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Asian Stocks Fall as Earnings Drag Down Technology Shares

Asian stocks fell, with the regional benchmark index headed for the first drop in four days, as worse-than-expected earnings results from Google Inc. and Microsoft Corp. weighed on technology shares.

Internet portal Yahoo Japan Corp. declined 2.3 percent in Tokyo and Samsung Electronics Co. fell in Seoul. National Australia Bank Ltd. led the country’s lenders lower after saying it quadrupled provisions for bad loans. Fanuc Corp., a Japanese maker of factory robots, increased 3.9 percent after manufacturing in the Philadelphia region expanded more than estimated.

The MSCI Asia Pacific Index dropped 0.2 percent to 123.65 as of 7:37 p.m. in Tokyo with about five stocks falling for every four that rose. The measure has risen 2.4 percent this week.

“Earnings reflect the economic weakness we saw a few months ago, and therefore you could argue it’s somewhat outdated,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “You end up in a standoff in the share market between focus on economic data, which is more forward-looking, and focus on earnings, which are not as good.”

The MSCI Asia Pacific Index rebounded 14 percent through yesterday from this year’s low on June 4 as stimulus measures in Europe, the U.S., Japan and China boosted market sentiment amid a global economic slowdown and Europe’s debt crisis. The Asian benchmark traded at 13.1 times estimated earnings on average, compared with 13.9 for the Standard & Poor’s 500 Index and 12.3 for the Stoxx Europe 600 Index.

Nikkei, Kospi

Japan’s Nikkei 225 Stock Average gained 0.2 percent, recording the biggest weekly advance this year. Australia’s S&P/ASX 200 added 0.3 percent, while New Zealand’s NZX 50 Index lost 0.3 percent. South Korea’s Kospi Index slid 0.8 percent. Singapore’s Straits Times Index dropped 0.4 percent. Taiwan’s Taiex Index (TWSE) fell 0.8 percent.

Hong Kong’s Hang Seng Index gained 0.2 percent, capping its longest streak of daily gains since January 2011, and China’s Shanghai Composite Index dropped 0.2 percent.

China’s government won’t provide big economic stimulus measures and a strong rebound in growth is unlikely, Song Guoqing, an adviser to the People’s Bank of China, said yesterday. The government reported a 7.4 percent economic expansion in the third quarter from a year earlier that met the median estimate of economists.

“Policy makers would’ve been very happy with the data because it’s suggesting that the Chinese economy is bottoming and therefore authorities have been right to exercise caution in providing stimulus,” said AMP Capital’s Oliver. “Likewise, the data suggests policy caution probably continues.”

Google, Microsoft

Futures on the S&P 500 fell 0.2 percent today, which marks the 25th anniversary of so-called the Black Monday market crash, the biggest single-day equity decline in history. The gauge fell 0.2 percent yesterday, led by technology shares.

Google dropped 8 percent to $695 after reporting profit and sales that missed analysts’ estimates, a signal that its tools are becoming less valuable to advertisers as more users access the world’s largest search engine via mobile devices. After regular trading, Microsoft, the largest software maker, reported fiscal first-quarter profit and sales that fell short of analysts’ estimates amid declining personal computer sales.

Information technology shares dropped the most among the 10 industry groups on the MSCI Asia Pacific Index. Samsung, the world’s No. 1 seller of smartphones and the heaviest weighted stock on the Asia-Pacific Index, dropped 2.6 percent to 1.302 million won.

Yahoo Japan slipped 2.3 percent to 28,830 yen. NCsoft Corp., an online-game maker, declined 1.8 percent to 213,500 won in Seoul. Pegatron Corp., an electronics maker, lost 1.7 percent to NT$40.8 in Taipei.

Leading Indicators

The earnings season is starting in earnest in Asia with 158 companies of the 1,006 members on the MSCI Asia Pacific Index scheduled to report results next week.

NAB fell 2.7 percent, its biggest decline since May, to A$26.22 in Sydney. Provisions increased by A$250 million ($259 million), taking the total to A$320 million, the Melbourne-based bank said in a statement. Westpac Banking Corp. (WBC), Australia’s No. 2 lender, dropped 1.5 percent to A$25.56 while Australia & New Zealand Banking Group Ltd. fell 1.1 percent to A$25.66.

Shares pared losses after an index of U.S. leading economic indicators rose in September by the most in seven months and manufacturing in the Philadelphia region expanded in October for the first time in six months.

Fanuc Gains

Fanuc, Japan’s biggest supplier of factory automation equipment, climbed 3.9 percent to 13,290 yen. It was the second- biggest support to the Asia-Pacific index today. Li & Fung Ltd. (494), a supplier of toys and clothes to Wal-Mart Stores Inc., rose 1.1 percent to HK$12.96.

Kyowa Hakko Kirin Co., a Japanese pharmaceutical maker, dropped 6.2 percent to 901 yen after halting a clinical study of a drug for chronic kidney disease.

Among other stocks that rose, NEC Corp., Japan’s biggest maker of telecommunications equipment, jumped the most in four years in Tokyo as it raised its estimate for first-half operating profit to 47 times the previous forecast. The stock surged 10 percent to 137 yen, the biggest gain since 2008.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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

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