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 a stronger yen dimmed the earnings outlook for Japan’s electronics and auto companies.
Li & Fung Ltd., the biggest supplier of toys and clothing to Wal-Mart Stores Inc., tumbled 10 percent in Hong Kong. Canon Inc., which generates more than half of its sales from the U.S. and Europe, lost 2.6 percent in Tokyo as the yen rose to a two- week high against the dollar. Nomura Holdings Inc., Japan’s No.1 brokerage, sank 7.7 percent, leading declines by financial company 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 0.5 percent to 89.14 at 7:23 p.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 1.1 percent to 8,742.96. Hong Kong’s Hang Seng Index rose 0.6 percent and China’s Shanghai Composite Index added 0.4 percent amid speculation China will introduce more measures to bolster its economy. Markets in Asia declined except China, India, Indonesia, Malaysia, Singapore, Sri Lanka and New Zealand.
‘Economic Progress’
Thailand, where the government called a state of emergency this week following clashes between security forces and protesters, remained shut for new year holidays.
Komatsu Ltd., the world’s No. 2 maker of earthmoving equipment, dropped 5.6 percent in Tokyo after saying it will close two plants. SembCorp Marine Ltd., the world’s second- biggest oil-rig maker, fell 4.5 percent in Singapore as a customer went into liquidation. Infosys Technologies Ltd., India’s second-largest software-services provider, slipped 2.8 percent after forecasting lower sales.
Futures on the U.S. Nasdaq Composite Index dropped 0.6 percent as Intel Corp. reported a slide in first-quarter profit. The Standard & Poor’s 500 Index sank 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.
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.
Finance Stocks Retreat
Li & Fung tumbled 10 percent to HK$20.60 in Hong Kong. Canon, the world’s largest maker of digital cameras, fell 2.6 percent to 3,030 yen in Tokyo. Mazda Motor Corp., which generates more than half of its sales in North America and Europe, dropped 2.5 percent to 237 yen in Tokyo.
Japan’s exporters fell as the stronger yen erodes the value of sales generated overseas. The yen climbed to as high as 98.15 against the dollar from 99.79 at the close of trading in Tokyo yesterday, the strongest level in since April 1.
“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.
Komatsu, SembCorp Marine
A measure of finance stocks on the MSCI measure lost 1.3 percent today. The drop pared the gauge’s gain in the past month to 27 percent, the most of 10 industry groups.
Nomura slumped 7.7 percent to 597 yen, following a 38 percent surge in the month through yesterday. Mitsubishi UFJ Financial Group Inc., Japan’s biggest publicly traded bank, lost 3 percent to 521 yen. It climbed 24 percent in the past month.
National Australia Bank Ltd., the nation’s largest lender by assets, dropped 3.1 percent to A$21.78. Australian banks face “headwinds” as asset values diminish and the economy slows, said Brian Johnson, an analyst at CLSA Asia Pacific Markets.
Komatsu slid 5.6 percent to 1,225 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.
Intel, Infosys Profit
SembCorp Marine slumped 4.5 percent to S$2.13. Bank of America Corp. and Macquarie Group Ltd. cut 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.
Infosys slipped 2.8 percent to 1,370.6 rupees. The company forecast its first annual drop in dollar-denominated sales as customers pare orders. Sichuan Guodong Construction Co. fell 2.8 percent to 9.52 yuan in Shanghai after the company said 2008 net income declined 48 percent.
Advantest Corp., the world’s biggest maker of equipment used to test memory chips, sank 3.9 percent to 1,522 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.
Shares of Intel, the world’s biggest chipmaker, retreated 5.3 percent in extended trading. Taiwan Semiconductor Manufacturing Ltd., the world’s largest maker of customized chips, lost 1 percent to NT$52.
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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