Asia Stocks Fall on Lower Earnings; Sumitomo, Suncorp, NEC Drop

By Chua Kong Ho and Patrick Rial

Aug. 1 (Bloomberg) -- Asian stocks fell, led by financial and raw-materials companies, after bank profits slumped and oil and metals prices declined. U.S. and European futures dropped.

Sumitomo Mitsui Financial Group Inc., Japan's second-largest bank by value, tumbled the most since January while Suncorp- Metway Ltd., Australia's No. 6 bank, posted its biggest decline since 1989. Mitsui & Co. and Santos Ltd. retreated after oil last month fell the most since December 2004 and U.S. growth trailed forecasts. NEC Corp., Japan's biggest personal-computer maker, plunged the most in two decades after profit slumped.

``Any bad news is getting punished, while any small piece of good news is being ignored, which is typical of a bear market,'' said Masafumi Oshiden, a Tokyo-based fund manager at BlackRock Inc., which oversees more than $1.4 trillion.

The MSCI Asia Pacific Index lost 1.3 percent to 130.68 at 7:17 p.m. in Tokyo, taking its weekly decline to 1.7 percent. Seven of 10 industry groups fell as financial and industrial stocks posted the biggest drop. The Asian benchmark index slipped 3.2 percent in July, taking its plunge from its Nov. 1 high to 25 percent.

Japan's Nikkei 225 Stock Average lost 2.1 percent to 13,094.59. Sharp Corp., Japan's largest liquid-crystal display maker, fell to its lowest since June 2003 after first-quarter operating profit trailed analysts' estimates. Mazda Motor Corp. and Suzuki Motor Corp. retreated after first-quarter profit fell on a stronger yen and higher raw-material costs.



Growth Concerns

Most other Asian markets declined. China's CSI 300 Index erased earlier losses after President Hu Jintao said the country needs to maintain ``steady and fast'' growth. Powerchip Semiconductor Corp. tumbled by the daily limit in Taipei after prosecutors indicted its chairman for insider trading and breach of trust.

In the U.S., the Standard & Poor's 500 Index yesterday lost 1.3 percent, capping a second monthly drop, after economic growth trailed forecasts, jobless claims rose to a five-year high and Exxon Mobil Corp.'s profit missed analysts' estimates. Shares extended declines after former Federal Reserve Chairman Alan Greenspan said falling U.S. home prices are ``nowhere near the bottom'' and the resulting market turmoil isn't showing signs of abating. S&P 500 futures slid 0.1 percent.

Sumitomo Mitsui, Japan's second-largest bank, sank 7.7 percent to 783,000 yen, the most since Jan. 22 after first- quarter income declined 51 percent to 58.1 billion yen ($539 million) on lower fee income and increased bad-loan provisions.

Banks Decline

Mitsubishi UFJ Financial Group Inc., the largest Japanese bank, fell 4.3 percent to 929 yen. Mizuho Financial Group Inc., the third-largest bank by market value, slid 3.6 percent after reporting a 9.1 percent decline in revenue.

A measure of financial stocks on the MSCI Asian gauge dropped 1.9 percent today, extending a 21 percent loss this year.

Earnings declined by half or more at four of Japan's largest banks, including Aozora Bank Ltd., Shinsei Bank Ltd. and Sumitomo Trust & Banking Co., as lending costs rose and fee income dropped.

Suncorp-Metway slumped 14 percent to A$11.53, the sharpest drop since June 30, 1989. Full-year profit was between A$525 million ($494 million) and A$550 million, compared with a profit of A$1.1 billion a year earlier, the company said yesterday.

``Wealth managers are having a bad time with equity markets as volatile as they are,'' said Prasad Patkar, who helps manage $1.8 billion at Platypus Asset Management in Sydney. ``When the market rallies, companies like this outperform a lot more than the market does. The reverse is what they're suffering now.''

Commodities Slump

Mitsui, Japan's second-biggest trading company, dropped 4.3 percent to 2,140 yen. Rio Tinto Group, the world's third-largest mining company, fell 3 percent to A$121.60. Aluminum Corp. of China Ltd. sank 5.5 percent to HK$7.58, after cutting alumina prices by 8.6 percent.

The Reuters/Jefferies CRB Commodity Index, a measure of 19 commodities including natural gas, nickel and corn, fell 10 percent in July, the biggest monthly decline since March 1980 when the U.S. economy was in a recession.

Inpex Holdings Inc., Japan's largest oil explorer, dropped 7 percent to 1.02 million yen. Santos, Australia's third-biggest oil producer, lost 3.7 percent to A$17.45.

Crude oil dropped 11 percent in July, the largest monthly retreat since December 2004, as a slowing U.S. economy weakened fuel consumption.

NEC tumbled 17 percent to 495 yen, the biggest retreat since Oct. 20, 1987. UBS AG and Deutsche Bank AG cut their ratings on NEC after the personal-computer manufacturer said first-quarter operating profit fell 64 percent on lower orders for network equipment.

Sharp, Mazda

Sharp lost 5.1 percent to 1,430 yen after operating profit for the three months ended June dropped 14 percent, missing all six analyst estimates in a Bloomberg survey.

Mazda, a third owned by Ford Motor Co., declined 3.4 percent to 605 yen after first-quarter operating profit fell 12 percent to 28.3 billion yen ($262.5 million). Suzuki, the second-largest Japanese maker of minicars, dropped 5.9 percent to 2,230 yen, as operating profit for the three months ended June declined 17 percent to 33.8 billion yen.

Among Topix-listed companies announcing quarterly earnings in the month through yesterday, 436 posted declining net income with 296 reporting gains, according to Bloomberg data.

``Economic indicators, whether foreign or domestic, are showing signs of deterioration, while corporate earnings have hit a rough patch,'' Soichiro Monji, chief strategist at Daiwa SB Investments Ltd., said in an interview with Bloomberg Television. ``The market is bound to fall in this kind of environment.''

Powerchip, Minebea

Powerchip plunged 7 percent to NT$6.68, the lowest level since May 29, 2003. Taiwan prosecutors are seeking a jail term and a NT$60 million ($2 million) fine for Powerchip Chairman Frank Huang for insider trading and breach of trust, the Hsinchu District Prosecutors Office said on its Web site. Powerchip denied the allegation in an e-mailed statement yesterday.

Minebea Co., a Japanese ball-bearing maker, tumbled 17 percent to 477 yen, the biggest percentage loss on MSCI's Asian gauge, after first-quarter income fell 16 percent and Goldman Sachs Group Inc. cut its rating to ``neutral'' from ``buy.''

CapitaLand Ltd., Southeast Asia's largest real-estate developer, sank 4 percent to S$5.47, the most since July 15. Second-quarter profit dropped 44 percent as home sales fell in China and Singapore and one-time gains weren't repeated.

Reliance Communications Ltd., India's second-largest mobile- phone operator, slumped 12 percent to 440 rupees after the company reported the slowest profit growth in nine quarters.

To contact the reporter for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net