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Asian Stocks Fall on U.S. Debt Deal Impasse; Nintendo Tumbles

Asian stocks fell, dragging down the benchmark index for the week, after the U.S. Congress delayed a vote on a plan to raise the country’s borrowing limit, increasing concern the government will default on its debt.

Toyota Motor Corp. (7203), the world’s largest carmaker, dropped 0.9 percent in Tokyo. Nintendo Co. plunged 12 percent, leading declines in information technology shares, after the maker of Wii game consoles slashed its profit forecast. AIA Group Ltd. (1299), the third-largest Asia-based insurer by market value, advanced 3.4 percent after first-half profit beat estimates.

“If a resolution in the U.S. is not reached, clearly the economy will suffer so that demand will wane significantly, and we’ll see pressure on Asian exporter earnings and shares,” said Chris Hall, who helps manage $4 billion of assets at Argo Investments Ltd. in Adelaide. “Earnings are mixed across the spectrum. There are still a lot of unknowns right now, and everyone’s incredibly cautious.”

The MSCI Asia Pacific Index dropped 0.9 percent to 136.36 as of 7:45 p.m. in Tokyo. About seven shares fell for every three that rose on the gauge. The measure is headed for a 1.9 percent decline this week as forecasts for higher earnings at companies from Canon Inc. to Baidu Inc. were overshadowed by concern the U.S. may default on its debt if lawmakers can’t agree to raise the government’s borrowing limit by Aug. 2.

No Vote

For the month, the MSCI Asia Pacific Index is on course for a 1 percent advance, its first such gain in three months.

Japan’s Nikkei 225 (NKY) Stock Average dropped 0.7 percent today. South Korea’s Kospi index lost 1.1 percent, Australia’s S&P/ASX 200 Index fell 0.9 percent and Hong Kong’s Hang Seng Index dropped 0.6 percent.

Futures on the Standard & Poor’s 500 Index dropped 0.6 percent today, indicating U.S. stocks will open lower on Friday, after Kevin McCarthy, the No. 2 Republican leader in the U.S. House of Representatives. said there will be no vote on Speaker John Boehner’s debt-limit plan tonight in Washington. The index slid 0.3 percent yesterday in New York.

“Its unbelievable, these guys are not just playing with financial markets but their own constituents’ jobs,” said Sydney-based Shane Oliver, head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “It’s certainly adding to stock-market nervousness. I think they will eventually get a deal that avoids massive spending cuts or default, but the risk is growing that they won’t.”

All Groups Lose

All 10 industry groups on the MSCI Asia Pacific Index declined today, with information technology, raw-material producers, energy and consumer discretionary stocks leading the declines.

Toyota, which gets about 27 percent of its sales in North America, slumped 0.9 percent to 3,155 yen in Tokyo. Canon Inc., the world’s largest maker of cameras, fell 1.2 percent to 3,750 yen. Hyundai Motor Co., South Korea’s largest carmaker, declined 1.7 percent to 235,000 won in Seoul.

Asian shares also fell today as downgrades to the profit outlooks of major Japanese companies overshadowed the fact that more companies reported better-than-estimated first-quarter earnings than those that missed, according to data compiled by Bloomberg.

Nintendo plunged 12 percent to 12,290 yen in Osaka, the biggest drag on the MSCI Asia Pacific Index. The gamemaker slashed its profit forecasts by 82 percent as falling demand for its new 3-D handheld player led it to cut the product’s price.

Sony, AIA

Taiwan Semiconductor Manufacturing Co. slumped 1.4 percent to NT$72 after saying second-quarter profit fell 11 percent to NT$36 billion (1.3 billion) from NT$40.3 billion a year earlier.

Sony Corp., maker of Bravia televisions and PlayStation game consoles, dropped 3.3 percent to 1,947 yen after cutting its profit forecast 25 percent, citing lower demand for televisions in the U.S. and Europe.

Among stocks that gained, AIA Group advanced 3.4 percent to HK$28.65 in Hong Kong after reporting profit climbed to $1.31 billion in the six months to May from $1.06 billion a year earlier. The result beat the $1.09 billion average estimate of five analysts surveyed by Bloomberg.

Shinsei Bank Ltd. (8303), a Japanese lender, surged 10 percent to 98 yen after posting a 31 percent jump in net income. The stock had the second-biggest gain on the MSCI Asia Pacific Index.

Samsung Electronics Co., the South Korean television maker, climbed 0.8 percent to 844,000 won after reporting second- quarter net income that beat analysts’ estimates.

Of 251 companies in the MSCI Asia Pacific Index that have reported net income since July 11, 113 have exceeded analysts’ estimates while 86 have fallen short, according to data compiled by Bloomberg. Total earnings declined 4.9 percent, the data show.

The MSCI Asia Pacific Index fell less than 1 percent this year through yesterday, compared with a gain of 3.4 percent by the S&P 500 and a drop of 3.2 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 13.5 times estimated earnings on average, compared with 13.1 times for the S&P 500 and 10.9 times for the Stoxx 600.

To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

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