Asian Stocks Decline on Commodity Prices, US Consumer Report
Nov. 2 (Bloomberg) -- Asian stocks fell, extending the MSCIAsia Pacific Index’s first monthly decline since February, asweaker commodity prices and a drop in U.S. consumer spendingfueled concern corporate earnings growth will falter.
Mitsubishi Corp., a Japanese trading company that gets 39percent of its sales from commodities, sank 3.1 percent. SonyCorp. slumped 5.8 percent even after narrowing a loss forecastas the yen climbed to a three-week high against the dollarearlier today. Daiwa Securities Group Inc., Japan’s No. 2brokerage, slid 4.5 percent on lower-than-estimated earnings.
The MSCI Asia Pacific Index slumped 1.1 percent to 115.13as of 5:14 p.m. in Tokyo. The gauge has surged 63 percent from amore than five-year low on March 9 amid signs lower borrowingcosts and spending packages are reviving the global economy. Theindex lost 1.3 percent in October.
“I can’t expect government stimulus measures to continueto shore up company earnings,” said Hiroshi Morikawa, a seniorstrategist at MU Investments Co., which manages the equivalentof $14 billion. “Doubt is rapidly growing that corporateprofits will continue to improve next year.”
Japan’s Nikkei 225 Stock Average lost 2.3 percent, whileAustralia’s S&P/ASX 200 Index dropped 2.2 percent. The Hang SengIndex in Hong Kong dipped 0.6 percent.
China’s Shanghai Composite Index rose 2.7 percent after areport showed the nation’s manufacturing industry expanded atthe fastest pace in 18 months. Shanghai Lujiazui Finance & TradeZone Development Co. climbed 8.9 percent after the South ChinaMorning Post said the government had approved a Walt Disney Co.theme park for the city.
U.S. Futures, Treasuries
Consumer lenders Aiful Corp. and Takefuji Corp. soared atleast 17 percent in Tokyo after the Nikkei newspaper saidtighter regulations on lenders may be postponed.
Futures on the U.S. Standard & Poor’s 500 Index added 0.4percent and Treasuries fell as economists said an industryreport today will show the country’s manufacturing industryexpanded last month. The yield on 10-year Treasuries rose threebasis points to 3.41 percent, according to BGCantor Market Data.
The U.S. stock gauge fell 2.8 percent on Oct. 30, the mostsince July 2, as a Commerce Department report showed spending byAmerican consumers dropped 0.5 percent in September, the firstdecline in five months. New-York based commercial lender CITGroup Inc. filed for bankruptcy on Nov. 1.
James Hardie Industries NV, the biggest seller of homesiding in the U.S., retreated 2.2 percent to A$7.05 in Sydney.Toyota Motor Corp., which gets 31 percent of its revenue fromNorth America, fell 2.5 percent to 3,570 yen and was the singlebiggest drag on the MSCI Asia Pacific Index.
Sony Forecast
Sony, which generates 24 percent of its sales in the U.S.,slid 5.8 percent to 2,625 yen even after narrowing its annualnet loss forecast by 21 percent.
The yen appreciated to as much as 89.20 per dollar today,the strongest since Oct. 14, compared with 91.02 against thedollar at the close of stock trading in Tokyo on Oct. 30. It wasat 90.03 recently. Against the euro, the yen strengthened to ashigh as 131.01 from 135.01. The stronger yen reduces income whenoverseas revenue is converted into local currency.
“Sony’s shares are adversely affected by the strong yen,”said Ryosuke Katsura, an analyst at Mizuho Securities Co. inTokyo. “Macroeconomic factors have a larger influence over thestock than the company’s fundamentals.”
The MSCI Asia Pacific Index has fallen 5 percent from thisyear’s high on Oct. 20 as earnings from PetroChina Co. toNational Australia Bank Ltd. missed analyst forecasts andinvestor concern grew about the end of stimulus policies. Stockson the MSCI gauge trade at an average 22 times estimated profit,the lowest level since May 18, according to Bloomberg data.
‘End to Recovery’
The measure lost 1.3 percent last month, the first dropsince February. Australia on Oct. 6 became the first Group of 20nation to raise interest rates amid signs of strength in itseconomy, while the Bank of Japan said last week it will let itsprograms of buying corporate debt expire at the end of the year.
“The global economy can’t stand on its feet yet withoutgovernment support,” said MU’s Morikawa. “An end to stimulusis an end to a recovery.”
Mitsubishi, Japan’s biggest trading house, sank 3.1 percentto 1,915 yen, while closest rival Mitsui & Co. slid 3.1 percentto 1,185 yen. BHP Billiton Ltd., the world’s biggest miningcompany, retreated 2 percent to A$36.71 in Sydney.
Crude oil futures in New York tumbled the most in a month,dropping 3.6 percent to $77 a barrel, on Oct. 30. The LondonMetals Index, a measure of six metals including copper and zinc,dropped 2.8 percent.
Daiwa fell 4.5 percent to 469 yen after posting second-quarter net income that was 72 percent lower than the averageanalyst estimate from a Bloomberg survey.
Disney Theme Park
HSBC Holdings Plc lost 1 percent to HK$86.35 in Hong Kong.Apple Daily said the bank’s provision for bad debts in the U.S.may stay at a high level for the near future, citing SandyFlockhart, who heads HSBC’s Asia-Pacific unit.
In Shanghai, Lujiazui rose 8.9 percent to 30.47 yuan, whileShanghai Jielong Industry Corp. jumped by the 10 percent dailylimit to 18.57 yuan.
The Disney park project has been approved by China’s topeconomic planning body, the National Development and ReformCommission, the South China Morning Post reported today, citingan unidentified official with direct knowledge of the matter. Anofficial at the Beijing-based NDRC who wouldn’t give her namedeclined to comment today.
China’s Manufacturing
A purchasing managers’ index released by HSBC today rose toa seasonally adjusted 55.4 in October from the previous month.Yesterday, the Federation of Logistics and Purchasing said itsPurchasing Managers’ Index advanced to 55.2.
Aiful, Japan’s No. 2 consumer-finance company by assets,jumped 17 percent to 156 yen, and Takefuji soared 23 percent to427 yen. A gauge of consumer lenders posted the steepest advanceamong the Topix index’s 33 industry groups.
The government may freeze the implementation of newregulations that limit lending to a customer to a third of theborrower’s annual income and caps interest charges at 20 percent,the Nikkei newspaper reported, citing a government official itdidn’t name.
Lopro Corp., an Osaka-based corporate lender, was suspendedfrom trading after the company filed for bankruptcy today amidswelling interest repayments.
To contact the reporter for this story:Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
Last Updated: November 2, 2009 04:15 ESTSource: Bloomberg
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