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Asian Stocks Drop to June Low as U.S. OKs Iraq Air Strike

Asian stocks dropped to a seven-week low as U.S. President Barack Obama authorized air strikes against militants fighting the Iraqi government.

Nikon Corp. slumped 9.4 percent in Tokyo after the camera maker reduced its profit forecast. Taiyo Yuden Co. plunged 8.9 percent as the Japanese maker of electronic components cut its net-income target. Melco Crown Entertainment Ltd. dropped 3.9 percent in Hong Kong after the Macau casino operator posted earnings that missed estimates and said its Taiwan branch was indicted for alleged foreign-exchange violations.

The MSCI Asia Pacific Index fell 1.4 percent to 144.09 at 8:02 p.m. in Hong Kong, taking its loss this week to 2.5 percent. President Obama said he has authorized air strikes to prevent genocide in Iraq. The U.S. will not send in ground troops, he said. The announcement heightened geopolitical risks as Russia retaliated against U.S. and European sanctions by banning some western food imports, with concern that President Vladimir Putin could ratchet up tensions by invading Ukraine.

“U.S. air strikes in Iraq could stir up more tensions in the region,” said Desmond Chua, a strategist at CMC Markets in Singapore. “The geopolitical situation seems to be getting rougher every day. Given these high-risk events, investors should probably stay on the sidelines.”

Japan Stimulus

Japan’s Topix index slumped 2.4 percent. The Bank of Japan maintained record stimulus after recent production and export data highlighted weakness that could challenge Governor Haruhiko Kuroda’s push to stoke faster inflation. The central bank kept current policy of expanding the monetary base by 60 trillion yen ($588 billion) to 70 trillion annually.

South Korea’s Kospi index lost 1.1 percent. India’s S&P BSE Sensex index both dropped 1 percent. Taiwan’s Taiex index fell 0.5 percent. Singapore’s Straits Times Index and New Zealand’s NZX 50 Index both lost 0.8 percent. Australia’s S&P/ASX 200 Index retreated 1.3 percent. Hong Kong’s Hang Seng Index dropped 0.2 percent.

China’s Shanghai Composite Index added 0.3 percent. A report today showed China’s export growth unexpectedly accelerated in July and the trade surplus surged to a record as imports fell.

Overseas shipments increased 14.5 percent from a year earlier, the Beijing-based customs administration said today, compared with the median projection of 7 percent in a Bloomberg News survey. Imports dropped 1.6 percent, leaving a trade surplus of $47.3 billion.

China Momentum

“These are very good numbers,” Nader Naeimi, the head of dynamic asset allocation at AMP Capital Investors Ltd. in Sydney, which manages about $131 billion, said by phone. “China’s economy is picking up momentum and it looks sustainable. Chinese equities are still attractively valued, offering investors a good buying opportunity.”

Nikon tumbled 9.4 percent to 1,435.50 yen in Tokyo, its lowest price since September 2010, after cutting its full-year profit forecast by 16 percent to 38 billion yen.

Taiyo Yuden slumped 8.9 percent to 981 yen as the company lowered its first-half net income target by 83 percent to 700 million yen after unexpectedly posting a first-quarter loss.

Nippon Electric Glass Co. dropped 8.8 percent to 518 yen after the supplier of glass used in electronic devices reduced its nine-month net-income forecast.

Melco Crown declined 3.9 percent to HK$75.55 after saying second-quarter adjusted property earnings before interest, taxes, depreciation and amortization fell 11 percent from a year earlier to $313.6 million. That lagged behind an average estimate of $358.5 million from eight analysts compiled by Bloomberg.

The Taipei District Prosecutors Office indicted Melco’s Taiwan branch office and some employees for alleged violations of banking and foreign-exchange laws, Melco said.

China Unicom Hong Kong Ltd. dropped 1.7 percent to HK$12.58 after posting second-quarter profit that missed analyst estimates.

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