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Asian Stocks Drop as China’s Industrial Profit Declines
Asian stocks fell, with the regional benchmark index heading for a three-week low, as a drop in profit at Chinese industrial companies offset optimism policy makers around world will move to boost growth.
Jiangxi Copper Co. (358), China’s biggest supplier of the metal, slid 1.9 percent in Hong Kong. Samsung Electronics Co. tumbled by the most in almost four years in Seoul after a U.S. jury ruled that the world’s No. 1 maker of smartphones infringed Apple Inc. (AAPL) patents. Olympus Corp., the world’s largest manufacture of endoscopes, rose 4.4 percent in Tokyo after agreeing to sell unit ITX Corp.’s telecommunications business for 53 billion yen ($674 million).
The MSCI Asia Pacific Index dropped 0.4 percent to 119.81, as of 8:03 p.m. in Tokyo, heading for its lowest close since Aug. 7. Almost three shares fell for every two that rose in the gauge. The measure climbed 10 percent from a June low through Aug. 24 on bets the U.S., Europe and China will take action to propel economic expansion. Investors are awaiting comments from Federal Reserve Chairman Ben S. Bernanke as U.S. policy makers meet on Aug. 30 in Jackson Hole, Wyoming.
“The markets have priced in some kind of positive policy action,” Mark Matthews, Singapore-based head of research for Asia at Bank Julius Baer & Co., which has about $286 billion in client assets globally, said on Bloomberg Television in Hong Kong. “In the absence of that, markets may go back down by about 10 percent. China is probably the big problem in the world, it’s slowing.”
China’s Shanghai Composite Index sank 1.7 percent. Profit at Chinese industrial companies fell for a fourth month in July. Income dropped 5.4 percent to 366.8 billion yuan ($58 billion) last month from a year earlier, the National Bureau of Statistics said in a report on its website today.
Hong Kong’s Hang Seng Index declined 0.4 percent and Taiwan’s Taiex Index slipped 0.1 percent. Japan’s Nikkei 225 Stock Average (NKY) gained 0.2 percent and Australia’s S&P/ASX 200 Index slid 0.1 percent.
South Korea’s Kospi Index dropped 0.1 percent, having fluctuated between gains and losses throughout the trading day. The nation’s sovereign-debt rating was raised by Moody’s Investors Service, which said the country’s export competitiveness will help Asia’s fourth-largest economy rebound as global growth recovers.
The Jakarta Composite Index was little changed. Almost a third of the Indonesian bourse’s members failed to connect to its trading platform, disrupting trading. The exchange’s board is discussing today’s problem and will release a statement later, Samsul Hidayat, a director at the bourse, said by phone. The stock market normally closes at 4 p.m. local time.
Vietnam Bear Market
Vietnam’s VN Index plunged 3.4 percent amid concern the arrest of two banking officials last week may signal further instability in the nation’s financial system. Today’s losses extended the gauge’s decline since the recent peak on May 8 to more than 20 percent, which some investors regard as a bear market.
Futures on the Standard & Poor’s 500 Index added 0.3 percent today. The gauge last week snapped a six-week gain amid concern European leaders may fail to tame the region’s debt crisis.
Chinese biggest commodities suppliers declined as the drop in industrial company profits in July added to evidence the nation’s economic slowdown is deepening. Jiangxi Copper fell 1.9 percent to HK$18.18. Aluminum Corp. of China Ltd., the nation’s biggest producer of the light-weight metal, decreased 4 percent to HK$3.14.
Information technology companies posted the biggest decline among the 10 industry groups in the MSCI Asia Pacific Index.
Samsung Electronics, which has the heaviest weighting on the MSCI Asia Pacific Index, was the biggest drag on the regional benchmark measure. The stock tumbled 7.5 percent, the most since Oct. 24, 2008, to 1.18 million won in Seoul after a U.S. court ordered the South Korean company to pay more than $1 billion for infringing Apple Inc.’s patents for mobile devices.
The MSCI Asia Pacific Index earlier gained after China’s Premier Wen Jiabao urged extra measures to support exports and help meet economic targets as evidence mounts that the nation’s slowdown is deepening. Adding to stimulus speculation, Bernanke said in an Aug. 22 letter to Darrell Issa, the chairman of the Congressional Oversight and Government Reform Committee, that the central bank has the ability to take additional steps to boost the U.S. economy.
“Clearly the chances of further quantitative easing are higher than they were six months ago,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian wealth management unit. “The market is looking to Bernanke’s speech at Jackson Hole for additional guidance on policy.” The Swiss bank has about $1.5 trillion in assets under management.
China Airlines Ltd. (2610) dropped 2.1 percent to NT$11.55 in Taipei after the Taiwanese carrier reported a first-half net loss of NT$1.04 billion ($35 million), compared with a loss of NT$661 million a year earlier.
Of the 477 companies in the Asia-Pacific index that have reported quarterly earnings since July 1, and for which Bloomberg has estimates, more than half failed to meet projections, according to data compiled by Bloomberg.
Citic Resources Holdings Ltd. sank 7.2 percent to HK$1.03 after the Chinese oil and coal producer posted a 42 percent decline in first half profit to HK$228.1 million ($29.4 million) from a year earlier.
Parkson Retail Group Ltd., a mainland CHinese operator of department stores, dropped 6.5 percent to HK$6.65. The company reported first half earnings that missed estimates, prompting Barclays Plc to cut its rating on the stock to underweight.
The MSCI Asia Pacific Index (MXAP) fell 6.7 percent from this year’s high on Feb. 29 through Aug. 24. Stocks on Asia’s benchmark index were valued at 12.6 times estimated earnings on average, compared with 13.7 for the S&P 500 and 11.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Among stocks that advanced, Olympus jumped 4.4 percent to 1,562 yen in Tokyo. The company may book an exceptional gain of about 16 billion yen from the sales of ITX’s telecommunications business, according to estimates by Goldman Sachs Group Inc. The Japanese camera maker didn’t provide a figure for the one-time gain.
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