Asian Stocks Drop as Commodity Prices Decline; Mitsubishi Falls

By Shani Raja

Aug. 12 (Bloomberg) -- Asian stocks fell for the first time in three days, as commodity prices declined and a weaker dollar reduced Japanese automakers’ overseas earnings prospects.

Mitsubishi Corp., a Japanese trading company that gets more than a third of its sales from commodities, lost 2 percent. Honda Motor Co., which generates 45 percent of its sales in North America, dropped 2.2 percent in Tokyo. Ascendas Real Estate Investment Trust slumped 5.1 percent in Singapore after selling shares at a discount.

“We’ve had an incredible run the last few months,” said Tim Schroeders, who helps manage $1.1 billion at Pengana Capital Ltd. in Melbourne. “We need to see economic growth exceed the improved expectations that have flowed through to the market. Any disappointment will see stock prices fall back significantly from current levels.”

The MSCI Asia Pacific Index dropped 0.8 percent to 111.82 as of 11:08 a.m. in Tokyo, following a two-day, 1.8 percent advance. The gauge has climbed 59 percent from a five-year low on March 9 amid speculation the global economy is recovering.

Japan’s Nikkei 225 Stock Average dropped 0.8 percent, while Hong Kong’s Hang Seng Index slumped 2 percent. China’s Shanghai Composite Index dropped 1.2 percent. South Korea’s Kospi Index sank 1.1 percent.

Australia’s S&P/ASX 200 Index rose 0.1 percent as better- than-estimated profit lifted Commonwealth Bank of Australia by 2.5 percent. Limiting gains in Sydney, developer Stockland sank 3.4 percent after reporting a full-year loss.

Futures on the Standard & Poor’s 500 Index added 0.2 percent. The gauge slid 1.3 percent yesterday as Dick Bove, an analyst at Rochdale Securities, said the recent rally in banking shares was driven by a change in investor sentiment and earnings in the industry won’t improve in the third and fourth quarters.

Oil, Metals

Mitsubishi sank 2 percent to 1,934 yen. Mitsui & Co., a rival trading house, fell 3 percent to 1,259 yen. Crude oil dropped for a fourth day with a 1.6 percent decline in New York yesterday. A gauge of six metals in London fell 2 percent.

Rio Tinto Group, the world’s third-largest mining company, lost 0.7 percent to A$57.52 as China’s official Xinhua News Agency reported four of the company’s workers had been arrested for infringing trade secrets.

Honda dropped 2.2 percent to 3,050 yen as the stronger yen threatens to reduce the value of dollar-denominated sales. The yen strengthened against the dollar to as much as 95.91 from 96.81 at the 3 p.m. close of Tokyo stock trading yesterday. Toyota Motor Corp. fell 1.5 percent to 4,070 yen.

Ascendas slumped 5.1 percent to S$1.67. The company said it sold 185 million shares at S$1.63 each, raising S$296 million ($204 million) in net proceeds. The stock last traded at S$1.76 on Aug. 7.

Commonwealth Bank Earnings

Commonwealth Bank, Australia’s No. 2 lender by market value, gained 2.5 percent to A$45.01. The bank posted full-year earnings of A$4.72 billion, compared with the median estimate of eight analysts surveyed by Bloomberg for A$4.64 billion.

A third of the 457 companies in the MSCI Asia Pacific Index that have reported quarterly results so far have beaten analysts’ profit estimates, while 17 percent have missed, according to data compiled by Bloomberg.

Better-than-expected earnings and economic reports worldwide have driven stocks higher since March, lifting the average valuation of the MSCI Asia Pacific’s companies to a four-month high of 25 times estimated profit on July 28.

Data last week showed Australian employers unexpectedly added jobs and pointed to improving manufacturing industries in China, Europe and the U.S.

“Investors are wary of the pace of the recent gain and they’ll likely book profits,” said Hiroichi Nishi, an equities manager at Tokyo-based Nikko Cordial Securities Inc.

Stockland, Australia’s biggest housing developer, sank 3.2 percent to A$3.30. The company reported a full-year loss because of writedowns related to a slump in the value of property assets.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.