Tokyo / Singapore: Asian stocks fell on Thursday, dragging the MSCI Asia Pacific Index lower for the first time in five days, as stronger currencies threatened export earnings and China took steps to curb lending growth.
LG Electronics Inc. tumbled 7.6% in Seoul on concern profit at the handset business may miss analyst estimates and after South Korea’s won appreciated against the dollar. Canon Inc., which gets 28% of its sales from the Americas, sank 2.5% after Credit Suisse Group AG cut its recommendation. China Citic Bank Corp. fell 3.4% in Shanghai after the central bank said it will target moderate loan growth in 2010.
The MSCI Asia Pacific Index sank 0.5% to 123.46 as of 7.14pm in Tokyo, snapping a 3.6% climb in the past four trading days. The gauge climbed 34% last year, the biggest annual gain since 2003, as central banks cut borrowing costs and governments boosted spending to drag their economies out of recession.
“Markets will struggle to go higher,” said Norman Villamin, Singapore-based head of investment analysis for Asia Pacific at Citigroup Private Bank. “We’re much more sensitive to valuations given last year’s gains and will focus more on selected stock picks.”
China’s Shanghai Composite Index retreated 1.9%, while Hong Kong’s Hang Seng Index declined 0.7%. The Kospi Index sank 1.3% in Seoul amid speculation the central bank will raise rates after a policy meeting on Friday.
Japan’s Nikkei 225 Stock Average fell 0.5%. Banks were the biggest contributor to the Topix Index’s 0.1% gain, with a gauge of lenders rising 1.7%, amid optimism bank share sales are close to an end. After the stock market shut, the yen slumped versus the dollar after the finance minister said he would like the currency to fall a bit more.
The Philippine Stock Exchange Index jumped 1.3%, the most among benchmark gauges in Asia. San Miguel Corp., the nation’s largest food and drinks maker, climbed 7.5% after agreeing to a takeover plan by its directors.
Futures on the Standard and Poor’s 500 Index lost 0.4%. The stock gauge added 0.1% on Wednesday as minutes from the Federal Reserve’s last policy meeting showed central bankers considered more stimulus measures.
In Seoul, LG Electronics, the world’s No. 3 mobile phone maker, dived 7.6% to 115,000 won, the biggest slump since 9 September, after saying on Thursday it aims to post global revenue of 59 trillion won ($52 billion) this year.
There are concerns about earnings growth at LG’s mobile phone business, as the company has been late in introducing so-called smartphones, according to Han Eun Mee, an analyst at HI Investment and Securities Co.
Samsung Electronics Co., Asia’s biggest maker of semiconductors, flat screens and mobile phones, declined 3.3% to 813,000 won even after reporting fourth quarter operating profit of about 3.7 trillion won, compared with a loss a year earlier.
The stock was the heaviest drag on the MSCI Asia Pacific Index as the stronger won threatened the value of overseas sales at South Korean companies when converted into their home currency. The won appreciated versus the dollar to as much as 1,129.42 on Thursday, a level not seen since September 2008.
Hyundai Motor Co., South Korea’s largest car maker, dropped 4.5% to 106,000 yen.
The Bank of Korea will announce its monthly decision on interest rates on 8 January, after it kept borrowing costs on hold last month. Governor Lee Seong Tae said in his New Year speech the central bank will manage its benchmark interest rate to help support the economy, while monitoring for possible side effects of a loose monetary policy.
There seems to be investor speculation that Korea is set to join those increasing interest rates given the pace of its economic recovery, said Chu Moon Sung, a fund manager at Shinhan BNP Paribas Asset Management Co. in Seoul, which manages about $28 billion in assets.
Reports in the past week showed South Korea’s exports surged 33.7% last month and November home building permits rose 5.9% in Australia, where the central bank lifted the benchmark lending rate for a third month in December.
Australian retail sales increased 1.4% in November from the previous month, the statistics bureau said on Thursday.