Asian Stocks Fall First in Seven Weeks on Yen, Earnings

Asian stocks fell, with the benchmark index capping the first weekly drop in seven weeks, as the yen’s gain weighed on Japanese shares and earnings from HSBC Holdings Plc to Nikon Corp. disappointed investors.

Mazda Motor Corp. (7261), a Japanese carmaker that gets 30 percent of its revenue in North America, slumped 6.6 percent. HSBC, Europe’s biggest bank, had its biggest one-week loss in more than a year after net income missed estimates. Nikon Corp. plunged to the lowest since January 2012 after the Japanese camera maker cut its full-year net income target. Fonterra Shareholders Fund, a unit trust of Fonterra Cooperative Group Ltd, recouped losses in Wellington after the world’s biggest dairy exporter said its board would conduct a formal review into a contamination scare.

The MSCI Asia Pacific Index dropped 1.25 percent to 133.89, snapping six weeks of gains through Aug. 2, its longest winning streak since January. Shares fell even as data showed China’s trade beat estimates and inflation stayed subdued.

“This week, we’ve had some strength in the yen, which has been one of the key drivers,” said Garry Evans, head of global equity strategy at HSBC in Hong Kong. On Japanese earnings, “people have overestimated the impact of a weak yen. In the rest of Asia, it’s a bit too early to tell.”

The MSCI Asia gauge has dropped 7.3 percent from a five-year high reached in May as investors weigh when the Federal Reserve may start reducing its record stimulus.

Asia’s benchmark share index traded at 13 times average estimated earnings yesterday, compared with multiples of 15.34 for the Standard & Poor’s 500 Index (SPX) and 13.95 for the Europe STOXX 600 Index, according to data compiled by Bloomberg.

Yen, Exporters

Japan’s Topix index dropped 4.6 percent after the yen rose to a seven-week high against the dollar. A stronger yen cuts the value of overseas earnings at Japanese companies. Mazda slumped 6.6 percent to 412 yen. Toyota Motor Corp., Asia’s biggest carmaker, slid 4 percent to 6,170 yen. Canon Inc., the world’s biggest carmaker, lost 2.9 percent to 3,065 yen.

South Korea’s Kospi Index lost 2.2 percent. Australia’s S&P/ASX 200 Index retreated 1.2 percent after the Reserve Bank of Australia cut the overnight cash-rate target to a record-low 2.5 percent and lowered its growth outlook. New Zealand’s NZX 50 Index dropped 1.1 percent in Wellington.

Singapore’s Straits Times Index slipped 0.7 percent in the first three days of the week before markets shut for public holidays. Taiwan’s Taiex Index dropped 3 percent. Hong Kong’s Hang Seng Index declined 1.7 percent. China’s Shanghai Composite Index added 1.1 percent.

China Exports

China’s exports rose 5.1 percent from a year earlier in July and imports gained 10.9 percent, the government reported on Aug. 8. The consumer price index increased 2.7 percent from a year earlier in July, separate data showed yesterday.

“We’ve had a little better data recently, which suggest growth in China is stabilizing, but the bottom line is China’s growth is going to disappoint many investors in the next year or two,” Evans at HSBC said.

Of the 548 companies on the MSCI Asia Pacific Index that have posted results since July 1 and for which estimates are available, 50.2 percent exceeded estimates, according to data compiled by Bloomberg.

HSBC declined 4.6 percent to HK$84.75 in Hong Kong, the biggest weekly drop since the period ended May 18, 2012. First-half net income totaled $10.28 billion, missing the $10.57 billion estimate of analysts surveyed by Bloomberg, and Chief Executive Officer Stuart Gulliver said the lender’s fast-growing emerging markets are slowing.

Nikon, Fonterra

Nikon plunged 16 percent to 1,726 yen in Tokyo, the lowest since Jan. 17, 2012. Nikon on Aug. 8 cut its full-year net income target by 23 percent to 50 billion yen ($517 million) from a 65 billion-yen forecast in May, as demand for compact cameras weakens.

Fonterra advanced 0.8 percent to NZ$7.20 after locating and removing all dairy products affected by a potentially contaminated ingredient. The dairy exporter on Aug. 3 said that a dirty pipe at a processing plant may have tainted whey protein, prompting China and Russia to halt imports of some Fonterra products and causing a spate of recalls in China, Vietnam, Thailand, Sri Lanka and New Zealand.

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

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.