Asia Stocks Fall, Led by Gome, on China Earnings Concern
Asian stocks fell after Chinese companies posted slumping profit and Societe Generale SA said the country’s earnings growth with come to a halt this year.
Gome Electrical Appliances Holding Ltd. plunged 21 percent in Hong Kong after China’s No. 2 electronics retailer missed profit estimates. Hong Kong’s Hang Seng China Enterprises Index of Chinese companies listed in the city dropped for the 10th day in 11 days. Li & Fung Ltd. (494), the world’s biggest supplier of clothes and toys to retailers, slid 5.2 percent in Hong Kong on a plan to sell shares.
The MSCI Asia Pacific Index dropped 0.5 percent to 127.33 as of 8:44 p.m. in Tokyo, having lost 1.3 percent this month. The measure advanced 12 percent this year through yesterday, headed for the biggest quarterly gain since the three months ended September 2009.
“We’re seeing a modest correction following recent gains,” said Yoji Takeda, who oversees about $1.1 billion at RBC Investment Management (Asia) Ltd. in Hong Kong. “We’ve seen some negative earnings, but overall the economy is still growing at a healthy speed, so I’m not too worried.”
The MSCI Asia Pacific Index rose 12 percent this year through yesterday amid optimism the U.S. economy is recovering and monetary easing from China to Europe will spur economic growth. Gains boosted the value of shares on the Asia-Pacific gauge to 15 times estimated earnings on average as of yesterday, higher than 13.5 times for the Standard & Poor’s 500 and 11.2 times for the Stoxx Europe 600 Index.
Australia’s S&P/ASX 200 (AS51) rose 1 percent today. South Korea’s Kospi Index fell 0.4 percent.
Japan’s Nikkei 225 Stock Average dropped 0.7 percent after gaining the most in six months yesterday. Almost 90 percent of the companies listed on the gauge traded without a dividend today.
Hong Kong’s Hang Seng Index lost 0.8 percent while the China Enterprises index dropped 1 percent. The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, dropped 2.7 percent, the most since November, as some of the nation’s largest metal producers reporting falling earnings.
Jiangxi Copper Co. (358), China’s No. 1 producer of the metal by market value, dropped 2.4 percent to HK$18.30 after reporting an 18 percent slide in profit. Angang Steel Co. dropped 2.2 percent to HK$4.88 after posting a wider second-half loss.
Gome Electrical Appliances slumped 21 percent to HK$1.64 after saying profit fell 6 percent last year, missing analyst estimates as higher costs cut into on earnings.
Profit at Chinese industrial companies dropped 5.2 percent in January-February, the first decline since 2009, the National Bureau of Statistics said on its website yesterday. Earnings rose 34 percent in the first two months of 2011.
“China industrial profit figures for January and February proved surprisingly weak, and suggest that consensus earnings expectations for the Hang Seng China Enterprises Index (HSCEI) for 2012 are far too optimistic,” Societe Generale strategists Guy Stear and Anthony Lee wrote in report dated yesterday.
Of 649 companies listed in the Asia-Pacific measure that have reported quarterly net income since Jan. 9, more than half have missed analysts’ estimates, according to data compiled by Bloomberg.
Futures on the Standard & Poor’s 500 Index (SPXL1) rose 0.2 percent today. The gauge dropped 0.3 percent in New York yesterday even as a key consumer confidence index held close to the highest level in a year, and a measure of property values in 20 cities fell at a slower pace in January.
“U.S. data overnight were mixed,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. in Melbourne. Asia. “As a result, we are in a consolidation phase after markets put on some pretty good gains, particularly in Japan.”
Techtronic Industries Co. (669), maker of Ryobi power tools and Hoover vacuum cleaners that counts North America as its largest market, lost 3.9 percent to HK$10.32 after hitting an 11-month high yesterday.
Li & Fung fell 5.2 percent to HK$18.58 after the supplier to Wal-Mart Stores Inc. said it plans to sell 210 million shares at a 5 percent discount to yesterday’s closing price. The company said it plans to raise HK$3.9 billion ($502 million) in its biggest stock sale since its initial public offering in 1992 to help fund acquisitions.
Among companies that went ex-dividend today, Mizuho Financial Group Inc. (8411), Japan’s third-largest bank by market value, paced losses among financial firms, falling 1.4 percent to 140 yen. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, lost 1.4 percent to 430 yen.
The Nikkei 225 Volatility Index (VNKY) declined 2.8 percent to 19.68, indicating traders expect a swing of 5.6 percent on the benchmark gauge over the next 30 days. Volatility gauges for Korea’s Kospi 200 Index (VKOSPI) and Hong Kong’s Hang Seng Index rose.
Among companies that rose, Sharp Corp., which closed at its lowest price since 1979 on March 26, surged by its daily limit of 80 yen to 570 yen in Tokyo.
Foxconn Technology Group and founder Terry Gou agreed to invest 133 billion yen ($1.6 billion) in the TV maker and its display unit to secure flat panels. Foxconn unit Hon Hai Precision Industry Co. jumped 4.6 percent to NT$113, the highest since February 2011, in Taipei.
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