Most Asian Stocks Fall Amid Economic Growth Concerns; Utilities Advance
Aug. 23 (Bloomberg) -- Atlas Iron Ltd. Chief Executive Officer David Flanagan talks about this past weekend's Australian election and its implications for a proposed tax on mining companies. Tony Abbott’s Liberal-National coalition led Prime Minister Julia Gillard’s Labor Party 72 seats to 70, four short of an absolute majority, according to figures on the Australian Electoral Commission website as of 8:45 a.m. today. Two independent lawmakers who may hold the balance of power say they disapprove of Gillard’s mining tax, which she has refused to scrap. Flanagan speaks from Perth with Bloomberg's Susan Li. (Source: Bloomberg)
Most Asian stocks fell amid speculation U.S. data due this week will provide more evidence the world’s largest economy is weakening. Utilities climbed.
Japan’s Canon Inc. and South Korea’s Hyundai Motor Co., which both get at least 60 percent of their sales outside their home country, dropped more than 1 percent. China Petroleum & Chemical Corp. sank 1.9 percent as second-quarter net income declined. China Resources Power Holdings Co. gained 1.3 percent in Hong Kong after boosting first-half profit.
About three stocks fell for every two that rose in the MSCI Asia Pacific Index, which was little changed at 118.31 as of 7:36 p.m. in Tokyo. Automakers and electronics makers were the biggest drag on the index, while a gauge of utilities climbed 0.7 percent, the most of 10 industry groups.
“Ultimately, the global backdrop will be the biggest driver of markets,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors Ltd., which manages $90 billion.
Japan’s Nikkei 225 Stock Average fell 0.7 percent, while South Korea’s Kospi index declined 0.4 percent. Hong Kong’s Hang Seng Index lost 0.4 percent and China’s Shanghai Composite Index dropped 0.1 percent.
Australia’s S&P/ASX 200 Index was little changed after the nation’s federal election failed to deliver a majority government for the first time in 70 years. Rio Tinto Group, the world’s third-largest mining company, rose 0.9 percent on speculation a proposed resources tax will be scrapped.
Canon, Hyundai
Futures on the Standard & Poor’s 500 Index added 0.5 percent. The gauge declined 0.4 percent on Aug. 20 as a drop in commodities pulled oil and metals producers down amid concern the economic rebound may be flagging.
Canon slumped 1.4 percent to 3,550 yen in Tokyo, while Honda Motor Co. lost 0.5 percent to 2,805 yen. Hyundai fell 4.3 percent to 133,500 won in Seoul.
A report tomorrow by the Chicago-based National Association of Realtors will show July sales of existing homes plummeted 12.9 percent from June, according to the median estimate of economists surveyed by Bloomberg. Concern over the global economy also deepened after Axel Weber, a European Central Bank council member, recommended helping banks through end-of-year liquidity issues before determining when to withdraw emergency lending measures.
“The ECB official’s comments are making the market focus on Europe’s economic problems again,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees $104 billion. “Uncertainty about the economic recovery is making the market wary of taking risks.”
Panel Prices
LG Display Co., the world’s second-largest liquid-crystal display maker, dropped 4 percent to 33,900 won after Shinyoung Securities Co. cut its share-price estimate, saying a decline in panel prices may continue next month.
China Petroleum, Asia’s biggest refiner, lost 1.9 percent to HK$6.24 in Hong Kong after saying second-quarter net income fell 10 percent to 19.68 billion yuan ($2.9 billion).
Westpac Banking Corp. declined 2.6 percent to A$22.07 in Sydney. Its net interest margin, a key measure of profitability from lending, dropped two basis points, the bank said as it reported a 27 percent increase in third-quarter profit.
Billabong International Ltd. lost 5.7 percent to A$7.57 after it was cut to “underperform” from “neutral” at Credit Suisse Group AG. Billabong, the world’s biggest publicly traded surfwear maker, sank 9.9 percent on Aug. 20 after forecasting earnings that missed analyst estimates.
Debt Crisis
The MSCI Asia Pacific Index has slumped about 8.4 percent from its high this year on April 15 as Europe’s debt crisis, China’s measures to curb property-price inflation and disappointing economic reports in the U.S. fueled concern global growth may stall. Companies in the gauge trade at 13.8 times estimated earnings, down from 16.7 times at the April high.
The index increased 0.4 percent last week, the sixth weekly advance in seven, as better-than-estimated earnings from Cnooc Ltd. to Westfield Group offset global growth concerns.
“We think developments in the U.S. and China are of greater significance to equity markets in general than the Australian election,” said Atul Lele, Sydney-based equity strategist at Credit Suisse Group AG.
China Resources Power gained 1.3 percent to HK$17.34. Higher power generation in China helped the electricity producer increase first-half profit by 8.5 percent, beating the median estimate of analysts in a Bloomberg survey.
Brokerage Upgrades
Datang International Power Generation Co., China’s biggest publicly traded electricity producer by market value, climbed 2.8 percent to HK$3.27 after it was raised to “buy” from “sell” at Citigroup Inc., which cited better-than-estimated first-half profit. The stock was upgraded to “buy” from “hold” at Deutsche Bank AG.
Also in Hong Kong, Cathay Pacific Airways Ltd., the city’s biggest carrier, rose 1.5 percent to HK$19.74. The company’s Hong Kong Dragon Airlines Ltd. unit reached an agreement with cabin crew that averted a strike.
Rio climbed 0.9 percent to A$72.20 after the ruling Australian Labor party failed to win a majority at the weekend election, raising optimism its proposed mining tax may be scrapped or diluted. BHP Billiton Ltd., the world’s biggest mining company, gained 0.6 percent to A$38.11.
“We’re seeing some cautious optimism in major stocks like BHP and Rio,” said Tim Schroeders, who helps manage about $1.1. billion at Pengana Capital Ltd. in Melbourne. “There’s a glimmer of hope for the mining sector that things aren’t as dire as they appeared on Friday in terms of a mining tax.”
Challenger Financial Services Group Ltd. jumped 8.2 percent to A$3.81 as the Australian investment manager forecast higher earnings at its life insurance unit. Foster’s Group Ltd. gained 7.6 percent to A$6.26 after the Sunday Times reported that the company’s beer division may attract a bid from SABMiller Plc.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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