index declined 0.6 percent. Australia’s S&P/ASX 200 Index slipped 1.5 percent.
Hong Kong’s Hang Seng Index lost 0.2 percent, while China’s Shanghai Composite Index sank 0.5 percent. Taiwan’s Taiex index slumped 1.5 percent as the central bank unexpectedly raised its benchmark interest rate for the first time since 2008.
Futures on the Standard & Poor’s 500 Index fell 0.2 percent. The gauge dropped 1.7 percent yesterday, led by consumer shares and as banks dropped on concern over financial regulation.
Asian exporters to the U.S. declined after Dell Inc., the world’s third-largest maker of personal computers, said fiscal 2011 earnings may be as little as $60.31 billion, compared with analysts’ predictions of $61.79 billion. Bed Bath & Beyond Inc., a retailer of home-furnishings, forecast second-quarter earnings that missed analyst estimates.
Canon declined 4.5 percent to 3,530 yen, the second-biggest drag on the MSCI Asia Pacific Index after BHP. Credit Suisse AG cut its rating on the company to “underperform” from “neutral.” Toyota Motor Corp., which gets 28 percent of its sales from North America, lost 1.9 percent to 3,135 yen.
‘Signs of Fragility’
Tokyo Electron Ltd., the world’s second-largest maker of semiconductor equipment, declined 5.6 percent to 5,220 yen. Samsung Electronics, the world’s second-largest mobile-phone maker, fell 1.8 percent to 805,000 won in Seoul.
“The U.S. economy has begun to see signs of fragility at the company level,” said Kenichi Hirano, general manager and strategist in Tokyo at Tachibana Securities Co. “Companies that rely on overseas sales will likely be the focus of selling.”
Japanese chip-related stocks also retreated, with the gauge for information technology companies falling the most among the 10 industry groups on the MSCI Asia Pacific Index, after Mizuho Securities Co. cut its investment ratings on the companies.
Tokyo Electron, Dainippon Screen Manufacturing Co. and Elpida Memory Inc.’s ratings and share-price-estimates were all reduced by Mizuho Securities. Memory-chip maker Dainippon Screen Manufacturing declined 8.7 percent to 432 yen. Elpida, the world’s No. 3 maker of memory chips, slumped 8.4 percent to 1,401 yen.
Australian mining companies fell as optimism faded that Julia Gillard, Australia’s new prime minister, will reverse a profit tax on resource companies proposed by her predecessor. Gillard took office yesterday after ousting Kevin Rudd following a leadership ballot by the ruling Australian Labor Party.
BHP Billiton fell 2.1 percent to A$38.80, following yesterday’s 1.3 percent climb. Morgan Stanley strategist Gerard Minack said there is little prospect for a big change on the tax. Rio Tinto Group, the world’s third-biggest mining company, lost 3 percent to A$69.60.
“We will still get a super profits tax on the mining sector,” said Minack. “You can’t assume that a change in prime minister means that the tax gets dropped.”
Macarthur Coal Ltd., the world’s biggest exporter of pulverized coal, fell 2 percent to A$12.09. Gillard should remove the anticipated revenue from the proposed mine tax from budget estimates to show good faith in talks with mining companies, Macarthur Coal chairman Keith de Lacy said in a statement.
The MSCI Asia Pacific Index has fallen 11 percent from its high this year on April 15 amid concern Chinese measures to curb property prices and Europe’s debt crisis will hurt global growth. Shares on the gauge trade at 14.5 times estimated earnings, compared to about 22 times at the start of this year.
This week’s housing data from the U.S. caught some investors off guard, with the MSCI Asia Pacific Index ending an eight day winning streak on June 21, its longest consecutive days of gains since July 2009.
Purchases of U.S. new homes fell in May to the lowest level on record, figures from the Commerce Department showed on June 23. Sales of previously owned homes in the U.S. also unexpectedly fell in May, according the National Association of Realtors on June 22 and a survey of economist by Bloomberg News.
“Expectations that the global economy is on the road to recovery seem to be peaking out,” said Naoki Fujiwara, a fund manager in Tokyo at Shinkin Asset Management Co., which oversees about $6 billion. “The market has probably started to price in concerns about the possibility of a double dip in the economy.”
Taiwan Real Estate
In Taipei, property stocks declined after the central bank raised interest rates and told lenders to cap home loans. Farglory Land Development Co., the island’s biggest property developer by market value, slid 4.8 percent to NT$63. Cathay Real Estate Development Co., the second-largest developer, fell 2.1 percent to NT$11.55.
Some Taiwanese banks rose today after the island’s regulator approved applications to set up branches in China, the Financial Supervisory Commission said yesterday.
Chang Hwa Commercial Bank, a Taiwanese lender, jumped 4.9 percent to NT$14.05, the second-biggest increase on the MSCI Asia Pacific Index. Taiwan Cooperative Bank, the island’s biggest publicly traded lender, increased 1.1 percent to NT$19.25.