Asian Stocks Extend Weekly Drop as Earnings Disappoint Investors

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Asian stocks fell, extending the regional gauge’s first weekly decline in three weeks, as forecasts from Canon Inc. to Posco disappointed investors.

Posco, South Korea’s biggest steelmaker, sank 1.1 percent in Seoul after cutting its 2013 sales forecast. LG Electronics Inc. (066570) lost 3.3 percent after its third-quarter operating profit and sales missed estimates. Canon retreated 1 percent in Tokyo as the camera maker trimmed its earnings forecast. AMP Ltd. tumbled 4.3 percent in Sydney after Australia’s largest life insurer and pension manager said fourth-quarter operating profit will fall by as much as A$65 million ($62.5 million).

The MSCI Asia Pacific Index sank 0.5 percent to 142.22 as of 10:49 a.m. in Tokyo, extending this week’s fall to 0.9 percent. The gauge climbed to a five-month high on Oct. 22 amid speculation the Federal Reserve would delay tapering stimulus, pushing its earnings multiple to 13.8 times estimated profit, according to data compiled by Bloomberg.

“The earnings numbers are not fantastic,” Evan Lucas, Melbourne-based market strategist at IG Ltd. said by phone. “Many of the export-driven Japanese companies like Canon had the weakening yen supporting them earlier in the year but that is now stagnating. People are starting to reassess those shares that have had that support.”

Of 73 companies in the MSCI Asia Pacific Index that have reported quarterly results this earnings season and for which Bloomberg compiles estimates, 60 percent posted profit that missed expectations.

Regional Gauges

Japan’s Topix index today fell 0.9 percent, Australia’s S&P/ASX 200 Index rose 0.4 percent and New Zealand’s NZX 50 Index advanced 0.5 percent. South Korea’s Kospi index dropped 0.8 percent even after data showed the nation’s economy expanded more than forecast last quarter. Futures on the Standard & Poor’s 500 Index were little changed.

Hong Kong’s Hang Seng Index slid 0.2 percent and China’s Shanghai Composite declined 0.1 percent. Singapore’s Straits Times Index lost 0.1 percent and Taiwan’s Taiex Index retreated 0.4 percent.

Fed policy makers are scheduled to meet Oct. 29-30, when they will evaluate the strength of the recovery with a less complete set of figures than usual due to the 16-day partial government shutdown that caused the suspension of reports and collection of data.

Japanese consumer prices climbed in September from a year earlier, a fourth monthly gain. The Topix surged 40 percent this year through yesterday, the largest rally among 24 developed equity markets tracked by Bloomberg.

 

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