By Shani Raja and Adam Haigh
Oct. 12 (Bloomberg) -- Asian stocks fell for the first time in five days, led by South Korean oil refiners and Chinese steelmakers on concern they will report lower-than-estimated earnings in coming months.
SK Energy Co. slumped 9.9 percent in Seoul after Woori Investment & Securities Co. said refiners may post “earnings shocks” in the third quarter. Baoshan Iron & Steel Co. lost 1.3 percent in Shanghai after the Xinhua News Agency said the company will cut product prices. National Australia Bank Ltd. dropped 1.9 percent in Sydney, pacing declines among financial companies, on a brokerage downgrade.
Six stocks dropped for every five that gained on the MSCI Asia Pacific excluding Japan Index, which lost 0.5 percent to 399.14 as of 4:15 p.m. in Hong Kong. The measure rose 4.8 percent in the previous four trading days. Japanese markets are closed. The MSCI gauge has surged 95 percent since March amid signs of a global economic revival.
“The question is whether the rally has over-extended beyond the confirmation of economic stability that we’ve seen,” said Jason Teh, who helps manage about $3.2 billion at Investors Mutual Ltd. in Sydney. “It’s still hard to know exactly where the world’s going to go, and the degree of growth remains very hard to quantify.”
Hong Kong’s Hang Seng Index sank 0.9 percent, while South Korea’s Kospi Index slid 0.4 percent. Singapore’s Straits Times Index gained 0.7 percent after the government raised its 2009 economic forecast. Jardine Cycle & Carriage Ltd., an automobile distributor, climbed 3.7 percent.
Rising Valuations
Promos Technologies Inc. climbed 6.7 percent in Taipei, leading gains among chipmakers after memory-chip prices climbed to the highest in almost 11 months. Crown Ltd., Australia’s largest casino operator, surged 6.1 percent after 3 percent of the company changed hands in a single trade.
Futures on the Standard & Poor’s 500 Index added 0.3 percent. The Dow Jones Industrial Average rose 0.8 percent on Oct. 9 to a one-year high, as analyst recommendations spurred gains in technology and health-care shares.
Global stock markets advanced last week as Alcoa Inc. unexpectedly reported a profit and economic data signaled the U.S. recession is ending. Companies from Intel Corp. to Goldman Sachs Group Inc. are scheduled to report earnings this week.
The seven-month rally in equity markets has lifted the average price of stocks in the MSCI Asia Pacific excluding Japan Index to 2 times book value from 1.2 at the gauge’s March low.
China Steelmakers
SK Energy, South Korea’s biggest oil refiner, sank 9.9 percent to 113,500 won. S-Oil Corp. lost 1.1 percent to 61,000 won after a Woori report said the companies may report “earnings shocks” in the third quarter after margins for premium products narrowed and the won strengthened.
Woori cut its estimates for SK Energy and S- Oil’s 2009 and 2010 per-share earnings, the report said.
In China, Baoshan Iron & Steel Co., the country’s largest steelmaker, lost 1.3 percent to 6.65 yuan. The company will cut November prices on hot-rolled and cold- rolled steel products by 400 yuan a metric ton, the state-run Xinhua News Agency said yesterday.
The average spot price for domestic hot-rolled steel sheet fell 0.6 percent on Oct. 9 to the lowest since April 23, according to data from Beijing Antaike Information Development Co.
Angang Steel Co., China’s No. 2 producer, retreated 0.9 percent to 12 yuan. Wuhan Iron & Steel Co., the country’s third biggest, fell 1.9 percent to 7.19 yuan.
Biggest Lender
National Australia Bank, the country’s biggest lender by assets, lost 1.9 percent to A$31.01. Bank of America Corp.’s Merrill Lynch unit downgraded the stock to “underperform” from “neutral” on valuation concerns, according to an Oct. 9 report. Commonwealth Bank of Australia dropped 1 percent to A$52.64.
Crown surged 6.1 percent to A$9.01. Shares worth A$205 million ($185 million) changed hands after the market closed on Oct. 9 at a 6 percent premium, according to stock exchange data. Chairman James Packer was the buyer, the Australian Financial Review reported. Crown declined to comment.
In Singapore, Jardine Cycle & Carriage climbed 3.7 percent to S$26.10. DBS Group Holdings Ltd. raised its share-price estimate to S$4.80 from S$4.52 and maintained its “buy” rating.
The city’s government raised its 2009 economic forecast today after gross domestic product expanded for a second consecutive quarter. The economy will shrink 2 percent to 2.5 percent this year, less than an earlier forecast for a contraction of 4 percent to 6 percent, the trade ministry said.
House Prices
In Wellington, Cavalier Corp., New Zealand’s largest publicly traded carpet maker, gained 3.3 percent to NZ$2.48 after the government’s valuation agency said the country’s house prices increased last month.
Michael Hill International Ltd., New Zealand’s largest specialty jewelry retailer, added 1.4 percent to 72 New Zealand cents after saying first-quarter sales rose 6.3 percent.
The Singapore and New Zealand reports are the latest signs of a pick-up in the global economy, which has driven the seven-month stock rally.
White House economic adviser Lawrence Summers on Oct. 8 rejected the notion that the U.S. faces an extended period of below-average growth and high unemployment in the wake of the worst recession since the 1930s.
“The data is supportive, the systemic risks have passed, and the recovery seems to be taking shape across the world,” said Prasad Patkar, who helps manage about $1.3 billion at Platypus Asset Management in Sydney. “Most people are positioned for a pullback. As the markets keep going up, they sort of nervously have to deploy cash into the market.”
Chipmakers Advance
Promos, Taiwan’s most unprofitable memory-chip maker, climbed 6.7 percent to NT$1.92 after benchmark dynamic random access memory chip prices surged 8.5 percent on Oct. 9, to the highest since Nov. 20, 2007.
Powerchip Semiconductor Corp. surged 6.8 percent to NT$3.45. South Korea’s Hynix Semiconductor Inc., the world’s No. 2 maker of computer-memory chips, gained 1.8 percent to 20,000 won in Seoul.
The Philadelphia Semiconductor Index, which measures 18 U.S. companies, jumped 3.3 percent on Oct. 9 after Ross Seymore, an analyst at Deutsche Bank AG, wrote in a note that chipmakers’ third-quarter earnings will beat analysts’ estimates.
To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net; Adam Haigh in Hong Kong at ahaigh1@bloomberg.net.
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