Asian Stocks Outside Japan Cap Weekly Drop on Earnings Reports

Asian stocks outside Japan fell this week as investors weighed earnings reports with trading curtailed by holidays around the region.

The MSCI Asia Pacific excluding Japan Index slid 0.3 percent to 475.51, dropping a third week. Samsung Electronics Co. and Tencent Holdings Ltd. were the biggest drags on the gauge. The broader MSCI Asia Pacific Index gained 0.2 percent this week. The regional measure slid 0.5 percent in April to cap its first loss in three months amid signs of a deepening slowdown in China and as tensions in Ukraine escalated.

Shanghai Pharmaceuticals Holding Co. led declines after posting a 6.3 percent drop in first-quarter net income. Esprit Holdings Ltd. tumbled 13 percent in Hong Kong after the clothier’s sales fell. Alps Electric Co. surged 15 percent in Tokyo on forecasting a rise in full-year profit. Goodman Fielder Ltd., the largest baker in Australia and New Zealand, soared 23 percent in Sydney after rejecting a A$1.3 billion ($1.2 billion) offer from Wilmar International Ltd. and First Pacific Co.

“Earnings season in Asia is probably not as good as what we’ve been seeing in the U.S.,” said Chris Weston, chief market strategist at IG Ltd. in Melbourne. “But corporate Asia seems to be in relatively healthy shape for the moment.”

Of the companies on the MSCI Asia Pacific Index that have posted results since the beginning of April and for which Bloomberg has estimates, 52 percent beat earnings expectations. That compares with 75 percent on the Standard & Poor’s 500 Index.

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong, also known as the H-share index, was little changed this week. The city’s benchmark Hang Seng Index added 0.2 percent. The Shanghai Composite Index lost 0.5 percent. Hong Kong’s bourse was shut on May 1 and mainland markets were closed the past two trading days.

China Economy

China’s official manufacturing Purchasing Managers’ Index came in at 50.4, compared with the 50.5 median estimate in a Bloomberg survey of analysts. The final April reading in HSBC Holdings Plc’s and Markit Economics’s private survey due next week is expected to show a four-month contraction in factory activity.

Japan’s Topix index gained 1.1 percent this week. The Bank of Japan on April 30 refrained from adding stimulus and said it’s on track to meet its inflation target.

South Korea’s Kospi index fell 0.6 percent. Australia’s S&P/ASX 200 Index dropped 1.3 percent, while New Zealand’s NZX 50 Index advanced 1.5 percent. Taiwan’s Taiex Index added 1.1 percent, and Singapore’s Straits Times Index slid 0.5 percent.

The Federal Reserve said it will keep trimming the pace of asset purchases as the economy shakes off the winter doldrums, putting the central bank on a course to end the unprecedented stimulus program by the close of 2014. The Fed on April 30 pared monthly asset buying to $45 billion, its fourth straight $10 billion cut, and said further reductions in “measured steps” are likely.

Earnings Season

Shanghai Pharmaceuticals tumbled 16 percent to HK$13.90 after first-quarter profit declined 6.3 percent to 586.2 million yuan ($94 million). The drugmaker’s equity rating was cut to neutral from outperform at Credit Suisse Group AG, with a target price of HK$15.04.

Esprit plunged 13 percent to HK$12.16. Third-quarter sales fell 9.9 percent from a year earlier to HK$6.05 billion ($967 million).

Japan Exchange Group Inc., the main bourse operator in the world’s second-largest equity market, slid 2.2 percent to 2,150 yen. Net income for the year through March 2015 will be 21 billion yen ($205 million), the exchange said April 28. That compares with the 32.5 billion yen average estimate of nine analysts surveyed by Bloomberg.

Alps, Nomura

Alps Electric jumped 15 percent to 1,270 yen. The parts maker said current fiscal-year profit will rise 19 percent to 17 billion yen. Nomura Holdings Inc. added 3.3 percent to 629 yen. Japan’s largest brokerage reported net income of 61.3 billion yen in the fourth quarter, beating estimates for a 41 billion-yen gain.

Goodman Fielder surged 23 percent to 67.5 Australian cents after rejecting the offer from Wilmar and First Pacific, saying the 65-cents-a-share bid “materially undervalues” the company.

Samsung Electronics, South Korea’s biggest exporter of consumer electronics, lost 3.8 percent to 1,346,000 won. Tencent, Asia’s biggest Internet company, slumped 5.4 percent to HK$495.40.

The MSCI Asia-Pacific Index ended the week trading at 13 times estimated earnings, compared with multiples of 16 for the S&P 500 and 15 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

To contact the reporter on this story: Sarah McDonald in Sydney at smcdonald23@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Jim Powell, Jim McDonald

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