Asian Stocks Drop Amid Earnings Concern, China Bank Risk

Asian Stocks Advance as Higher Commodity Prices Offset U.S. Data
Sony Corp. added 1.7 percent after the yen dropped against all of its 16 major counterparts. Photographer: Akio Kon/Bloomberg

Asian stocks fell for a second day, extending last week’s loss, amid concern exporter earnings are deteriorating and that Chinese banks may have understated the risks of loans to local governments.

BYD Co., the carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., slumped 4.8 percent in Hong Kong after saying first-quarter profit may fall as much as 95 percent. Agricultural Bank of China Ltd. led mainland lenders lower. Leighton Holdings Ltd. rose 2.7 percent after Australia’s largest builder said it won $400 million in new contracts.

The MSCI Asia Pacific Index fell 0.6 percent to 125.64 as of 7:21 p.m. in Tokyo, adding to a 0.4 percent drop on March 23. It sank 1.3 percent last week. The measure has gained 11 percent this quarter to the end of last week, its biggest advance since the three months ended September 2010.

“In the absence of positive news, I think people are feeling like taking a bit of money off the table,” said Angus Gluskie, managing director at White Funds Management in Sydney who manages more than $350 million. “There’s a lack of economic news following key issues.”

BYD fell after the company yesterday said that first-quarter profit may plunge by between 65 percent and 95 percent. The automaker slid 4.8 percent to HK$19.94.

Of 631 companies listed in the measure that have reported earnings since Jan. 9, more than half have missed analysts’ estimates, according to data compiled by Bloomberg.

Earnings Analysis

China Shanshui Cement Group Ltd. slumped 12 percent to HK$5.13 after last week posting full year earnings that missed estimates. China Airlines Ltd. retreated 2.6 percent to NT$13 after reporting a 2011 loss of NT$1.95 billion ($66 million). The carrier posted net income of NT$10.60 billion a year earlier.

Hong Kong’s Hang Seng Index closed little changed as real-estate companies rallied amid speculation the city’s newly-elected leader Leung Chun-ying will maintain the development policies of the previous administration.

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, rose 0.1 percent. Australia’s S&P/ASX 200 fell 0.2 percent. South Korea’s Kospi Index lost 0.4 percent. Futures on the Standard & Poor’s 500 Index rose 0.2 percent.

Chinese financial stocks slid on speculation banks had understated the risks associated with about 20 percent of their outstanding loans to local governments. The China Banking Regulatory Commission told lenders last month they had incorrectly placed about 1.8 trillion yuan ($285 billion) of loans in the safest category of lending, according to a person with knowledge of the matter.

Chinese Loans

Agricultural Bank of China lost 2.4 percent to HK$3.33. Industrial & Commercial Bank of China Ltd. fell 1 percent to HK$4.97.

Leighton Holdings rose 2.7 percent to A$23.75 after Australia’s largest builder announced A$400 million ($418 million) in new work.

Japan’s Nikkei 225 Stock Average gained 0.1 percent as the yen fell against 15 of its 16 major counterparts, brightening the earnings outlook for the nation’s exporters. A weaker yen boosts the value of overseas earnings when repatriated. Trading volume on the measure was about 25 percent below the average of the past 10 sessions.

Japanese exporters gained. Kyocera Corp., an electronics maker, climbed 1.2 percent to 7,570 yen. Nissan Motor Co., a carmaker that gets about 80 percent of its revenue overseas, jumped 2.5 percent to 876 yen.

The MSCI Asia Pacific Index gained 11 percent this year through last week on optimism the U.S. economy is recovering and central banks from China to Japan and Europe will take measures to spur growth. The increase boosted the value of stocks in the measure to 14.9 times estimated earnings on average, higher than 13.4 times for the S&P 500 and 11.1 times for the Stoxx Europe 600 Index.

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