Asian Manufacturing Stocks Slump as Global Recession Spreads

By Patrick Rial and Masaki Kondo

Jan. 9 (Bloomberg) -- Asian manufacturing stocks retreated after profit reports and job cuts deepened concern the global recession is curtailing demand. Seven & I Holdings Co. led gains by consumer-staple retailers with resilient earnings.

Toyoda Gosei Co., an affiliate of Toyota Motor Corp., dropped 2.9 percent after cutting its net-income forecast because of the stronger yen. Nissan Motor Co. retreated 2.5 percent as it laid off workers in the U.K. Seven & I, operator of Japan’s largest convenience store chain, added 0.9 percent after profit rose. Newcrest Mining Ltd., Australia’s largest gold producer, jumped 6.5 percent as the metal gained the most in a week.

“It’s hard for investors to buy when companies come out with lower earnings forecasts,” Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages about $53 billion, said in an interview with Bloomberg Television.

The MSCI Asia Pacific Index fell 0.2 percent to 89.70 as of 10:06 a.m. in Tokyo. About six shares rose for every five the dropped on the benchmark gauge. The index is little changed this year, after posting a record 43 percent decline in 2008.

Japan’s Nikkei 225 Stock Average declined 0.5 percent to 8,836.49. Stocks in South Korea fell, while Australian and Malaysian benchmark indexes advanced.

Most U.S. stocks gained yesterday, with the Standard & Poor’s 500 Index added 0.3 percent as falling oil prices boosted the outlook for refiners’ profit margins.

TDK Corp., the world’s largest maker of magnetic heads used in disk drives, yesterday reversed its annual profit projection to a loss, saying demand fell “significantly.”

Seven & I yesterday reported a 4.4 percent increase in its nine-month net operating profit. Closest competitor Lawson Inc. said net income jumped 23 percent in the nine months to Nov. 30. Higher cigarette sales helped boost the companies’ earnings, they said. Japan Tobacco Inc. added 3 percent to 304,000 yen.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.