Asian Stocks Pare Decline as Profits Temper Europe Debt Concern
Asian Stocks Fall
Tomohiro Ohsumi/Bloomberg
Pedestrians are reflected in an electronic stock board outside a securities firm in Tokyo, Japan.
Pedestrians are reflected in an electronic stock board outside a securities firm in Tokyo, Japan. Photographer: Tomohiro Ohsumi/Bloomberg
Aug. 11 (Bloomberg) -- Lorraine Tan, director of Asia equity research at Standard & Poor's, talks about global stocks and economies. Tan, who also discusses Federal Reserve monetary policy, speaks in Hong Kong with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Aug. 11 (Bloomberg) -- Robert Howe, chief executive officer of hedge fund manager Geomatrix (HK) Ltd., talks about his investment strategy for Asian stocks. Howe also discusses Federal Reserve monetary policy and Europe's sovereign debt crisis. He speaks with Rishaad Salamat, Susan Li and Phillip Yin on Bloomberg Television's "Asia Edge." (Source: Bloomberg)
Asian Stocks Drop with Europe Crisis
Tomohiro Ohsumi/Bloomberg
Toyota Motor Corp., the largest global carmaker by market value, declined 1.6 percent.
Toyota Motor Corp., the largest global carmaker by market value, declined 1.6 percent. Photographer: Tomohiro Ohsumi/Bloomberg
Asia’s benchmark stock index pared its seventh loss in eight days as concern Europe will fail to contain its debt crisis was tempered by higher profits from the U.S. to Japan and Australia.
Telstra Corp., Australia’s largest telephone company, climbed 5.7 percent in Sydney after second-half profit beat analysts’ estimates. Zijin Mining Group Co., China’s biggest gold miner by market value, gained 3.2 percent in Hong Kong after futures on the precious metal surged a fourth day on demand for a haven amid European debt concerns. HSBC Holdings Plc (HSBA), Europe’s biggest lender by market value, fell 2.9 percent in Hong Kong. Canon Inc. (7751), the world’s biggest camera maker by market value, dropped 1.5 percent in Tokyo.
The MSCI Asia Pacific Index dropped 0.5 percent to 122.28 as of 5:25 p.m. in Tokyo. It earlier dropped as much as 2.4 percent as global growth concerns escalated after the cost of protecting the government debt of Greece, Italy, Spain and France rose.
“Earnings have been very good on the whole and companies are being rewarded on a case-by-case basis,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “But there are still a lot of cross currents. Speculation that France’s sovereign-debt rating is in the crosshairs of ratings agencies has served to undermine investor confidence.”
Three stocks declined for every two that advanced on the Asia-Pacific gauge, which last week entered a so-called correction after falling more than 10 percent from its May peak. Of 475 companies in the Asia-Pacific index that have reported net income since July 11, 45 percent exceeded analysts’ estimates while 31 percent fell short.
Corporate Earnings
Futures on the Standard & Poor’s 500 Index rose 1.6 percent today after companies from Cisco Systems Inc. (CSCO) to News Corp. (NWSA) reported better-than-estimated earnings.
In New York yesterday, the Dow Jones Industrial Average closed at its lowest level since September as banks slumped on concern Europe will fail to contain its debt crisis and that the U.S. economy is faltering. The S&P 500 fell 4.4 percent in New York after jumping 4.7 percent the previous day.
Japan’s Nikkei 225 Stock Average fell 0.6 percent, even as a report showed the nation’s machinery orders rose for a second month. Hong Kong’s Hang Seng Index dropped 1 percent, paring an earlier 2.6 percent decline.
Australia’s S&P/ASX 200 Index fell 0.5 point, or less than 0.1 percent, to 4,140.8 after yesterday posting its biggest advance in more than a year. Stocks reversed earlier losses of as much as 2 percent as banks climbed after a report showing the jobless rate rose sparked speculation the central bank may cut interest rates.
Exporters, HSBC
Canon fell 1.5 percent to 3,400 yen in Tokyo. Toyota Motor Corp. (7203), the largest global carmaker by market value, dropped 2 percent to 2,851 yen. HSBC declined 2.9 percent to HK$67 in Hong Kong as concern intensified that Europe’s sovereign-debt crisis is spilling over to countries including France.
Billionaire Li Ka-shing’s Hutchison Whampoa Ltd., which owns ports from the U.K. to Sweden and Italy and receives 53 percent of sales from Europe, fell 0.9 percent to HK$76.15.
“As Europe’s debt crisis spreads, concern is mounting about damage to the financial system,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “We may slip back into a global equity slump.”
A measure of primary metals traded in London fell for a sixth straight day yesterday, losing 1 percent, while copper futures dropped 2.1 percent in New York.
Earnings Improve
BHP Billiton slid 1.2 percent to A$37.93 in Sydney. Alumina Ltd. (AWC), partner in the world’s biggest producer of the material used to make aluminum, plunged 5.8 percent to A$1.79 even after first-half profit climbed 53 percent.
Among stocks that rose today, Telstra, Australia’s largest telephone company, climbed 5.7 percent to A$2.99 in Sydney after second-half profit beat analysts’ estimates on increased mobile customers and cuts in operating costs and executive jobs.
Commonwealth Bank of Australia (CBA), the nation’s biggest lender by market value, rose 0.7 percent to A$48.58, extending a 2 percent advance yesterday when it reported that second-half profit rose 22 percent to a record.
Nikon Corp. surged 8.2 percent to 1,750 yen in Tokyo after boosting its full-year profit forecast by 43 percent, citing a smaller-than-expected impact from the March earthquake.
Gold Producers
Zijin Mining Group Co., China’s biggest gold miner by market value, gained 3.2 percent to HK$3.83 in Hong Kong after gold futures surged for a fourth straight day today on demand for a haven investment amid Europe’s debt problems. Newcrest Mining Ltd. (NCM), Australia’s biggest gold producer, gained 3.8 percent to A$40.74.
Westpac Banking Corp. (WBC), Australia’s No. 2 lender by market value, rose 1.5 percent to A$20.45 in Sydney, reversing an earlier decline of as much as 2.6 percent after the statistics bureau said Australian employers unexpectedly cut workers in July and the jobless rate rose to 5.1 percent, the highest level since October. Rival Australia & New Zealand Banking Group Ltd. (ANZ) advanced 1.5 percent to A$20.09.
Goldman Sachs & Partners Australia Pty revised its forecast for Australia’s central bank policy. Goldman estimates the Reserve Bank of Australia will lower its benchmark overnight cash rate target, now the highest in the developed world at 4.75 percent, by as much as 50 basis points before the end of this year as the nation’s economy slows.
“The Australian unemployment data was quite weak,” said Manoj Wanzare, a Sydney-based senior portfolio manager at Plato Investment Management. “The market is pricing a higher probability that Reserve Bank of Australia might need to move away from a normal stance towards a more ‘crisis policy implementation’ stance leading to a rate cut.”
The Asia-Pacific gauge has fallen 11 percent this year compared with an 11 percent decline by the S&P 500 and a 19 percent drop by the Stoxx Europe 600 Index. The Asian measure trades at 12.3 times estimated earnings compared with 11.3 times for the S&P 500 and 9.3 for the Stoxx 600.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
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