Asia Stocks Fall as Yen Dents Japan Profits; Gold Nears Record
Stocks Fall as Stronger Yen Fuels Japan Growth Concern
Tomohiro Ohsumi/Bloomberg
The MSCI Asia Pacific Index sank 1.2 percent to 120.30 as of 2:10 p.m. in Tokyo, adding to yesterday’s 0.1 percent drop.
The MSCI Asia Pacific Index sank 1.2 percent to 120.30 as of 2:10 p.m. in Tokyo, adding to yesterday’s 0.1 percent drop. Photographer: Tomohiro Ohsumi/Bloomberg
Asian stocks fell, dragging the MSCI Asia Pacific Index lower for a second straight day, as a stronger yen deepened concern over the Japanese economy, and ahead of a Federal Reserve survey that may show a U.S. recovery is stalling.
Canon Inc. dropped 2.1 percent in Tokyo as the yen’s rise to its strongest level in 15 years against the dollar threatened the value of revenue derived from the U.S. Honda Motor Co., a carmaker that receives 46 percent of its sales from North America, lost 2.5 percent. BHP Billiton Ltd., the world’s largest mining company, slipped 1.4 percent as commodity prices slumped. China Mobile Ltd. sank 3.8 percent in Hong Kong after Vodafone Group Plc sold a stake in the company.
“The market is avoiding risk because there’s just no end to all this bad news we’re getting,” said Ayako Sera, a strategist who helps oversee about $310 billion in Tokyo at Sumitomo Trust & Banking Co., a unit of Japan’s third-largest banking group. “There’s no mistake that Japanese exporters’ earnings will be hurt just because of the yen’s appreciation.”
The MSCI Asia Pacific Index sank 1.1 percent to 120.48 as of 7:23 p.m. in Tokyo, extending yesterday’s 0.1 percent drop. The index has slumped 6.7 percent from its high this year on April 15 on concern China’s steps to curb property-price inflation, a weakening U.S. economy, and Europe’s sovereign debt problems will crimp global growth.
Japan’s Nikkei 225 Stock Average slumped 2.2 percent, the most since Aug. 31, as the yen’s strength prompted Nomura Holdings Inc. to cut its 2011 forecasts for sales growth and profit for the nation’s companies.
Property Stocks
Hong Kong’s Hang Seng Index sank 1.5 percent and the Shanghai Composite Index dropped 0.1 percent, paced by developers on speculation China will introduce new property- market curbs.
Property stocks also fell in Australia after JPMorgan Chase & Co. downgraded five real-estate investment trusts, contributing to the S&P/ASX 200 Index’s 0.8 percent decline. South Korea’s Kospi index retreated 0.5 percent.
Futures on the Standard & Poor’s 500 Index climbed 0.2 percent. The gauge fell 1.2 percent yesterday on concern the European debt crisis may worsen after the Wall Street Journal reported bank stress tests published in July understated some institutions’ sovereign debt holdings. Growth concerns deepened as the German government reported an unexpected decline in factory orders.
Consumer Electronics
The Federal Reserve is due to release its survey of conditions in its 12 districts today before officials meet to review monetary policy on Sept. 21. The jobless rate in the U.S. is likely to approach 10 percent in coming months as the economy fails to grow enough to employ people rejoining the labor force, economists said.
Canon, a maker of consumer electronics that gets more than 80 percent of its sales outside Japan, slumped 2.1 percent to 3,510 yen and Sony Corp., the world’s third-largest maker of televisions, lost 2.2 percent to 2,458 yen. Honda sank 2.5 percent to 2,744 yen.
Japanese exporters dropped after the yen appreciated to as much as 106.04 against the euro, compared with 107.70 at the close of stock trading in Tokyo yesterday. Against the dollar, the yen traded near a 15-year high at 83.35 from 84.10. A stronger yen reduces overseas income at Japanese companies when converted into their home currency.
‘Deficit Crisis’
“The market, which has been watching the yen rising against the euro because of Europe’s deficit crisis, now has to deal with the yen’s rise against the dollar again, too,” said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc. “The psychological effects on the stock market will be huge.”
The yen was near a two-week high versus the euro after a government report showed Japan’s current-account surplus widened, underscoring the currency’s value as a refuge in times of economic turmoil. The yen has strengthened 16 percent this year, the most among 10 developed-world counterparts, Bloomberg Correlation-Weighted Currency Indices show.
Ibiden Co., a maker of ceramics and printed circuit boards, slumped 6.8 percent to 2,105 yen and Shinko Electric Industries Co., which makes semiconductor packages, lost 4.9 percent to 907 yen. Both companies were reduced to “equal-weight” from “overweight” by Barclays Capital analyst Masaru Koshita.
BHP, Rio Tinto
The MSCI Asia Pacific Index slumped as much as 5.3 percent from a three-month high on Aug. 6 as the yen appreciated, while U.S. economic reports showed slower-than-estimated growth in incomes and a record plunge in home sales. The declines have cut the average price of shares in the gauge to 13.7 times estimated earnings. That’s still higher than the S&P 500 Index’s 13.1 times.
Commodity stocks dropped after crude oil futures in New York lost 0.7 percent yesterday, the biggest single-day decrease since Aug. 31. The London Metal Exchange Index of six metals including copper and zinc fell 0.8 percent yesterday.
Mitsubishi Corp., a commodities trading company, sank 2.8 percent to 1,840 yen in Tokyo. BHP Billiton, Australia’s biggest oil producer, lost 1.4 percent to A$37.91 in Sydney and Rio Tinto Group, the world’s third-largest mining company, dropped 1.2 percent to A$73.44.
Australian resource companies also declined amid concerns over a proposed tax on the profits of mining companies. Treasurer Wayne Swan signaled that the levy’s final design may depend on talks with independent lawmakers who helped Prime Minister Julia Gillard hold on to power yesterday.
Real Estate Curbs
In Hong Kong, China Mobile slumped 3.8 percent to HK$78.90. Vodafone’s $6.5 billion sale of a 3.2 percent stake in the Chinese company is the biggest divestment since Chief Executive Officer Vittorio Colao took charge in 2008.
Chinese property stocks slumped after the 21st Century Business Herald cited an unidentified person close to the Ministry of Housing and Urban-Rural Development as saying new curbs may include ending loans to real estate developers, a compulsory lowering of home prices, and a ban on third-home purchases.
China Vanke Co., China’s biggest real estate developer, dropped 2.4 percent to 8.57 yuan in the southern city of Shenzhen. Poly Real Estate Group Co. fell 2.8 percent to 11.80 yuan in Shanghai.
Australian property stocks fell after JPMorgan downgraded the real-estate investment trusts, saying their shares were too expensive compared with peers. GPT Group sank 1 percent to A$3.05, ING Office Fund lost 2.4 percent to 61.5 Australian cents, and Stockland slipped 1 percent to A$4.06.
Among stocks that rose today, Carnarvon Petroleum Ltd. jumped 14 percent to 42 Australian cents in Sydney as the company announced record flow rates at a test well in Thailand. Foster’s Group Ltd., Australia’s largest brewer, jumped 4.4 percent to A$6.34 after rejecting an offer for its wine unit from an unidentified buyout firm.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net
Rate These Stories
Rate this Page