Asian Stocks Decline, Paring Weekly Gain as Sony Tumbles

Asian stocks fell, paring this week’s advance, after Sony Corp. posted an unexpected loss and the European Central Bank said the euro’s strength could hamper an economic recovery, damping the profit outlook for exporters.

Sony tumbled 10 percent after posting an eighth-straight quarterly loss and cutting sales targets for TVs, gaming devices and cameras. GS Engineering & Construction Corp. lost 7 percent in Seoul, among the biggest declines on the Asian benchmark, after reporting a fourth-quarter loss. Fujitsu Ltd., a Japanese maker of computers, network equipment and mobile phones, gained 5.1 percent after saying it will eliminate 5,000 jobs and merge its LSI chip business with Panasonic Corp.

About four stocks fell for every three that gained on the MSCI Asia Pacific Index, which fell 0.2 percent to 132.96 as of 6:14 p.m. in Tokyo. The gauge is headed for a 0.2 percent gain for the week.

“We certainly expect to see these shivers and worries from Europe,” said E. William Stone, who helps oversee $112 billion as chief investment strategist at PNC Wealth Management. “You’re probably wise to be a little less aggressive at the current time just because we’ve had quite a run without much of a pullback. Hence our recommendation to be a little more on the defensive side.” Stone was speaking in a Bloomberg Television interview with Zeb Eckert.

Japan’s Nikkei 225 Stock Average fell 1.8 percent to finish the week down 0.3 percent, the first drop after 12 consecutive weeks of gains through Feb. 1, the longest such winning streak since 1959, according to Nikkei Inc. Australia’s S&P/ASX 200 Index climbed 0.7 percent today and South Korea’s Kospi Index added 1 percent. Hong Kong’s Hang Seng Index rose 0.2 percent and China’s Shanghai Composite Index advanced 0.6 percent.

Relative Value

The MSCI Asia Pacific Index, the benchmark regional equities gauge, rallied 13 percent in the seven months through yesterday. That left the gauge trading at 14.8 times average estimated earnings compared with 13.6 for the Standard & Poor’s 500 Index and a multiple of 12.2 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Sony lost 10 percent to 1,365 yen to lead declines on the Asia-Pacific gauge. Japan’s biggest consumer-electronics exporter cut its sales forecast for portable game players in the year ending March to 7 million units from the 10 million predicted three months ago and the 16 million forecast in May. Its TV sales outlook was pared to 13.5 million units from a projection of 17.5 million made in May.

GS Engineering slumped 7 percent to 51,800 won. The firm posted a 75.7 billion won ($69 million) loss for the fourth-quarter, below 55.2 billion won net-income forecast by analysts in a Bloomberg survey.

Fujitsu, Panasonic

Fujitsu advanced 5.1 percent to 434 yen. The venture with Panasonic will design large-scale integration, or LSI chips, and contract out their manufacture, according to a joint statement yesterday. The state-backed Development Bank of Japan has been asked to help finance the venture, the companies said.

Newcrest Mining Ltd. rose 5 percent to A$24.52 as Australia’s largest gold producer reported first-half profit that was 9.6 percent higher than estimates, saying output would increase this half.

Of the 275 firms on the MSCI Asia Pacific index that have reported earnings so far this quarter and for which Bloomberg has estimates, 52 percent have exceeded profit expectations. Some 53 percent have missed sales projections, the data compiled by Bloomberg show.

Hong Kong’s market will be shut three days next week for the Chinese New Year holidays, while mainland markets will be closed all week.

China Exports

China’s exports and imports rose more than estimated in a January that had five more working days than last year, helping sustain a growth rebound in the world’s second-biggest economy.

European Central Bank President Mario Draghi told reporters growth risk continues to be on the “downside,” accommodative ECB policy will support the economy and the recent strength of the euro create may damp inflation. An economic recovery should begin later this year as an absence of inflation risks allows the ECB to maintain record-low interest rates, he said yesterday.

Futures on the Standard & Poor’s 500 Index were little changed. The gauge slid 0.2 percent yesterday. The S&P 500 has rallied almost 6 percent in 2013 as U.S. lawmakers reached a budget compromise and companies reported better-than-estimated earnings. The benchmark U.S. equity gauge is about 3.7 percent below its record high reached in October 2007 after more than doubling since bottoming in March 2009.

The Reserve Bank of Australia today reduced its economic growth and inflation forecasts as investment outside the mining industry remains elusive, the labor market softens and a high local currency contains prices.

Chorus Ltd., New Zealand’s biggest telephone network operator, rose 10 percent to NZ$3.15 in Wellington, the most on record, after the government delayed proposed cuts to its wholesale Internet pricing pending a review of industry regulation.

Before it's here, it's on the Bloomberg Terminal.