By Shani Raja
Aug. 7 (Bloomberg) -- Asian stocks fell for the third time in four days as lower earnings from Konica Minolta Holdings Inc. and DBS Group Holdings Ltd. fueled concern an equity rally in the past month had outpaced prospects for corporate profits.
Konica Minolta Holdings Inc., a maker of printers and office equipment, tumbled 9.8 percent as its first-quarter profit tumbled 98 percent. DBS, Southeast Asia’s biggest bank, dropped 3.3 percent in Singapore after saying non-performing loans increased. Orient Overseas (International) Ltd., Hong Kong’s biggest container line, slumped 6.1 percent after reporting its first loss in 10 years.
The MSCI Asia Pacific Index lost 0.8 percent to 111.62 as of 11:49 a.m. in Tokyo, taking its drop this week to 0.2 percent. The gauge has climbed 58 percent from a five-year low on March 9 on speculation the global economy is recovering.
“The market has run a bit ahead of the fundamentals,” said Rob Patterson, who helps manage $2.7 billion at Argo Investments Ltd. in Adelaide, Australia. “Things are getting less worse rather than better. Having said that, we’re hopeful we’ve passed the low point and that the world is becoming a better place.”
Japan’s Nikkei 225 Stock Average dropped 1 percent. Kubota Corp., Asia’s largest tractor maker, sank 6.9 percent on lower earnings. Hong Kong’s Hang Seng Index lost 0.7 percent, as China Construction Bank Corp. fell 2.5 percent after saying it will reduce lending. Australia’s S&P/ASX 200 Index declined 0.7 percent, led by BHP Billiton Ltd., the world’s largest mining company, which sank 2.5 percent on lower metal prices.
Jobless Rate
Futures on the Standard & Poor’s 500 Index lost 0.1 percent. The gauge slipped 0.6 percent yesterday as JPMorgan Chase & Co. downgraded health-care stocks.
Economists in a Bloomberg survey estimate that a Labor Department report today will show unemployment rose to 9.6 percent, the highest level since 1983. The number of Americans filing claims for jobless benefits last week fell more than economists predicted, according to data released yesterday, a sign some employers have stopped paring staff.
“The rate of deterioration in unemployment is likely to ease, but there are doubts we’ll see as much improvement as the market would like,” said Kazuhiro Takahashi, a general manager at Daiwa Securities SMBC in Tokyo.
Toyota Motor Corp., which gets 31 percent of its revenue in North America, lost 2.9 percent to 4,010 yen. Honda Motor Co., Japan’s No. 2 automaker, dropped 2.6 percent to 3,030 yen.
Slumping Earnings
Konica retreated 9.8 percent to 894 yen. The company said yesterday after markets closed net income dropped 98 percent to 299 million yen ($3.1 million) for the three months ended June, from 17.6 billion yen a year earlier. Nomura Holdings Inc. cut its rating on the stock to “neutral” from “buy.”
Kubota sank 6.9 percent to 759 yen after first-quarter operating profit tumbled 70 percent.
The MSCI Asia Pacific Index has rallied 25 percent this year, following a record 43 percent slide in 2008. The gauge extended gains in the past two weeks as companies reporting better-than-estimated earnings outnumbered those that disappointed by a ratio of two to one, according to data compiled by Bloomberg.
Singapore’s DBS fell 3.3 percent to S$12.86. The bank said net income fell 15 percent in the second quarter as non- performing loans climbed to 2.8 percent of total lending from 1.4 percent a year ago.
The rising bad debts was a “negative surprise,” Harsh Wardhan Modi, an analyst at JPMorgan Chase & Co., told Bloomberg Television. “That is something we need to understand more.”
Reduced Lending
In Hong Kong, Orient Overseas sank 6.1 percent to HK$42.40 after reporting a $231.8 million first-half net loss as world trade slumped and rising overcapacity pummeled cargo rates.
China Construction Bank fell 2.5 percent to HK$5.79. The company will reduce new lending by about 70 percent in the second half after a surge in loans in the first six months increased credit risk, President Zhang Jianguo said.
BHP declined 2.5 percent to A$37.84. Rio Tinto Group, the world’s third-largest mining company, fell 2.1 percent to A$60.63. Fortescue Metals Group Ltd. sank 1.5 percent to A$4.48.
A measure of six metals, including copper and aluminum, traded on the London Metal Exchange plunged 3.5 percent yesterday, the steepest drop since July 8. The Baltic Dry Index, a measure of shipping costs for commodities, tumbled 4.7 percent, a sixth consecutive decline.
Daicel Chemical Industries Ltd., a Japanese maker of air- bag inflators, climbed 3.2 percent to 578 yen after boosting its profit forecast as it slashed costs.
“Earnings outlooks are being lifted and there are still quite a few companies that investors have yet to properly price for the recovery,” said Daiwa’s Takahashi.
To contact the reporter for this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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