Asian Stocks Decline on Japanese Economic Data, Macquarie Profit Outlook
The MSCI Asia Pacific Index sank 0.5 percent to 119.18 as of 9:51 a.m. in Tokyo. Four stocks declined for each one that rose on the index, which climbed 1.5 percent this week. Photographer: Tomohiro Ohsumi/Bloomberg
July 30 (Bloomberg) -- Gavin Wendt, a senior analyst with MineLife Co. Ltd., talks with Bloomberg's Susan Li from Sydney about Aluminum Corp. of China Ltd.'s agreement to pay $1.35 billion for a stake in Rio Tinto Group's Simandou iron ore project in Guinea. Chalco, as the Beijing-based company is known, will acquire a 44.65 percent stake by funding development over the next two to three years, the companies said in a joint statement. (Source: Bloomberg)
Asian stocks fell, dragging down the MSCI Asia Pacific Index by the most in almost two weeks, as higher-than-estimated unemployment in Japan and a poorer Macquarie Group Ltd. earnings outlook overshadowed increased profit targets at Sony Corp. and Panasonic Corp.
Mizuho Financial Group Inc., Japan’s third-largest lender by market value, lost 1.4 percent amid concerns about the health of the world’s second-largest economy. Macquarie, Australia’s biggest investment bank, slumped 3.1 percent after saying some of its businesses are set to report lower earnings. Sony and Panasonic, the world’s largest consumer-electronics makers, climbed more than 3.5 percent in Tokyo.
The MSCI Asia Pacific Index sank 0.6 percent to 119.10 as of 7:07 p.m. in Tokyo, the biggest drop since July 19. Today’s slump pared the measure’s advance this month to 5.6 percent, the most since March. The gauge has slumped 7.7 percent from its high this year on April 15 on concern Europe’s debt crisis and Chinese steps to curb property prices will slow global growth.
“Some investors are cautious,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $104 billion. “People cannot remove uncertainties about the future in terms of the macro economy.”
The Nikkei 225 Stock Average fell 1.6 percent in Japan, where a government report also showed industrial production sank unexpectedly. Australia’s S&P/ASX 200 Index and South Korea’s Kospi Index declined 0.7 percent. Hong Kong’s Hang Seng Index lost 0.3 percent. China’s Shanghai Composite Index dropped 0.4 percent.
Japan’s Jobless Rate
Futures on the U.S. Standard & Poor’s 500 lost 0.5 percent. The gauge sank 0.4 percent yesterday as earnings and forecasts at technology and consumer companies disappointed investors.
Japanese stocks fell after the statistics bureau reported the country’s unemployment rate rose to a seven-month high of 5.3 percent in June from 5.2 percent a month earlier. The median forecast of economists surveyed by Bloomberg News was 5.2 percent. Separately, the Trade Ministry said factory output dropped 1.5 percent last month from May. The median estimate of economists in a Bloomberg survey was for a 0.2 percent increase.
Mizuho Financial decreased 1.4 percent to 141 yen while Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by market value, fell 0.9 percent to 429 yen. Kobe Steel Ltd., the country’s No. 4 steel mill, dropped 7.2 percent to 181 yen. Asahi Glass Co. dropped 2.7 percent to 880 yen.
Faltering Markets
Macquarie lost 3.1 percent to A$37.20 after the investment bank said its advisory, securities, fixed income and commodities businesses are set to report lower earnings as global markets falter and deals dwindle. The outlook reverses Macquarie’s April forecast that all businesses were likely to post improved results for the year to March 31, 2011. Westpac Banking Corp. retreated 1.1 percent to A$23.99.
In Tokyo, Sony rose 3.6 percent to 2,705 yen while Panasonic surged 6 percent to 1,142 yen.
Sony, which makes Bravia televisions, raised its full-year profit forecast 20 percent, while Panasonic revised its projection by 70 percent after they both reported first-quarter earnings that exceeded analysts’ estimates. Both cited better- than expected sales of flat-panel TVs for the improved outlooks.
Fujitsu Ltd., Japan’s biggest computer-services provider, rose 4.4 percent to 615 yen after tripling its first-half net income forecast. Acom Co., Japan’s largest consumer lender by market value, jumped 5.8 percent to 1,511 yen after its first- quarter operating profit more than doubled.
July Rally
Seventy percent of the 180 companies in the MSCI Asia Pacific Index that reported quarterly earnings this month have beaten analysts’ estimates, according to data compiled by Bloomberg. The gauge gained 1.4 percent over the past five days, the fourth straight weekly advance.
“Some companies’ earnings were better than I thought, but those can’t be factors in determining the direction of the macro economy” said Koichi Kurose, chief strategist in Tokyo at Resona Bank Ltd., which manages about $57 billion. ”Global economic growth will remain flat for a while.”
Economic data from the U.S. this month have fueled concerns the world’s biggest economy is stalling. Sales at U.S. retailers declined in June for a second month, the Commerce Department reported on July 14. The Conference Board reported on July 27 that its index of consumer confidence fell in July from June.
Speculation global economic growth may falter dragged down the MSCI Asia Pacific Index by as much as 9.6 percent this year, and the average price of stocks in the gauge dropped this month to its lowest level since December 2008. The index’s companies now trade at 14.3 times estimated profit, compared with 13.3 times for the S&P 500.
Yanzhou Coal
In Seoul, Hyundai Steel Co., South Korea’s biggest maker of construction steel, declined 3.8 percent to 102,500 won after it reported a 41 percent slump in second-quarter profit because of foreign-exchange losses.
Yanzhou Coal Mining Co., the listed unit of China’s fourth- biggest coal miner, sank 3 percent to 17.84 yuan in Shanghai after cutting its estimate for first-half profit growth.
In Hong Kong, Chong Hing Bank Ltd. soared 15 percent to HK$17.52. Industrial & Commercial Bank of China Ltd. has approached Chong Hing Bank to acquire it, Sina.com reported, citing unidentified people from the banking industry.
To contact the reporter for this story: Monami Yui in Tokyo at myui1@bloomberg.net; Akiko Ikeda in Tokyo at iakiko@bloomberg.net.
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