By Jonathan Burgos and Patrick Rial
April 15 (Bloomberg) -- Asian stocks dropped for the first time in five days after U.S. retail sales unexpectedly declined and the stronger yen dimmed the earnings outlook for Japan’s electronics and auto companies.
Canon Inc., which generates more than half of sales from U.S. and Europe, declined 3.5 percent in Tokyo as the yen rose against the dollar and the euro. Advantest Corp., the world’s biggest maker of equipment used to test memory chips, sank 2.7 percent after Intel Corp. reported lower earnings. Nomura Holdings Inc., Japan’s largest brokerage, slumped 6.7 percent, leading declines by finance shares, the region’s best performers in the past month.
“This is a reality check,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments Ltd. in Tokyo, which manages $28 billion. “The collapse the global economy was experiencing has come to an end, but investors moved too quickly in predicting a recovery.”
The MSCI Asia Pacific Index lost 0.9 percent to 88.71 at 11:35 a.m. in Tokyo, snapping a four-day, 5.6 percent advance. The gauge rallied 26 percent from a five-year low reached on March 9 amid speculation government stimulus efforts worldwide will succeed in easing the global financial crisis.
Japan’s Nikkei 225 Stock Average dropped 0.8 percent to 8,768.35, while Hong Kong Hang Seng Index fell 1.7 percent. All markets in Asia declined except China, Indonesia and Vietnam.
‘Economic Progress’
Komatsu Ltd., the world’s No. 2 maker of earthmoving equipment, dropped 4.4 percent in Tokyo after saying it will close two manufacturing facilities. SembCorp Marine Ltd., the world’s second-biggest oil-rig maker, fell 5.8 percent to S$2.09 in Singapore after a customer went into liquidation. Sichuan Guodong Construction Co. slumped 4.4 percent in Shanghai after earnings slumped.
Futures on the U.S. Standard & Poor’s 500 Index dropped 0.6 percent. The gauge slid 2 percent yesterday after the government said the country’s retail sales fell 1.1 percent in March, compared with the 0.3 percent increase economists in a Bloomberg survey had estimated. Prices paid to U.S. producers dropped 1.2 percent, a separate government report showed.
President Barack Obama said yesterday that his economic- stimulus package and plans to rescue banks and bolster housing are starting to “generate signs of economic progress.” Still, he warned of “pitfalls” ahead.
Canon, the world’s largest maker of digital cameras, fell 3.5 percent to 3,000 yen in Tokyo. Toyota Motor Corp., the world’s largest automaker, lost 0.8 percent to 3,770, adding to yesterday’s 3.6 percent decline.
Finance Stocks Retreat
The yen climbed to as high as 98.74 against the dollar from 99.79 at the close of trading in Tokyo yesterday. Japan’s currency gained as much as 2.1 percent versus the euro. A stronger yen erodes the value of sales generated overseas.
“The situation in the U.S., combined with the stronger yen, point to losses in the local market today,” said Hiroichi Nishi, general manager at Nikko Cordial Securities Co., in an interview with Bloomberg Television. “From a technical perspective, investors may be thinking now is a good time to sell.”
The MSCI Asia Pacific Index’s rally in the past five weeks has driven the average valuation of companies on the gauge to 18 times reported profit, the highest since Nov. 7, 2007.
Advantest dropped 2.7 percent to 1,541 yen after Intel said first-quarter profit fell 55 percent because of slowing computer demand and signaled sales won’t recover in the current period. Intel shares lost 5.6 percent in extended trading.
Samsung Electronics Co., the world’s largest maker of computer-memory chips, dipped 1 percent to 569,000 won in Seoul. Taiwan Semiconductor Manufacturing Ltd., the world’s biggest maker of customized chips, slid 1.7 percent to NT$51.60.
Komatsu, SembCorp Marine
A measure of finance stocks on the MSCI Asia Pacific Index lost 1.9 percent today. The drop pared the gauge’s gain in the past month to 26 percent, the most of 10 industry groups.
Nomura slumped 6.7 percent to 604 yen, following a 38 percent surge in the month through yesterday. Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank, lost 2.8 percent to 522 yen. It climbed 25 percent in the past month.
Komatsu slid 4.6 percent to 1,239 in Tokyo. Declining demand forced the company to close two factories in Japan, the company said yesterday after the market closed. It will shift production and workers to other factories and take a 6.5 billion yen ($66 million) charge for the reorganization.
SembCorp Marine slumped 5.8 percent to S$2.10 in Singapore. Bank of America Corp. and Macquarie Group Ltd. downgraded their recommendations on the stock after PetroPod Ltd., a Singapore- based oil-services provider, went into liquidation. SembCorp Marine is building an oil rig and converting a tanker for PetroPod.
Sichuan Guodong Construction fell 4 percent to 9.57 yuan after the company said 2008 net income declined 48 percent to 31.3 million yuan ($4.6 million).
To contact the reporters for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net.
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