Sydney: Asian stocks fell for the first time in three days on concern the region’s economic recovery may falter after a Bank of Japan (BoJ) survey showed companies plan to deepen investment cuts.
Fanuc Ltd, Japan’s largest maker of robots, fell 3.1% after the central bank’s Tankan report showed companies will cut capital spending 10.8% this year.
Hyundai Motor Co., South Korea’s largest auto maker, slumped 8.1% on concern export earnings will be hurt after the won rose against the dollar and Chicago business activity dropped.
Treading with caution: Pedestrians reflected on an electronic market board in Tokyo. The MSCI Asia Pacific Index fell 1.2% to 116.60 in Tokyo, following a two-day, 0.6% advance, while the Nikkei dropped 1.5%. Toru Yamanaka / AFP.
Advantest Corp. slumped 5.8% after Credit Suisse Group AG cut its rating.
“The data is looking a bit more mixed,” said Rob Patterson, who helps manage $3.4 billion (Rs16,286 crore) at Argo Investments Ltd in Adelaide. “The rally has been very strong and probably a bit overdone. We need more evidence of an economic recovery and the proof will be in the next earnings results.”
The MSCI Asia Pacific Index declined 1.2% to 116.60 as of 7.27pm in Tokyo, following a two-day, 0.6% advance. The gauge has surged 65% from a five-year low on 9 March as stimulus measures around the world dragged economies out of recession.
Japan’s Nikkei 225 Stock Average sank 1.5%, while South Korea’s Kospi Index lost 1.7%. Australia’s S&P/ASX 200 Index dropped 0.9%. Markets in Hong Kong and China are closed for holidays.
Elpida Memory Inc. sank 8.6% in Tokyo after the US vowed to use World Trade Organization sessions to press Japan over subsidies to the chip maker. In Seoul, shipbuilder Hanjin Heavy Industries and Construction Co. Ltd slumped 6.5% in Seoul, falling for a second day on concern France’s CMA CGM, the world’s third biggest container shipping firm, will cancel new vessels. StarHub Ltd fell 6.5% in Singapore after losing sports-channel broadcast rights.
Futures on the Standard and Poor’s 500 Index dropped 0.4%. The gauge fell 0.3% on Wednesday after the Institute for Supply Management (ISM)-Chicago Inc. said its business measure decreased to 46.1 in September, while economists had projected the gauge would rise. Fanuc dived 3.1% to 7,800 yen (Rs4,185), while Kawasaki Heavy Industries Ltd, the maker of Japan’s first industrial robots, dropped 4% to 219 yen.
Large Japanese enterprises plan to cut capital spending by 10.8% in the year to March 2010, more than the 9.4% reduction foreseen three months ago, according to the BoJ’s quarterly Tankan survey released on Thursday morning. Economists had estimated a 9% decrease.
“The current business climate is hardly enticing companies to invest,” said Yoshinori Nagano, a senior strategist at Tokyo-based Daiwa Asset Management Co. Ltd, which oversees the equivalent of $96 billion. “The economy is not in good shape yet.”
Stocks also sank after the ISM’s Chicago report, while separate figures from ADP Employer Services showed that US companies cut payrolls by 254,000 jobs last month, more than economists estimated.
Toyota Motor Corp., which got 31% of its revenue in North America last year, lost 1.7% to 3,510 yen. Canon Inc., which makes digital cameras and office equipment, dropped 2.8% to 3,530 yen.
Hyundai Motor dropped 8.1% to 102,500 won (about Rs4,200) as the stronger won threatened to cut the repatriated value of overseas sales for the firm, which last year earned 62% of revenue outside South Korea. The stock fell even after Hyundai Motor reported a 61% jump in September sales. Kia Motors Corp., South Korea’s second biggest car maker, slumped 6.7% to 17,350 won.
The won, Asia’s best performing currency against dollar in September, was recently little changed at 1,178.25 versus the US currency, according to data compiled by Bloomberg. The won earlier climbed to the highest in a year after South Korea said exports last month dropped at the slowest pace since November.
The climb in Asian equities in the past seven months has been fuelled by better-than-estimated economic and earnings reports. Australian retail sales climbed 0.9% in August, the first gain in three months, the country’s statistics bureau reported on Wednesday.
Confidence among Japan’s largest manufacturers increased for a second straight quarter, rising to minus 33 from minus 48 in June, the BoJ’s Tankan survey showed on Friday. The number matched economists’ estimates. A negative figure means pessimists outnumber optimists.
The MSCI index gained 14% last quarter, less than the previous three months’ 28% advance, as concerns emerged the stock rally may have overvalued firm earnings prospects. The average price of the gauge’s shares rose to 1.6 times book value on 17 September, up from 1 at the measure’s five-year low on March 9.
The index added 4.1% in September, a seventh monthly advance that was its longest stretch of gains since the 10 months ended July 2007.
Advantest, the world’s largest maker of memory-chip testers, slumped 5.8% to 2,345 yen. The company was downgraded to underperform from neutral at Credit Suisse.
Elpida, Japan’s biggest computer memory-chip maker, sank 8.6% to 1,076 yen. US trade representative Ron Kirk promised in a letter made public on Wednesday to use sessions at the WTO over subsidies and a separate meeting of countries with semiconductor production to get more information from Japan and Taiwan about the aid to Elpida.
Hanjin Heavy slumped 6.5% to 22,150 won as Lloyd’s List reported the company may be the most at risk among South Korean shipyards of having orders cancelled by CMA CGM.
CMA CGM had said on Tuesday that it will renegotiate or cancel orders as it begins talks with creditors on debt restructuring in a bid to stave of bankruptcy. Hanjin Heavy tumbled 11% on Wednesday.
In Singapore, StarHub fell 6.5% to Singapore $2.03 (about Rs70) after it lost the right to broadcast Barclays Premier League football games and ESPN Star Sports to Singapore Telecommunications Ltd. SingTel, as South-East Asia’s biggest telephone operator is known, added 0.3% to S$3.26.
Masaki Kondo in Tokyo contributed to this story.