Asian Stocks Decline on Japan Exports, Earnings Outlook

Asian stocks fell, with the regional benchmark index retreating after its biggest weekly advance in a month, as Japan’s exports dropped and companies including Treasury Wine Estates Ltd. forecast lower earnings.

Komatsu Ltd. (6301), the Japanese maker of construction machinery that gets 14 percent of sales from China, slid 2.4 percent in Tokyo. Treasury Wine Estates slumped 7.3 percent in Sydney after Australia’s biggest wine maker forecast a drop in first-half earnings. GrainCorp Ltd. jumped 39 percent after Archer-Daniels- Midland Co. offered to buy the Australian grain handler. Hong Kong’s Hang Seng Index (HSI) completed its longest streak of daily advances since July 2010.

The MSCI Asia Pacific Index (MXAP) declined for a second day, falling 0.3 percent to 123.21 as of 7:37 p.m. in Tokyo, with about five stocks dropping for every four that rose. The gauge last week posted its biggest weekly advance in a month after reports on U.S. retail sales and manufacturing beat estimates and China’s economy showed signs of stabilization.

“Markets have had a pretty strong rebound already,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “The outlook for company earnings are being revised down and that’s affecting market sentiment. Any market correction is good and likely to be short-lived as investors will likely use any weakness as a buying opportunity. Even though earnings are slowing, they’re not collapsing.”

Currency Intervention

South Korea’s Kospi Index lost 0.1 percent. Australia’s S&P/ASX 200 Index (AS51) fell 0.7 percent. Taiwan’s Taiex Index dropped 0.5 percent. China’s Shanghai Composite Index added 0.2 percent.

Hong Kong’s Hang Seng Index gained 0.7 percent, extending gains for an eighth day, the longest such streak since July 2010. The city’s de facto central bank stepped in for the first time since 2009 to prevent the currency from rising against the U.S. dollar as funds flow into the market. Hong Kong Exchanges & Clearing Ltd., the city’s bourse operator, rose 3.5 percent to HK$125.60.

Japan’s Nikkei 225 Stock Average (NKY) rose 0.1 percent, reversing losses of as much as 1.5 percent, as the yen weakened amid speculation the Bank of Japan will add stimulus at a meeting next week. Shares fell earlier after companies including Mitsubishi Corp. cut profit forecasts.

Futures on the Standard & Poor’s 500 Index added 0.4 percent today. The gauge fell 1.7 percent on Oct. 19 after Microsoft Corp. and General Electric reported earnings that missed estimates. As well, purchases of existing houses dropped 1.7 percent to a 4.75 million annual rate, matching the median forecast of economists surveyed by Bloomberg, figures from the National Association of Realtors showed on Oct. 19 in Washington.

Japanese Exporters

Japanese exporters dropped as shipments slid 10.3 percent in September from a year earlier, leaving a trade deficit of 558.6 billion yen ($7 billion), the Finance Ministry said in Tokyo today. The median forecast in a Bloomberg News survey of analysts was for a 9.9 percent export decline. Imports rose 4.1 percent. The decline in shipments, exacerbated by a spat with China over islands in the East China Sea, was the biggest since May last year.

Komatsu declined 2.4 percent to 1,710 yen. Fanuc Corp., a Japanese maker of factory robots, slipped 2.5 percent to 12,960 yen. Renesas Electronics Corp. (6723), the world’s largest maker of microcontrollers that gets about 15 percent of sales from China, dropped 2 percent to 292 yen.

Raw-material producers posted the biggest decline among the 10 industry groups in the MSCI Asia Pacific Index. Oil fell a third day in its longest losing streak in almost a month. Copper futures in London headed for a second day of decline.

Rio Tinto Group (RIO), the world’s second-biggest mining company by market value, decreased 2.4 percent to A$57.75. Woodside Petroleum Ltd., Australia’s No. 2 oil producer, slipped 1 percent to A$35.61.

Profit Target

The MSCI Asia Pacific Index rebounded 13 percent through Oct. 19 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 13.2 times estimated earnings on average, compared with 13.7 for the S&P 500 and 12.2 for the Stoxx Europe 600 Index.

Treasury Wine Estates slumped 7.3 percent to A$5.10 in Sydney after forecasting first-half earnings would drop 20 percent on higher costs and a reduced grape harvest.

Of the 37 companies on the MSCI Asia Pacific Index that reported earnings since Oct. 1, 62 percent missed earnings estimates, while 38 percent exceeded expectations, according to data compiled by Bloomberg News. More than 100 companies in Australia, India, Japan, South Korea, China and Taiwan are scheduled to post results this weeks.

Mitsubishi Corp., which gets 45 percent of revenue from energy and metals, fell 1.8 percent to 1,404 yen after cutting its annual profit target by 34 percent to 330 billion yen and reducing the dividend forecast by 28 percent to 50 yen a share.

Amada Co. (6113) slid 1.7 percent to 409 yen after the Japanese machinery maker cut its full-year profit forecast by 58 percent to 5 billion yen.

Jupiter Telecom

Among stocks that advanced, Jupiter Telecommunications Co., controlled by KDDI Corp. and Sumitomo Corp., surged 18 to 97,700 yen in Tokyo, the most on the regional gauge, Jupiter will buy Japan Cablenet Ltd. to control half of the country’s cable television market, the Nikkei newspaper reported, without saying where it obtained the information.

Keiichi Sakurai, a spokesman at KDDI, and Jupiter’s spokeswoman Keiko Ajikata said by telephone today the companies weren’t the source of the information. Sumitomo didn’t provide the information for the report, the company said in statement on its website.

GrainCorp jumped 39 percent to A$12.30,a record closing price. Archer-Daniels-Midland, the biggest corn processor, offered A$2.7 billion ($2.8 billion), or A$11.75 a share, in cash for GrainCorp to gain agricultural shipment assets in Australia.

China Rongsheng Heavy Industries Group Holdings Ltd. (1101), the country’s largest shipbuilder outside state control, climbed 14 percent to HK$1.58 in Hong Kong after announcing an order for a deep water barge, the first of its push into the offshore- equipment market.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

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

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