Asian Stocks Fall on U.S. Factory Orders, China Earnings
Asian stocks fell for a second day on concern China’s economic slowdown is weighing on company earnings and after orders placed with U.S. factories for durable goods rose less than estimated.
PICC Property & Casualty Co. slid 3.9 percent in Hong Kong after China’s biggest non-life insurer missed analysts’ profit estimates. Toyota Motor Corp. (7203), which depends on North America for 28 percent of its sales, fell 1.7 percent. Speco Co. led gains among South Korean defense-related companies on a report North Korea has begun to fuel a rocket it plans to launch.
The MSCI Asia Pacific Index dropped 0.6 percent to 126.54 as of 7:23 p.m. in Tokyo, with more than twice as many stocks declining as rising. The gauge is headed for its first monthly drop since November, paring the biggest quarterly gain since the period through September 2010. The measure has risen 11 percent this year.
Weaker earnings are “consistent with other data out of China showing a slowdown,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “What’s lacking is more aggressive easing by the Chinese authorities. That’s what is concerning the markets. I think if the data was soft and authorities were easing, investors would be a lot more comfortable.”
Japan’s Nikkei 225 Stock Average lost 0.7 percent, with trading volume 11 percent below the 30-day average. South Korea’s Kospi Index dropped 0.9 percent. Australia’s S&P/ASX 200 slid 0.1 percent, Hong Kong’s Hang Seng Index lost 1.3 percent and the Shanghai Composite Index declined 1.4 percent.
PICC slipped 3.9 percent to HK$9.48, its lowest close since Oct. 21. Full-year profit rose to 8.03 billion yuan ($1.27 billion), missing the 8.8 billion yuan median estimate of 16 analysts surveyed by Bloomberg as the insurer booked a loss on stock investments.
Sany Heavy Industry Co., a builder of heavy construction machinery, slid 4.1 percent to 12.32 yuan in Shanghai after net income trailed analysts’ estimates.
In Sydney, Leighton Holdings Ltd. (LEI), Australia’s largest construction company, plunged 6.7 percent to A$22.16 after saying underlying profit last year may miss an earlier forecast by as much as 38 percent because of delays to two of its major project caused by wet weather and lower productivity.
Of 666 companies listed on the MSCI Asia-Pacific Index that have reported quarterly profit since Jan. 9, 57 percent have missed analysts’ estimates, according to data compiled by Bloomberg.
The MSCI Asia Pacific Index has fallen about 2 percent this month amid as confidence in the strength of the U.S. economy wavers. Federal Reserve Chairman Ben S. Bernanke yesterday said unemployment remains too high and the recovery isn’t guaranteed.
Shares on the regional gauge were valued at 15 times estimated earnings on average as of yesterday, higher than 13.5 times for the Standard & Poor’s Index 500 and 11.1 times for the Stoxx Europe 600 Index.
Futures on the S&P 500 (SPXL1) rose 0.3 percent today. The index lost 0.5 percent in New York yesterday after factory orders for durable goods advanced less than expected in February. The data followed reports this month showing less-than-expected growth in manufacturing and a drop in consumer confidence amid higher gasoline prices.
“We are starting to see data come out on the softer side of what’s expected,” AMP Capital’s Oliver said. “With all the good news being factored in, we are coming to a tougher period and markets are vulnerable to any bad news.”
Toyota dropped 1.7 percent to 3,575 yen. Samsung Electronics Co. (005930), South Korea’s biggest exporter of consumer electronics, fell 1.7 percent to 1.28 million won.
Renhe Commercial Holdings Co. (1387) slumped 22 percent to 56 cents in Hong Kong after Moody’s Investors Service cut the shopping mall developer’s credit rating two levels to B3, six ranks below investment grade. The stock plunged 20 percent yesterday after posting underlying profit that fell more than 90 percent.
Among shares that rose today, defense-related companies advanced in Seoul after Tokyo Shimbun reported North Korea started to fuel a rocket it plans to launch. The newspaper cited an unidentified person it said was familiar with the situation.
Speco, which makes parts for naval ships, rallied 5.4 percent to 2,910 won. Victek Co., a maker of military communications equipment, jumped 12 percent to 1,970 won. Huneed Technologies (005870) added 2.8 percent to 3,700 won.
Korea’s Kospi 200 Volatility Index (VKOSPI) rose 2 percent to 17.78, indicating traders expect a swing of 5.1 percent on the benchmark gauge over the next 30 days. Hong Kong’s Hang Seng Volatility Index gained 7 percent, and the gauge for Japan’s Nikkei 225 average added 0.2 percent.
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