28 Oct 2009
Oct. 28 (Bloomberg) -- Asian stocks fell, dragging the MSCI Asia Pacific Index to a three-week low, as losses at National Australia Bank Ltd. and Canon Inc.'s lower profit raised concern about the strength of the global recovery. The yen advanced.
National Australia fell 2.4 percent after posting a second- half loss amid rising charges for bad debt. Canon, the world's largest camera maker, lost 3.6 percent as it posted its seventh- straight drop in quarterly profit. BlueScope Steel Ltd. dropped 3.2 percent in Sydney as rising Chinese steel inventories raised concern oversupply will hurt producers.
The MSCI Asia Pacific Index lost 0.8 percent to 116.98 as of 12:38 p.m. in Tokyo, set to close at the lowest since Oct. 6. The gauge has surged 66 percent from a more than five-year low on March 9 amid signs stimulus measures around the world are reviving the global economy.
"The thought is starting to creep into people's minds that once stimulus measures run out, the recoil will run rather deep," said Hiroshi Morikawa, a senior strategist at MU Investments Co., which manages the equivalent of $14 billion. "Earnings might be good now, but that's looking to the past, and everyone is more worried about the uncertain future."
Japan's Nikkei 225 Stock Average lost 0.7 percent. Toshiba Corp. sank 3.9 percent as a narrower second-quarter loss failed to ease speculation the stock is expensive relative to the company's earnings prospects. South Korea's Kospi Index fell 1.3 percent. Australia's S&P/ASX 200 Index dropped 0.8 percent.
Honda, Astellas
Among companies that rose, Honda Motor Co., Japan's second- largest carmaker, surged 3.9 percent after tripling its full- year earnings forecast. Astellas Pharma Inc. gained 2.4 percent after agreeing to pay for global rights to develop and sell an experimental drug for prostate cancer.
Futures on the U.S. Standard & Poor's 500 Index added 0.1 percent. The measure dropped 0.3 percent yesterday as a gauge of confidence among the country's consumers unexpectedly fell.
The yen gained against all 16 of the most-active currencies on speculation the pace of the global economic recovery will disappoint, reducing demand for higher-yielding assets. Japan's currency rose to 135.47 per euro from 135.89 in New York yesterday, after earlier reaching 135.26, the highest level since Oct. 21.
Better-than-estimated economic and earnings reports have helped fuel a global stock-market rally since March. The advance has driven the average price of companies in the MSCI Asia Pacific Index to 1.6 times book value, up from 1.04 times at this year's low.
Net Loss
"The market's in a bit of a wait-and-see mode," said Prasad Patkar, who helps manage about $1.3 billion at Platypus Asset Management in Sydney. "In this stage of the recovery, valuations always looked stretched. The market is forward- looking and expecting an earnings recovery to come through."
National Australia, the country's biggest lender to businesses, fell 2.4 percent to A$29.97. The net loss of A$75 million ($69 million) in the six months ended Sept. 30 compared with a profit of A$1.85 billion in the year-earlier period, the Melbourne-based bank said today.
Canon slumped 3.6 percent to 3,450 yen after its third- quarter net income fell 56 percent to 36.7 billion yen from a year earlier. The company maintained its estimates for full-year earnings and sales.
No Revisions
"Some investors had expected an upward revision of the full-year earnings forecasts because of Canon's robust camera business," said Tetsuya Wadaki, a Tokyo-based analyst at Nomura Holdings Inc., who recommends buying the stock.
Toshiba dropped 3.9 percent to 523 yen, cutting its advance in the past six months to 61 percent. The chipmaker's second- quarter loss narrowed on cost reductions, helping Toshiba beat its first-half forecast. Still, the outlook for the global economy in the second half of its fiscal year "remains highly opaque," Toshiba said.
BlueScope Steel Ltd., Australia's largest steelmaker, slumped 3.2 percent to A$3.06. JFE Holdings Inc., Japan's No. 2 producer, sank 2 percent to 2,960 yen. Posco, South Korea's biggest steelmaker, dropped 2.8 percent to 529,000 won.
Steel inventories held by large Chinese companies jumped 10 percent in the first nine months of the year, the Ministry of Industry and Information Technology said, adding to evidence of rising oversupply in the world's largest producer of the metal.
Steel Supply
The nation's cabinet in August said it was studying curbs on overcapacity in industries including steel. Monthly steel production in China reached records for four months from May through August.
Honda Motor climbed 3.7 percent to 2,950 yen after forecasting net income of 155 billion yen in the year ending March, compared with an earlier target of 55 billion yen. Toyota Motor Corp. added 1.1 percent to 3,640 yen.
Astellas, Japan's second-largest drugmaker, gained 2.1 percent to 3,410 yen. The company agreed to pay as much as $765 million to California-based Medivation Inc. for global rights to develop and sell the prostate cancer drug.
