Asian Stocks Decline for Fourth Day on Yen, China Profit

Asian stocks dropped, with the regional benchmark index heading for a fourth day of declines, after the yen strengthened and resources shares slid after China’s industrial profit slowed.

Toyota Motor Corp. slipped 4.1 percent in Tokyo, pacing losses among Japanese exporters as the yen traded near a one-month low to the dollar. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest publicly traded lender, dropped 4 percent, extending its biggest weekly decline in two months. Jiangxi Copper Co., China’s biggest producer of the metal, fell 2.2 percent in Hong Kong.

The MSCI Asia Pacific Index sank 1.6 percent to 133.23 as of 6:17 p.m. Tokyo time, with about seven shares falling for each that rose. Japan’s Topix index last week posted its biggest decline in more than a month as earnings from Advantest Corp. and JFE Holdings Inc. disappointed and the yen gained.

“Investors are looking for bit of further direction in Japan,” said Angus Gluskie, managing director at White Funds Management in Sydney, who helps oversee about $450 million. “There are real concerns about the impact of China in the near term. The announcements they’ve made last week about winding back excess capacity and production in certain industries is having a big impact.”

Japan’s Topix and the benchmark Nikkei 225 Stock Average (NKY) both dropped 3.3 percent, the most since June 13. The nation’s retail sales fell 0.2 percent last month compared to May, figures today showed, missing the median estimate of a 0.8 percent gain in a Bloomberg survey.

Kuroda Comments

A planned sales-tax increase “won’t give major damage” to the growth in Japan’s economy, Bank of Japan Governor Haruhiko Kuroda said in a speech today in Tokyo. The country’s economic growth will be moderate going forward, he said.

“Japan is in a summer lull,” Jesper Koll, head of Japan strategy at JPMorgan Chase & Co. in Tokyo, said on Bloomberg Television. “Parliament will only reopen in the middle of September. Between now and then, there’s no new initiatives coming. There’s a lot of worry about the slowdown in China plus the possible tapering of stimulus in the U.S.”

Industrial Profit

Hong Kong’s Hang Seng Index (HSI) slid 0.5 percent, while China’s Shanghai Composite Index declined 1.7 percent. Profit at mainland industrial companies increased 6.3 percent in June from a year earlier, the Beijing-based National Bureau of Statistics said July 27, down from a 15.5 percent pace in May.

South Korea’s Kospi Index fell 0.6 percent. Taiwan’s Taiex Index dropped 0.8 percent. New Zealand’s NZX 50 Index lost 0.1 percent. Australia’s S&P/ASX 200 Index (AS51) added 0.1 percent.

The MSCI Asia Pacific Index fell 6.2 percent from this year’s highest close on May 20 through last week amid signs China’s economy is slowing and on concern the Federal Reserve will start tapering monetary stimulus. Shares on the gauge traded at 13.1 times estimated earnings as of July 26, compared with 15.3 times for the Standard & Poor’s 500 Index and 13.5 times for the Stoxx Europe 600 Index.

Futures on the S&P 500 fell 0.1 percent today. The gauge added 0.1 percent in New York on July 26 as investors weighed corporate earnings and economic data ahead of the Federal Reserve meeting from July 30 to 31.

Yen Strengthens

Japanese exporters declined as the yen rose for a third day against the dollar and headed for its strongest close since June 27. A stronger yen reduces the overseas income of carmakers and electronics manufacturers when repatriated.

Toyota, the world’s biggest carmaker, decreased 4.1 percent to 5,900 yen in Tokyo. Nissan Motor Co. (7201), which gets about 80 percent of sales outside of Japan, sank 5 percent to 1,042 yen. Sony Corp., the maker of Bravia televisions and PlayStation game consoles, slipped 3.6 percent to 2,057 yen.

Mitsubishi UFJ dropped 4 percent to 603 yen. Mizuho Financial Group Inc. (8411), Japan’s third-largest lender by market value, fell 2.9 percent to 202 yen.

Resources Slide

Raw material producers declined as copper and crude oil dropped after Chinese industrial profits indicated a deepening slowdown.

Jiangxi Copper slipped 2.2 percent to HK$13.62 in Hong Kong. Aluminum Corp. of China Ltd., the nation’s biggest producer of the lightweight metal, decreased 2.7 percent to HK$2.54. Cnooc Ltd., the country’s biggest offshore oil producer, fell 1.5 percent HK$14.06.

Hyundai Development Co. slumped 11 percent to 19,900 won in Seoul after the South Korean builder reported a second-quarter loss. Its share-price forecast was cut to 21,000 won from 28,000 won at Samsung Securities Co., which said profit margins may continue to deteriorate.

Solar Tariffs

Solar-energy materials suppliers advanced after European Union and Chinese negotiators reached an agreement to curb EU imports of solar panels from China in exchange for exempting the shipments from punitive tariffs.

GCL-Poly Energy Holdings Ltd. (3800), the world’s biggest producer polysilicon used in making solar panels, rose 1.5 percent to HK$1.99 in Hong Kong. Solargiga Energy Holdings Ltd., a maker of silicon wafers, increased 2.5 percent to 41.5 Hong Kong cents.

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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