Asian stocks fell, with the regional benchmark index heading for the first drop in five days, as China’s manufacturing expanded at the slowest pace in eight months and South Korea’s exports fell. Japanese shares led declines on disappointing earnings reports.
Fanuc Corp. (6954), a maker of robotic controls for Chinese factories, fell 2.5 percent in Tokyo. Samsung Electronics Co. (005930), South Korea’s biggest exporter of consumer electronics, slid 0.7 percent. Sumitomo Heavy Industries Ltd. and Komatsu Ltd. (6301) led industrial shares lower after cutting earnings forecasts. Intrepid Mines Ltd., an Australian gold explorer, surged 32 percent after saying a new shareholder would help safeguard its project in Indonesia.
The MSCI Asia Pacific Index dropped 0.3 percent to 118.33 as of 7:22 p.m. in Tokyo. Seven of the 10 industry groups fell on the measure, which yesterday capped a second monthly gain. Investors are awaiting monetary policy decisions by the Federal Reserve today and the European Central Bank tomorrow.
“China-related stocks are terrible today,” said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. “Given that the Chinese economy hasn’t bottomed yet, next quarter’s earnings could be even worse and share prices will keep sliding. It’s difficult to see a recovery by the end of this year.”
The MSCI Asia Pacific Index fell 8 percent from this year’s high on Feb. 29 through yesterday amid concern Europe’s sovereign-debt crisis will worsen as the U.S. and Chinese economies slow. The regional benchmark index traded at 12.1 times estimated earnings, compared with 13.4 for the Standard & Poor’s 500 Index and 11.2 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Japan’s Nikkei 225 Stock Average (NKY) dropped 0.6 percent, paring losses in final hours of trading as the yen reversed earlier gains against its major counterparts. The MSCI Asia Pacific excluding Japan Index rose 0.1 percent. South Korea’s Kospi Index lost 0.1 percent.
Australia’s S&P/ASX 200 slipped 0.2 percent after a gauge of the country’s manufacturing dropped to a three-year low. New Zealand’s NZX 50 Index fell 0.4 percent.
Hong Kong’s Hang Seng Index rose 0.1 percent, a fifth day of advance and the longest such streak since January. The Shanghai Composite Index gained 0.9 percent. Singapore’s Straits Times Index added 0.5 percent.
China’s Purchasing Managers’ Index, a measure of manufacturing, slipped to 50.1 in July from 50.2 in June and less than the median 50.5 median forecast of economists surveyed by Bloomberg News, a government report showed today.
China’s leaders pledged to keep adjusting policies to ensure stable economic growth this year after the official Xinhua News Agency said yesterday some banks are telling branches to provide local-government loans.
Worse to Come
“The market just doesn’t have any real appreciation for how the slowdown is impacting economies here,” said Sean Darby, Hong Kong-based chief global equity strategist at Jefferies Group Inc. “It’s going to get worse. Equities are trading now almost on hot air because really the earnings numbers will be coming down very sharply,”
Companies linked to China fell. Fanuc lost 2.5 percent to 11,910 yen. Cnooc Ltd., the Chinese offshore oil producer that’s bidding for Canada’s Nexen Inc., retreated 1.4 percent to HK$15.50 in Hong Kong.
South Korean shares dropped as data showed the nation’s inflation rate moderated to a 12-year low and exports slid 8.8 percent in July from a year earlier, the steepest decline since September 2009.
Samsung Electronics dropped 0.7 percent to 1.3 million won, and LG Electronics Inc. (066570), a South Korean mobile phone maker, declined 1.3 percent to 61,600 won.
Futures on the S&P 500 (SPXL1) climbed 0.6 percent today. The gauge dropped 0.4 percent in New York yesterday as economists forecast the Fed may forgo announcing a third round of asset purchases today, and is more likely to wait until September to unveil plans to buy $600 billion in housing and government debt.
The European Central Bank meets tomorrow, with President Mario Draghi pledging policy makers will do whatever is needed to preserve the euro.
Of the 1,007 companies listed on the Asian benchmark gauge, 260 are scheduled to post earnings this week, according to data compiled by Bloomberg. Of the 247 companies that reported since July for which Bloomberg had earnings estimates, more than half failed to meet expectations. Earnings per share at companies on the index are expected to grow 21 percent this fiscal year.
Japanese shares also fell on earnings results. Sumitomo Heavy Industries plummeted 15 percent to 270 yen after the machinery maker cut its fiscal-year net income forecast to 16.5 billion yen, missing analyst estimates of 23.5 billion yen.
Komatsu plunged 7.1 percent to 1,633 yen after saying profit will probably be 157 billion yen in the year ending March 31, missing its April forecast by 17 percent.
Among shares that rose, Intrepid Mines jumped 32 percent to 29 Australian cents after saying Indonesian businessman Surya Paloh agreed to buy 5 percent in the company for a “nominal price.” Paloh’s extensive networks in the country will help Intrepid safeguard its interests there, the company said in a statement.
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