Asian Stocks Fall as Advantest, Telstra Fuel Earnings Concern

By Shani Raja and Hanny Wan

Feb. 26 (Bloomberg) -- Asian stocks fell, led by technology and phone companies, on renewed concern the deepening global recession is hurting corporate earnings.

Advantest Corp., the world’s biggest maker of memory-chip testers, tumbled 13 percent in Tokyo after forecasting a loss. Telstra, Australia’s No. 1 telephone company, slid 2.4 percent in Sydney on lower profit. Daiichi Sankyo Co., Japan’s third- largest drugmaker, slumped 9.5 percent, after U.S. regulators suspended reviews of medicines made by its Ranbaxy Laboratories Ltd. unit. Ranbaxy Laboratories plummeted 17 percent.

“More earnings announcements are on the way so do we want to take the risk right now? I don’t think so,” said John Koh, regional investment director at MEAG Hong Kong Ltd., which manages $1.1 billion. He’s favoring government bonds.

Five stocks advanced for every three that declined on the MSCI Asia Pacific Index, which lost 1.3 percent to 74.55 as of 3:52 p.m. in Tokyo. The gauge has lost 49 percent in the past 12 months and closed at its lowest in more than five years on Feb. 24, as recessions in the world’s largest economies battered earnings in Asia.

Japan’s Topix Index declined 0.4 percent, while the Nikkei 225 Stock Average closed little changed. Hong Kong’s Hang Seng Index dropped 2.3 percent, while South Korea’s Kospi Index fell 1.2 percent. All markets in the region declined except Australia, Taiwan and Pakistan.

U.S. Home Sales

Fortescue Metals Group Ltd., Australia’s third-largest iron ore exporter, fell 9.5 percent after selling shares at a discount. Nippon Steel Corp., the world’s second-biggest producer, rose 2 percent after saying output has probably bottomed. Australia & New Zealand Banking Group Ltd. gained 4.4 percent in Sydney as it cut dividends to preserve capital.

Futures on the Standard & Poor’s 500 Index gained 0.1 percent today. The gauge slid 1.1 percent yesterday as the National Association of Realtors said purchases of previously owned homes dropped 5.3 percent last month to a 12-year low. Economists had predicted an increase. The S&P 500 Index is down 15 percent this year, the worst start on record.

In Asia, China and Australia this month passed policies to ease the financial crisis and bolster slumping economies. In Singapore today, the trade ministry said the city’s economy shrank an annualized 16.4 percent last quarter from the previous three months, the most in at least 33 years.

Lower Profits

Losses on U.S. mortgage investments in the past year have caused banks to rein in lending, hurting global growth. The MSCI Asia Pacific Index’s decline in that time has dragged the average valuation of companies on the gauge down by 7 percent to 13.5 times reported profit.

Advantest tumbled 13 percent to 1,245 yen. The company said yesterday its net loss will probably amount to 78 billion yen ($797 million) in the year to March 31 and that it plans to cut a quarter of its workforce by March.

Telstra lost 2.4 percent to A$3.68 after reporting its first half-year profit decline in two years as sales of traditional phone services fell. Chief Executive Officer Sol Trujillo will step down on June 30, Telstra said, ending months of speculation by the Australian media about his departure.

Daiichi Sankyo fell 9.5 percent to 1,680 yen, while Ranbaxy Laboratories plunged 17 percent to 172.5 rupees.

The U.S. Food and Drug Administration suspended reviews of new products from Ranbaxy’s plant in Paonta Sahib, India, after findings at the facility raised “significant questions about the reliability” of data used to support requests to sell drugs in the U.S., the regulator said.

Demand Recovery?

Fortescue slumped 9.5 percent to A$2.56 after this week selling 225 million new shares to China’s Hunan Valin Iron & Steel Group at A$2.48 each. The stock closed at A$2.83 on Feb. 20, the last trading day before being halted Feb. 23.

Nippon Steel climbed 2 percent to 251 yen. Stockpile reductions by customers, even as demand remained weak, would lead to a recovery in production that may begin as early as next quarter, Executive Vice President Kiichiro Masuda said yesterday in an interview.

Hitachi Metals Ltd., a maker of specialty steel for use in auto and electronics production, rallied 2 percent to 560 yen.

ANZ Banking, bracing for more bad debts as the economy slows, gained 4.4 percent to A$13.05. The company will cut its dividend by about a quarter and increase loss provisions. Earnings in the four months ended January fell 11 percent, the bank said today. The lender has cut jobs and sold government- backed debt to protect the bank’s balance sheet.

Westpac Banking Corp., Australia’s largest bank by market value, jumped 2.9 percent to A$16.65. National Australia Bank Ltd., the country’s biggest by assets, rose 1 percent to A$17.51.

“Banks are assuming the brace position for turbulence ahead and that is prudent,” said Prasad Patkar, who helps manage $647 million at Sydney-based Platypus Asset Management. “As the economy worsens, the pressure on revenues and profits is becoming more and more intense.”

To contact the reporters for this story: Shani Raja in Sydney at sraja4@bloomberg.net; Hanny Wan in Hong Kong at hwan3@bloomberg.net