Asian Stocks Pare Weekly Gains Amid Lack of Stimulus
Asian stocks rose, with the MSCI Asia Pacific Index (MXAP) paring the third advance in five weeks after central banks in China, Europe and the U.S. failed to deliver new stimulus needed to bolster growth.
Canon Inc. climbed 7 percent after the world’s biggest camera maker announced plans to buy back its shares. Komatsu Ltd. sank 8.1 after the second-largest maker of construction equipment cut its sales forecast as measures of manufacturing showed global production slowing. China Yurun Food Group Ltd. (1068) jumped 29 percent after billionaire Robert Kuok’s Kerry group became a substantial shareholder in the nation’s second-largest supplier of meat products.
The MSCI Asia Pacific Index gained 0.9 percent to 116.99. The gauge rose as much as 2.4 percent early in the week amid speculation the U.S. Federal Reserve and European Central Bank would unveil measures to spur economic growth.
Shares declined for three days after the ECB failed to announce immediate measures to address the debt crisis, the Fed refrained from adding stimulus to the U.S. economy and China’s manufacturing grew at the slowest pace in eight months.
“Both the Fed and ECB have indicated that they will provide support,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “What was delivered was a commitment to action, but not immediately. It’s a disappointment and a bit of setback.”
About $700 billion has been wiped from the value of the Asia-Pacific index since its Feb. 29 peak as Europe’s sovereign debt crisis threatened to upset the global economic recovery. Through yesterday the benchmark has slid more than 10 percent from its high this year on Feb. 29.
Shares on the gauge trade at 12 times estimated earnings. That compares with 13.3 for the Standard & Poor’s 500 Index and 11.1 for the Stoxx Europe 600 Index.
Australia’s S&P/ASX 200 added 0.3 percent. South Korea’s Kospi Index climbed 1.1 percent. Hong Kong’s Hang Seng Index rose 2 percent. China’s Shanghai Composite Index increased 0.2 percent.
Of the 122 companies on the Nikkei 225 that have reported first-quarter earnings, and for which Bloomberg had estimates, 52 percent have fallen short of projections, according to data compiled by Bloomberg. About 80 percent of technology companies have missed estimates, the data show.
China Yurun surged 29 percent to HK$6.14 in Hong Kong, the biggest advance on the MSCI Asia Pacific Index this week. Kerry Group, which raised its stake in the company to 5 percent, is expected to be a long-term investor, according to an Aug. 2 e- mail from Wonderful Sky Financial Group, the public relations company representing China Yurun.
Canon (7751) jumped 7 percent to 2,694 yen in Tokyo. The company is spending 50 billion yen ($639 million) to buy back as many as 21 million shares. The camera maker is among 16 companies on the Topix Index to have announced buybacks during the week.
Tokyo Electric Power Co., the operator of the stricken Fukushima Dai-Ichi nuclear plant, rallied 23 percent to 154 yen after Goldman Sachs Group Inc. said the company would return to profit next fiscal year.
Companies that do business in Europe declined after ECB President Mario Draghi signaled the central bank intends to join forces with governments to buy bonds in sufficient quantities to ease Europe’s debt crisis, while conceding that Germany’s Bundesbank has reservations about the plan.
Mazda Motor Corp., the Japanese automaker that gets about 17 percent of sales from Europe, dropped 4.3 percent to 89 yen. Nippon Sheet Glass Co., which counts Europe as its biggest market, tumbled 15 percent to 60 yen after the glassmaker more than doubled its full-year net loss forecast and announced global job cuts.
Shares also dropped after separate reports showed China’s manufacturing and services industries expanded at a slower pace in July. The government will conduct policy fine-tuning at an appropriate time and consumer inflation may rebound after August, the People’s Bank of China said in a quarterly monetary-policy report on its website Aug. 2.
Komatsu, which gets about 14 percent of sales from China, sank 8.1 percent to 1,621 yen. The company said on July 31 it expects full-year net income of 157 billion yen, down from its April forecast of 190 billion yen.
Sharp Corp. plunged 25 percent, the most on the MSCI Asia Pacific Index, to 192 yen after the maker of Aquos televisions forecast a full-year loss of 250 billion yen. Sony Corp., Japan’s biggest consumer-electronics exporter, fell 5.3 percent to 897 yen after cutting its full-year profit forecast by a third to 20 billion yen. Both companies blamed slumping TV demand and a strengthening yen for their deteriorating earnings.
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