Asian Stocks Drop; SingTel, Commodity Producers Lead Declines

By Patrick Rial and Chen Shiyin
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Aug. 12 (Bloomberg) -- Asian shares declined, led by telephone companies and commodity producers, after Singapore Telecommunications Ltd.'s profit missed estimates and metals prices extended declines.

SingTel, Southeast Asia's largest phone company, sank the most in two months, while China Mobile Ltd. declined after Citigroup Inc. cut its price target. Newcrest Mining Ltd. fell in Sydney after gold dropped to the lowest level since December. JFE Holdings Inc., Japan's No. 2 steelmaker, dropped in Tokyo after Japanese demand fell. Sun Hung Kai Properties Ltd., Hong Kong's largest developer, advanced after China's inflation slowed, boosting speculation regulators will loosen lending curbs.

The MSCI Asia Pacific Index fell 0.5 percent to 127.99 as of 3:56 p.m. in Tokyo, extending this year's decline to 19 percent.

``Inflation concerns may be easing but the broader concern now is with economic growth, especially with signs that even China is slowing down,'' said Nicole Sze, a Singapore-based investment analyst at Bank Julius Baer & Co., which manages $350 billion in assets. ``It's possible that you'll see more earnings downgrades.''

Most Asian benchmark indexes retreated. Japan's Nikkei 225 Stock Average dropped 1 percent to 13,303.60. The country's wholesale inflation rate accelerated to a 27-year high as companies raised prices to offset oil and commodity costs. Thailand is shut for a holiday today.

SingTel, China Mobile

BHP Billiton Ltd. led energy producers higher on speculation easing inflation in China will allow the government to boost economic growth, reviving demand for fuel. Consumer prices rose 6.3 percent in July from a year earlier, less than the 6.5 percent increase forecast by economists.

U.S. stocks climbed yesterday, with the Standard & Poor's 500 Index gaining 0.9 percent, after oil's drop below $115 a barrel boosted retailers and credit card companies.

SingTel slumped 3.1 percent to S$3.47, set for its biggest decline since June 16. First-quarter profit fell 5.3 percent to S$878.1 million ($622 million) as a stronger currency eroded overseas earnings, and missed the S$902 million median of analyst estimates in a Bloomberg survey.

China Mobile fell 3.9 percent to HK$95.10. Citigroup lowered its share-price estimate to HK$120 from HK$150, citing ``regulatory headwinds'' and increased competition.

Newcrest, Australia's biggest gold producer, fell 2.1 percent to A$23.49. Sumitomo Metal Mining Co., Japan's biggest nickel maker, declined 3.1 percent to 1,289 yen.

Commodity Prices

Gold dropped 4.2 percent to $828.30, the lowest since Dec. 24. A measure of six metals traded on the London Metal Exchange, including copper and zinc, slid 1 percent yesterday.

Raw-material producers on MSCI's Asian gauge have tumbled 12 percent this month, compared with a 3.4 percent decline on the broader index.

JFE Holdings slumped 6.1 percent to 4,480 yen. Nippon Steel Corp., the world's second-biggest producer of the alloy, declined 4.6 percent to 516 yen.

The Japan Iron and Steel Federation said yesterday June orders for steel fell 0.8 percent from the previous month.

Chinese airlines slumped for a fourth day on concern the government will halt the yuan's 26-month run of gains to help exporters weather a global slowdown. A strengthening local currency cuts the value of dollar-denominated debts when converted into yuan.

China Southern Airlines Co., the largest in China, dropped 3.6 percent to 5.87 yuan, capping a four-day, 24 percent decline. China Southern made a full-year currency gain of 2.83 billion yuan last year, exceeding its net income. Air China Ltd., the country's largest international carrier, tumbled 8.3 percent to 7.17 yuan in Shanghai.

Property Stocks

Sun Hung Kai rose 4.2 percent to HK$115.70. Sino Land rallied 7.8 percent to HK$15.48, the steepest climb since May 2.

China's inflation slowdown may encourage government policies aimed at sustaining growth in the world's fourth-biggest economy rather than fighting higher prices.

BHP, Australia's biggest oil and gas producer, advanced 2 percent to $37.21, reversing a decline of as much as 1.3 percent before China's price report. Inpex Holdings Inc., Japan's biggest oil explorer, jumped 3 percent to 1.103 million yen.

Cathay Pacific Airways Ltd., Hong Kong's biggest carrier, jumped 6.1 percent to HK$14.86, its best performance since July 23, after saying it will cut flights to North America and add more services to Australia to offset higher fuel costs.

Nippon Sheet Glass Co. climbed 6.6 percent to 483 yen. Asia's second-largest glassmaker reported a 17 percent slide in operating profit yesterday as energy costs increased and sales dropped in North America and Japan. The company's results were better than anticipated, Shinya Yamada, an analyst at Credit Suisse Group said in a note to clients.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Chen Shiyin in Singapore at schen37@bloomberg.net.