By Shani Raja
Sept. 14 (Bloomberg) -- Asian stocks fell, dragging the MSCI Asia Pacific Index from a one-year high, amid concern a six-month rally had overvalued prospects for an earnings recovery in the region.
Honda Motor Co., which gets 47 percent of its sales in North America, retreated 3 percent in Tokyo on concern the yen’s appreciation to a seven-month high against the dollar will reduce the value of overseas revenue. National Australian Bank Ltd., the nation’s biggest by assets, dropped 3.2 percent in Sydney after Treasurer Wayne Swan said unemployment will climb. Santos Ltd., Australia’s No. 3 oil producer, sank 3.7 percent as commodity prices declined.
“Expectations may be beginning to moderate regarding the ongoing strength of the recovery,” said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. “Investors will be concentrating on discerning real underlying growth in the global economy.”
The MSCI Asia Pacific Index sank 1.8 percent to 115.72 as of 5:53 p.m. in Tokyo after ending last week at its highest level since Sept. 9, 2008. The gauge has climbed 64 percent from a five-year low on March 9 as government stimulus measures worldwide pulled economies out of recession.
Japan’s Nikkei 225 Stock Average fell 2.3 percent. Real- estate investor K.K. DaVinci Holdings tumbled 14 percent in Tokyo after saying it wasn’t likely to reach agreement on a loan extension. Hong Kong’s Hang Seng Index dropped 1.1 percent, led by Li & Fung Ltd., which retreated for a second day from a 15- month high. Australia’s S&P/ASX 200 Index declined 1.4 percent.
Consumer Confidence
China’s Shanghai Composite Index rose 1.2 percent. Shandong Minhe Animal Husbandry Co. climbed 10 percent, leading gains among poultry producers, after the government announced a probe into U.S. chicken imports.
Futures on the U.S. Standard & Poor’s 500 Index dropped 1 percent. The gauge dipped 0.1 percent on Sept. 11 even after a report showed the Reuters/University of Michigan preliminary index of consumer sentiment rose more than economists had estimated in September.
U.S. Treasuries rose on speculation declines in Asian stocks and the euro will bolster demand for the safest assets. Philippe Chaumel, a Paris-based money manager at Rothschild & Cie Gestion who beat 94 percent of his peers in the past year, said he’s switching investments into so-called defensive stocks.
The MSCI Asia Pacific Index gained 4.4 percent last week, its biggest weekly advance since the period ended July 24. The average price of the gauge’s companies has climbed to 24 times estimated net income, up from 15 times at the index’s March low.
Stronger Yen
Profit reports in the region have helped fuel the six-month rally, with 35 percent of the 642 companies in the MSCI Asia Pacific beating analyst predictions in the latest quarter, while 21 percent missed, according to data compiled by Bloomberg. Net income in the latest period still tumbled 47 percent from a year earlier, the data showed.
Honda fell 3 percent to 2,780 yen as the yen appreciated versus the dollar to as much as 90.21 today, a level not seen since Feb. 12. A stronger yen reduces the value of overseas sales at Japanese companies when converted into their home currency.
Sony Corp., the world’s second-biggest maker of consumer electronics, dropped 2.4 percent to 2,425 yen. Toyota Motor Corp., which got 31 percent of its revenue last fiscal year in North America, lost 2.6 percent to 3,740 yen.
Japan’s large manufacturers expect the yen to trade at an average of 94.85 this year, according to the Bank of Japan’s most recent quarterly Tankan survey.
Australia’s Jobless Rate
“The current exchange rate will adversely affect companies that base their forecasts on 95 yen per dollar,” said Yoshinori Nagano, a senior strategist at Tokyo-based Daiwa Asset Management Co., which oversees the equivalent of $95 billion. “There aren’t a lot of players in the market and that amplifies declines and gains in equities.”
In Sydney, National Australia shares dropped 3.2 percent to A$28.10. Australia & New Zealand Banking Group Ltd. declined 3 percent to A$22.01.
Australia’s unemployment rate will rise from 5.8 percent, boosting the need to maintain the government’s economic stimulus measures, Treasurer Swan said in his weekly economic note released yesterday.
“Ripping the stimulus out prematurely would only pull the rug out from under the recovery, undermine confidence and threaten jobs,” Swan wrote.
Lehman Bankruptcy
HSBC Holdings Plc, the London-based bank that has the biggest representation in the Hang Seng Index, lost 0.9 percent to HK$83.85. Joseph Stiglitz, a Nobel Prize-winning economist, said in an interview in Paris over the weekend that the U.S. banking system is in a worse state than before the seizure in credit markets and collapse of Lehman Brothers Holdings Inc.
Tomorrow is the one-year anniversary of Lehman’s bankruptcy filing, which exacerbated the credit crunch and helped drag the global economy into its worst slowdown since World War II. Losses from the credit crisis at the world’s biggest financial institutions since the start of 2007 have climbed to more than $1.6 trillion.
New Zealand’s statistics office today reported a 0.5 percent decline in the country’s retail sales, missing the 0.4 percent increase anticipated by economists in a Bloomberg survey.
Fisher & Paykel Appliances Holdings Ltd., the nation’s biggest maker of cookers and washers, lost 1.3 percent to 77 New Zealand cents in Wellington. Warehouse Group Ltd., the biggest discount retailer, dropped 0.7 percent to NZ$4.22.
Copper, Oil
K.K. DaVinci, which manages real-estate investment funds, tumbled 14 percent to 12,350 yen following the statement on its loan extension.
Hong Kong’s Li & Fung, the biggest supplier of clothes and toys to Wal-Mart Stores Inc. and Target Corp. sank 3.8 percent to HK$28.10, adding to a 3.3 percent drop on Sept. 11. The stock closed on Sept. 10 at the highest since May 28, 2008.
In Sydney, Santos sank 3.7 percent to A$15.30, while Rio Tinto Group, the world’s No. 3 mining company, fell 2 percent to A$58.05. Mitsui & Co., which counts commodities as its biggest source of profit, lost 1.5 percent to 1,215 yen in Tokyo.
Copper futures in New York dropped 2.4 percent today, the fourth day of declines. A gauge of six metals in London lost 3.5 percent on Sept. 11. Crude oil dropped 1.1 percent today, adding to a 3.7 percent slump on Sept. 11.
The Australian and New Zealand dollars fell today, retreating from last week’s strongest levels since August 2008, following the declines in commodities, which account for more than half of the two nations’ exports.
Government Probe
Shandong Minhe, which breeds chickens, surged 10 percent to 15.05 yuan, while rival Shanghai Dajiang (Group) Stock Co. added 10 percent to 9.03 yuan on speculation demand for their products will rise.
The Chinese government announced a dumping and subsidy probe into U.S. imports two days after President Barack Obama imposed tariffs on tires from the Asian nation.
Among stocks that gained today, Japan Airlines Corp. jumped 8 percent to 176 yen after people familiar with the plan said American Airlines may buy a stake in the carrier. Japan Airlines, which has received three government bailouts since 2001, is also discussing possible stake sales to Delta Air Lines Inc. and Air France-KLM, people acquainted with those negotiations have said.
Japan Air is talking with other carriers to strengthen its business, spokeswoman Sze Hunn Yap said in Tokyo, declining to comment on discussions or possible investments.
Alibaba.com Ltd. climbed 3.7 percent to HK$21.15 in Hong Kong. The operator of China’s biggest trading Web site is attracting more sellers from Europe and has 1.4 million users in the region after boosting its marketing activity there, according to Maggie Choo, Alibaba’s director for Europe.
To contact the reporter for this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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