Asian Stocks Drop on Samsung Electronics, WorleyParsons

Asian stocks fell for a second day after valuations on the regional benchmark index reached the highest level since May and as Samsung Electronics Co. and WorleyParsons Ltd. (WOR) declined.

Samsung lost 1.3 percent as investors awaited a U.S. court decision on how much the South Korean handset maker should pay Apple Inc. for patent infringement. WorleyParsons Ltd., Australia’s largest oil and gas engineering company, slumped a record 26 percent after saying profit will miss a forecast given last month. Micronics Japan Co. surged 21 percent in Tokyo after the electronics-component maker said full-year earnings would increase from the prior period.

The MSCI Asia Pacific Index fell 0.4 percent to 142.21 as of 8:49 p.m. in Hong Kong. The gauge added 0.9 percent this week through yesterday. The Federal Open Market Committee publishes minutes of its October meeting today after Federal Reserve Chairman Ben S. Bernanke said the U.S. benchmark interest rate will remain near zero for a “considerable time” when central bank’s debt purchases end.

“There is evidence of profit taking,” Ric Spooner, Sydney-based chief market analyst at stockbroker CMC Markets, said in an e-mail. “Upcoming data beginning with tonight’s release of U.S. retail sales has more capacity to shift thinking on the timing and pace of the Fed’s taper program.”

Markets advanced this week after China pledged to execute economic reforms and Bernanke’s nominated successor, Fed Vice-Chairman Janet Yellen, said she would continue U.S. stimulus. Retail sales in the U.S. probably returned to growth last month, according to a Bloomberg survey of economists before data due today.

Relative Value

The Asia-Pacific gauge traded at 13.9 times estimated earnings yesterday, having touched 14 on Nov. 18, the highest since May. That compared with 16.2 for the S&P 500 yesterday and 15.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

The Organization for Economic Cooperation and Development cut its global growth forecasts yesterday, citing a slowdown in developing nations. The world economy will probably expand 2.7 percent this year and 3.6 percent in 2014, instead of the 3.1 percent and and 4 percent predicted in May, the Paris-based OECD said in a semi-annual report yesterday.

Bernanke’s statement that a “preponderance of data” would be needed to start removing stimulus comes after Yellen said last week that the U.S. economy is not yet strong enough to warrant cuts to the record bond-buying program.

Regional Gauges

Japan’s Topix index dropped 0.3 percent after the nation posted its biggest trade deficit on record. South Korea’s Kospi index and Taiwan’s Taiex both fell 0.7 percent. Australia’s S&P/ASX 200 Index sank 0.9 percent and New Zealand’s NZX 50 Index fell 0.5 percent. Singapore’s Straits Times Index slipped 0.3 percent.

Hong Kong’s Hang Seng China Enterprises Index (HSCEI) of mainland Chinese shares listed in the city gained 0.6 percent, capping a five-day rally and closing at the highest level since March after China’s central bank elaborated on plans to free up foreign-exchange controls.

The People’s Bank of China will “basically” end normal intervention in the currency market and broaden the yuan’s daily trading limit, Governor Zhou Xiaochuan said, without giving a time frame. The daily range will be widened in an “orderly way” as China seeks to enhance the currency’s two-way flexibility, Zhou wrote in an article in a guidebook explaining reforms outlined last week following a Communist Party meeting.

Hong Kong’s China Enterprises Index index climbed 29 percent since this year’s low on June 25 as data signaled China’s economy is strengthening and policy makers unveiled the biggest package of reforms since the 1990s. Hong Kong’s Hang Seng Index (HSI) added 0.2 percent today and the Shanghai Composite Index advanced 0.6 percent.

China Reforms

China’s policy makers have pledged to allow more private investment in state-run industries, ease the one-child policy and expand farmers’ land rights.

Futures on the Standard & Poor’s 500 Index were little changed today. The gauge dropped 0.2 percent yesterday, a second day of declines, as investors weighed rising valuations and disappointing earnings forecasts.

“The target for the federal funds rate is likely to remain near zero for a considerable time after the asset purchases end, perhaps well after” the jobless rate falls below the Fed’s 6.5 percent threshold, Bernanke said in a speech to economists in Washington. A “preponderance of data” would be needed to begin removing accommodation, he said.

Stimulus Tapering

“He’s just confirmed that the quantitative easing measures will continue, certainly for the near-term future,” Kirk Hartman, Los Angeles-based chief investment officer at Wells Capital Management, where he helps oversee about $331 billion, told Bloomberg TV. “We all know that the end of the Fed tapering is coming, the question is when. The market is hopeful.”

Samsung Electronics slid 1.3 percent to 1.47 million won. A court in San Jose, California, will decide on how much Samsung should pay Apple for patent infringement in a trial that started last week. The iPhone maker originally won a $1.05 billion verdict against Samsung last year, but the judge reduced the award by 39 percent in March. The jury in the current case is deciding how much of the trimmed amount should be reinstated.

WorleyParsons Sinks

WorleyParsons tumbled a record 26 percent to A$16 in Sydney after saying profit will be as much as 19 percent less than a forecast given last month. Daiichi Sankyo Co. sank 3.9 percent to 1,868 yen in Tokyo after Cantor Fitzgerald LP said edoxaban, the Japanese company’s new blood-thinning drug, may have trouble competing with existing anti-coagulants.

Among stocks that rose, Sharp Corp. surged 7.6 percent to 299 yen. The Japanese electronics maker is considering a tie-up with Hewlett-Packard Co. to make photocopiers, Kyodo News reported.

Micronics Japan (6871) jumped 21 percent to 870 yen after saying it expects net income to increase to 1.2 billion yen ($12 million) in the year ending September 2014, compared with 1.1 billion yen the previous year.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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

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