Asian Stocks Snap Four-Day Gain After China Export Data
Asian stocks dropped, with the regional benchmark index trimming the biggest weekly advance since January, after companies including Li & Fung (494) Ltd. posted lower profit and as China reported export growth slowed more than economists’ expectations.
Agricultural Bank of China Ltd. fell 1.6 percent, leading Chinese creditors lower, after new loans last month came in less than analysts expected. Li & Fung plunged by a record in Hong Kong as reduced spending by U.S. and European shoppers drove down core operating profit at the supplier to Wal-Mart Stores Inc. Trend Micro Inc. (4704) slumped 9.1 percent in Tokyo after earnings fell at the maker of anti-virus software.
“We could see further weakening in China’s exports, damping the broader economy,” said Michiya Tomita, a Hong Kong- based fund manager at Mitsubishi UFJ Asset Management Co., which oversees $65 billion. “Investors will be adjusting their expectations downwards.”
The MSCI Asia Pacific Index fell 0.6 percent to 120.22 as of 5:33 p.m. in Tokyo, with about three shares declining for every two that rose. The gauge trimmed its weekly advance to 2.8 percent, the most since the period ended Jan. 20, amid speculation China will do more to support growth and after Germany backed a European Central Bank bond-buying plan.
Japan’s Nikkei 225 Stock Average (NKY) slipped 1 percent. Australia’s S&P/ASX 200 Index and Hong Kong’s Hang Seng Index both declined 0.7 percent. China’s Shanghai Composite Index lost 0.2 percent. South Korea’s Kospi Index added 0.3 percent.
China’s export growth was sluggish in July, raising the odds the government will take more aggressive measures to support growth after industrial output and retail sales data yesterday missed estimates.
Outbound shipments increased 1 percent from a year earlier and imports rose 4.7 percent, the customs bureau said in a statement today in Beijing. The trade surplus was $25.1 billion compared with $31.5 billion a year earlier. Export growth was below all 32 estimates in a Bloomberg survey.
Chinese lenders dropped after data from the central bank said the industry extended 540.1 billion yuan ($85 billion) of new local-currency loans in July, compared with the median estimate of 700 billion yuan in a Bloomberg News survey of 30 analysts.
Agricultural Bank of China, the nation’s third-largest lender, fell 1.6 percent to HK$3.18. Industrial & Commercial Bank of China Ltd., the world’s biggest lender by market value, slid 1.5 percent to HK$4.51.
Futures on the Standard & Poor’s 500 Index slid 0.3 percent today. The gauge rose less than 0.1 percent yesterday after American jobless claims unexpectedly dropped in the week ended Aug. 4.
Li & Fung tumbled 19 percent to HK$12.90, the biggest decline since the stock listed in 1992, Brokerages including HSBC Holdings Plc and Credit Suisse Group AG cut ratings on the stock after the company reported first-half core operating profit dropped 22 percent and Chief Executive Officer Bruce Rockowitz said the economic environment is “very difficult.”
Neptune Orient Lines Ltd. dropped 3.7 percent to S$1.17 in Singapore. The shipping company lost $118 million in the second quarter, more than double the $41.1 million average loss estimate of five analysts in a Bloomberg survey.
Trend Micro tumbled 9.1 percent to 2,200 yen in Tokyo after saying operating profit fell 20 percent to 10.5 billion yen ($134 million) in the six months ended June 30, hurt by falling sales from the Americas and Europe.
Of the 385 companies that have reported earnings on the MSCI Asia Pacific Index since July 1 for which Bloomberg has compiled analysts’ projections, 55 percent have missed estimates.
“While disaster has been avoided in Europe on the back of the ECB’s actions, earnings will remain weak, reflecting a soft patch in the global economy,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages about $100 billion. “Markets have resumed an uptrend but it won’t be without volatility.”
Tabcorp Holdings Ltd. sank 9.1 percent to A$2.91 in Sydney. The stock was downgraded by Credit Suisse Group AG, UBS AG and Citigroup Inc. after Australia’s largest racecourse betting company provided estimates for wagering profit that were lower than analyst expectations.
The MSCI Asia Pacific Index (MXAP) has fallen 6.2 percent from this year’s high on Feb. 29 through yesterday amid concern China’s economic slowdown is deepening and Europe will struggle to contain the debt crisis. Shares on the gauge were valued at 12.4 times estimated earnings, compared with 13.6 for the S&P 500 Index and 11.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
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