Asian Stocks Drop on Earnings as BOJ Maintains Stimulus

Asian stocks dropped, with the regional benchmark index ending at a one-month low, as investors weighed corporate earnings and the Bank of Japan refrained from expanding stimulus. The Federal Reserve decides on U.S. monetary policy later today.

Aluminum Corp. of China Ltd., the nation’s biggest producer of the light metal, fell 4.5 percent in Hong Kong after its first-quarter loss widened. Woolworths Ltd. slid 1.9 percent as the Australian retailer’s sales fell short of expectations. Tencent Holdings Ltd. was the biggest drag on the regional gauge amid a selloff in technology shares. Kyocera Corp. rose 3.4 percent in Tokyo after the electronics and solar-panel maker reported full-year profit that beat analyst estimates.

The MSCI Asia Pacific Index lost 0.2 percent to 137.16 at 8:10 p.m. in Hong Kong, its lowest level since March 28. BOJ Governor Haruhiko Kuroda’s board stuck with targeting an annual increase in the monetary base of between 60 trillion yen and 70 trillion yen ($683 billion) in a decision released today. The central bank is monitoring the economy’s performance after a sales-tax increase on April 1 that’s projected to trigger a one-quarter contraction on weaker consumer spending.

“No one was expecting any change” from the BOJ, said Takashi Aoki, who helps oversee the equivalent of $37.6 billion at Mizuho Asset Management Co. in Tokyo. “The consensus for change is July, once they can see the data from April-June.”

The MSCI Asia Pacific Index fell 0.6 percent this month amid concern over escalating tensions in Ukraine and a deepening economic slowdown in China. While the BOJ kept its policy unchanged, Fed policy makers are expected to reduce bond buying for a fourth straight month today.

China Concern

“We don’t expect much from the two central banks as nothing much has changed since the last meetings,” Keith Poore, who helps manage $131 billion as Wellington-based head of investment strategy at AMP Capital Investors Ltd., said by phone before the BOJ announcement. “While earnings have been good, Asian investors are waiting to see a bit more recovery in China before optimism can return.”

A government report due tomorrow is expected to show China’s manufacturing continued to pick up in April. Data today showed Japan’s industrial output grew less than forecast in March, while factory production growth in South Korea missed analysts’ estimates.

Taiwan GDP

Japan’s Topix index added 0.1 percent. Taiwan’s Taiex index lost 0.9 percent as the nation’s economy expanded 3.04 percent in the first quarter, in line with economists’ estimates. South Korea’s Kospi index lost 0.2 percent. Australia’s S&P/ASX 200 Index added less than 0.1 percent.

Hong Kong’s Hang Seng Index retreated 1.4 percent after yesterday jumping by most in three weeks. The Hang Seng China Enterprises Index of mainland stocks traded in the city dropped 1 percent. China’s Shanghai Composite added 0.3 percent.

New Zealand’s NZX 50 Index advanced 1.6 percent. Singapore’s Straits Times Index rose 0.8 percent. The city’s biggest lenders DBS Group Holdings Ltd. and Oversea-Chinese Banking Corp. climbed after the posted higher earnings as loan margins widened for the first time since 2009.

The MSCI Asia Pacific Index traded at 12.6 times estimated earnings yesterday, compared with 16 for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

Futures on the S&P 500 fell less than 0.1 percent today. The U.S. equity benchmark index climbed 0.5 percent yesterday as results from Merck & Co. to Sprint Corp. topped estimates.

Earnings Performance

Of the 251 companies on the MSCI Asia Pacific Index that have posted results since the beginning of the month and for which estimates are available, 44 percent missed expectations for profit, according to data compiled by Bloomberg.

Chalco slipped 4.5 percent to HK$2.77 in Hong Kong. The company’s first-quarter loss widened to 2.2 billion yuan ($352 million) from 975 million yuan a year earlier as industry overcapacity caused prices to fall, the Beijing-based aluminum producer said yesterday.

Woolworths declined 1.9 percent to A$37.32 in Sydney after the retailer reported third-quarter total sales from continuing operations of A$15.19 billion ($14.1 billion), missing the median estimate of A$15.33 billion by three analysts.

Industrial & Commercial Bank of China Ltd. slid 1.1 percent to HK$4.62 after the nation’s biggest lender reported its weakest quarterly profit growth in almost five years.

Tencent plunged 5.2 percent to HK$483.20 as Internet-related stocks in Asia dropped amid companies in the industry are overvalued. Forgame Holdings Ltd., a maker of online games, declined 4.7 percent to HK$31.25. Yahoo Japan Corp., which operates an online portal, lost 5.5 percent to 444 yen.

Among shares that gained, DBS Group Holdings Ltd. added 0.6 percent to S$16.94 in Singapore after first-quarter profit unexpectedly rose. Oversea-Chinese Banking Corp. advanced 1.9 percent to S$9.65 after reporting a 29 percent jump in quarterly net income.

Kyocera climbed 3.4 percent to 4,807 yen in Tokyo. Full-year profit increased 34 percent to 88.8 billion yen from a year earlier, buoyed by photovoltaic products and devices such as smartphones and tablets, the company said April 28.

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