Asian stocks fell, dragging the MSCI Asia Pacific Index lower for the third time in four days, after disappointing earnings forecasts at US companies fueled concerns about growth in the world’s largest economy.
Canon Inc., which makes 27 per cent of its sales in the Americas, declined 4.1 per cent in Tokyo after its investment rating was cut by Credit Suisse. Samsung, which receives 20 per cent of its revenue from America, sank 1.8 per cent in Seoul. BHP Billiton, the world’s No. 1 mining company, fell 1.4 per cent in Sydney on concern Australia’s new prime minister will pursue a mining tax.
''People are somewhat circumspect about the prospects for global growth,'' said Tim Schroeders, who helps manage about $1.1 billion at Pengana Capital Ltd. in Melbourne. ''Doubts about how strong the US recovery is and its trajectory, particularly for the second half of 2010, have increased.''
The MSCI Asia Pacific Index lost 0.9 per cent to 116.01 in Tokyo. The index has risen 6.6 per cent from a 10- month low on May 25 amid reports of improved manufacturing and consumer sentiment in the US and as China ended its currency’s peg to the dollar. The gauge has fallen 0.1 per cent this week as reports of declining new and existing home sales in the US shook investor confidence in the pace of the recovery.
Japan’s Nikkei 225 Stock Average slumped 1.4 per cent even after the statistics bureau said consumer prices fell at a slower pace in May. South Korea’s Kospi index declined 0.5 per cent. Australia’s S&P/ASX 200 Index slipped 1.2 per cent. Hong Kong’s Hang Seng Index and China’s Shanghai Composite Index both declined 0.2 per cent.
Dell estimate
Futures on the Standard & Poor’s 500 Index rose 0.3 per cent. The gauge dropped 1.7 per cent yesterday, led by consumer shares and as banks dropped on concern over financial regulation.
Asian exporters to the US declined after Dell, the world’s third-largest maker of personal computers, said fiscal 2011 earnings may be as little as $US60.31 billion, compared with analysts’ predictions of $US61.79 billion. Bed Bath & Beyond, a retailer of home-furnishings, forecast second-quarter earnings that missed analyst estimates.
Canon declined 4.1 per cent to 3545 yen, the biggest drag on the MSCI Asia Pacific Index. Credit Suisse cut its rating on the company to ''underperform'' from ''neutral.'' Toyota, which gets 28 per cent of its sales from North America, lost 1.1 per cent to 3160 yen.
'Signs of fragility'
Tokyo Electron, the world’s second-largest maker of semiconductor equipment, declined 4 per cent to 5310 yen. Samsung, the world’s second-largest mobile-phone maker, fell 1.8 per cent to 805,000 won in Seoul.
''The US economy has begun to see signs of fragility at the company level,'' said Kenichi Hirano, general manager and strategist in Tokyo at Tachibana Securities. ''Companies that rely on overseas sales will likely be the focus of selling.''
Japanese chip-related stocks also retreated, with the gauge for information technology companies falling the most among the 10 industry groups on the MSCI Asia Pacific Index, after Mizuho Securities cut its investment ratings on the companies.
Tokyo Electron, Dainippon Screen Manufacturing and Elpida Memory’s ratings and share-price-estimates were all reduced by Mizuho Securities. Memory-chip maker Dainippon Screen Manufacturing declined 5.7 per cent to 446 yen. Elpida, the world’s No. 3 maker of memory chips, slumped 5.2 per cent to 1450 yen.
Rating cuts
Australian mining companies fell as optimism faded that Julia Gillard, Australia’s new prime minister, will reverse a profit tax on resource companies proposed by her predecessor Kevin Rudd. Gillard took office yesterday after ousting Rudd following a leadership ballot by the ruling Australian Labor Party.
BHP Billiton fell 1.4 per cent to $39.09, following a 1.3 per cent yesterday’s climb. Morgan Stanley strategist Gerard Minack said there is little prospect for a big change on the tax. Rio Tinto Group, the world’s third-biggest mining company, lost 1.8 per cent to $70.42.
Macarthur Coal, the world’s biggest exporter of pulverized coal, fell 2.2 per cent to $12.07. Gillard should remove the anticipated revenue from the proposed mine tax from budget estimates to show good faith in talks with mining companies, Macarthur Coal chairman Keith de Lacy said in a statement.
Housing data
The MSCI Asia Pacific Index has fallen 10 per cent from its high this year on April 15 amid concern Chinese measures to curb property prices and Europe’s debt crisis will hurt global growth. Shares on the gauge trade at 14.6 times estimated earnings, compared to about 22 times at the start of this year.
This week’s housing data from the US caught some investors off guard, with the MSCI Asia Pacific Index ending an eight day winning streak on June 21, its longest consecutive days of gains since July 2009.
Purchases of US new homes fell in May to the lowest level on record, figures from the Commerce Department showed on June 23. Sales of previously owned homes in the US also unexpectedly fell in May, according the National Association of Realtors on June 22 and a survey of economist by Bloomberg.
''Expectations that the global economy is on the road to recovery seem to be peaking out,'' said Naoki Fujiwara, a fund manager in Tokyo at Shinkin Asset Management, which oversees about $US6 billion. ''The market has probably started to price in concerns about the possibility of a double dip in the economy.''