Asian Stocks Drop on China Slowdown, Earnings Concerns
Asian stocks slid, with the benchmark index heading toward a one-week low, as companies including China Rongsheng Heavy Industries Group Holdings Ltd. posted weaker earnings and Australia cut its commodity sales forecast on concern China’s economy is slowing.
China Rongsheng, the biggest shipbuilder listed in Hong Kong, declined 8.1 percent after profit tumbled 59 percent. Geely Automobile Holdings Ltd. (175) fell 3 percent on speculation growth in mainland car sales will miss targets. BHP Billiton Ltd. (BHP), the world’s biggest mining company, slipped 1.7 percent in Sydney after copper futures slid the most in two weeks yesterday.
“People are starting to realize that things are not as great as initially thought,” said Lee King Fuei, a Singapore- based fund manager at Schroders Plc, which oversees about $326 billion of assets globally. “There’s a risk of much slower growth in China should bad debts climb and banks raise capital or restrict lending.”
The MSCI Asia Pacific Index (MXAP) fell 0.9 percent to 125.93 as of 9:48 p.m. in Tokyo, poised for its lowest close since March 7. The measure climbed 12 percent this year through yesterday as signs the U.S. economy is improving boosted confidence in the outlook for Asia’s exporters. The rally boosted the value of stocks on the gauge to 15 times estimated earnings on average yesterday, compared with 13.5 times for the S&P 500 and 11.2 times for the Stoxx 600.
Eight of the 10 biggest drags on the Asian benchmark today were companies listed in Japan, as declines caught up with losses in the region yesterday when markets in Tokyo and Osaka were closed for a holiday. The Nikkei 225 Stock Average (NKY) lost 0.6 percent. The MSCI Asia Pacific excluding Japan Index fell 0.4.
South Korea’s Kospi Index decreased 0.7 percent, Australia’s S&P/ASX 200 Index dropped 0.5 percent. Hong Kong’s Hang Seng Index declined 0.2 percent. China’s Shanghai Composite Index added 0.1 percent after rising as much as 0.8 percent and falling as much as 0.7 percent.
Futures on the Standard & Poor’s 500 Index were little changed today. The gauge fell 0.3 percent in New York yesterday as China raised fuel prices for the second time in less than six weeks, stoking concern growth in the world’s fastest-growing major economy may slow.
China Rongsheng declined 8.1 percent to HK$2.17 in Hong Kong. Second-half profit tumbled 59 percent to 504 million yuan ($80 million), based on annual results announced yesterday, after the shipyard only delivered one mega-commodity vessel to Vale SA.
Kathmandu Holdings Ltd. (KMD) also fell after posting falling earnings. The producer of outdoor clothing and equipment slumped 14 percent to NZ$1.62 in Wellington after first-half profit dropped 43 percent.
Of the 602 companies on the MSCI Asia Pacific Index that reported earnings since Jan. 9, 56 percent have missed analysts’ estimates, data compiled by Bloomberg showed.
David Jones Ltd. (DJS), Australia’s second-largest department store chain, sank 11 percent to A$2.43 in Sydney after forecasting its smallest profit in six years. The retailer said it is boosting spending on outlets and its website to stem falling sales.
Carmakers dropped today after an official at the China Association of Automobile Manufacturers yesterday said mainland vehicle sales will probably miss their 8 percent growth forecast this year. A slowing economy and rising fuel costs will limit demand, the official said.
Geely Automotive dropped 3 percent to HK$2.88. Brilliance China Automotive Holdings Ltd. (1114), a partner of Bayerische Motoren Werke AG, retreated 1.3 percent to HK$8.28. Toyota Motor Corp. (7203), which gets about 17 percent of sales in Asia excluding Japan, slid 1.5 percent to 3,520 yen in Tokyo.
Nissan Motor Co., which has factories in Mexico, fell 2.9 percent to 865 yen after the country experienced its biggest earthquake since 2003 overnight. Mexican President Felipe Calderon, in a message posted on Twitter, said no major damage had been detected and there were no reports of casualties.
Raw-material producers posted the second-biggest decline among the 10 industry groups in the MSCI Asia Pacific Index. The London Metal Exchange Index (LMEX) of prices for six industrial commodities including copper and aluminum fell 1.5 percent yesterday.
BHP dropped 1.7 percent to A$34.70. Rio Tinto Group, the world’s third-biggest mining company by market value, slid 0.4 percent to A$65.34. Mitsubishi Corp. (8058), a Japanese commodities trader that gets about 43 percent of sales from metals and energy, declined 2 percent to 1,986 yen in Tokyo.
Australia, the largest shipper of iron ore and coal, cut its forecast for minerals and energy export earnings this fiscal year by 3.2 percent amid expectations of lower commodity prices.
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