By Masaki Kondo
Nov. 2 (Bloomberg) -- Asian stocks fell, extending the MSCI Asia Pacific Index’s first monthly decline since February, as weaker commodity prices and a drop in U.S. consumer spending fueled concern corporate earnings growth will falter.
Mitsubishi Corp., a Japanese trading company that gets 39 percent of its sales from commodities, sank 3.1 percent. Sony Corp. slumped 5.8 percent even after narrowing a loss forecast as the yen climbed to a three-week high against the dollar earlier today. Daiwa Securities Group Inc., Japan’s No. 2 brokerage, slid 4.5 percent on lower-than-estimated earnings.
The MSCI Asia Pacific Index slumped 1.1 percent to 115.15 as of 3:50 p.m. in Tokyo. The gauge has surged 63 percent from a more than five-year low on March 9 amid signs lower borrowing costs and spending packages are reviving the global economy. The index lost 1.3 percent in October.
“I can’t expect government stimulus measures to continue to shore up company earnings,” said Hiroshi Morikawa, a senior strategist at MU Investments Co., which manages the equivalent of $14 billion. “Doubt is rapidly growing that corporate profits will continue to improve next year.”
Japan’s Nikkei 225 Stock Average lost 2.3 percent, while Australia’s S&P/ASX 200 Index dropped 2.2 percent. The Hang Seng Index in Hong Kong slumped 0.9 percent.
China’s Shanghai Composite Index rose 2.4 percent. Shanghai Lujiazui Finance & Trade Zone Development Co. climbed 8.1 percent after the South China Morning Post said the government had approved a Walt Disney Co. theme park for the city.
U.S. Futures, Treasuries
Consumer lenders Aiful Corp. and Takefuji Corp. soared at least 17 percent in Tokyo after the Nikkei newspaper said tighter regulations on lenders may be postponed.
Futures on the U.S. Standard & Poor’s 500 Index added 0.6 percent and Treasuries fell as economists said an industry report today will show the country’s manufacturing industry expanded last month. The yield on 10-year Treasuries rose two basis points to 3.41 percent, according to BGCantor Market Data.
The U.S. stock gauge fell 2.8 percent on Oct. 30, the most since July 2, as a Commerce Department report showed spending by American consumers dropped 0.5 percent in September, the first decline in five months. New-York based commercial lender CIT Group Inc. filed for bankruptcy on Nov. 1.
James Hardie Industries NV, the biggest seller of home siding in the U.S., retreated 2.2 percent to A$7.05 in Sydney. Toyota Motor Corp., which gets 31 percent of its revenue from North America, fell 2.5 percent to 3,570 yen and was the single biggest drag on the MSCI Asia Pacific Index.
Sony Forecast
Sony, which generates 24 percent of its sales in the U.S., slid 5.8 percent to 2,625 yen even after narrowing its annual net loss forecast by 21 percent.
The yen appreciated to as much as 89.20 per dollar today, the strongest since Oct. 14, compared with 91.02 against the dollar at the close of stock trading in Tokyo on Oct. 30. It was at 90.03 recently. Against the euro, the yen strengthened to as high as 131.01 from 135.01. The stronger yen reduces income when overseas revenue is converted into local currency.
“Sony’s shares are adversely affected by the strong yen,” said Ryosuke Katsura, an analyst at Mizuho Securities Co. in Tokyo. “Macroeconomic factors have a larger influence over the stock than the company’s fundamentals.”
The MSCI Asia Pacific Index has fallen 5 percent from this year’s high on Oct. 20 as earnings from PetroChina Co. to National Australia Bank Ltd. missed analyst forecasts and investor concern grew about the end of stimulus policies. Stocks on the MSCI gauge trade at an average 22 times estimated profit, the lowest level since May 18, according to Bloomberg data.
‘End to Recovery’
The measure lost 1.3 percent last month, the first drop since February. Australia on Oct. 6 became the first Group of 20 nation to raise interest rates amid signs of strength in its economy, while the Bank of Japan said last week it will let its programs of buying corporate debt expire at the end of the year.
“The global economy can’t stand on its feet yet without government support,” said MU’s Morikawa. “An end to stimulus is an end to a recovery.”
Mitsubishi, Japan’s biggest trading house, sank 3.1 percent to 1,915 yen, while closest rival Mitsui & Co. slid 3.1 percent to 1,185 yen. BHP Billiton Ltd., the world’s biggest mining company, retreated 2 percent to A$36.71 in Sydney.
Crude oil futures in New York tumbled the most in a month, dropping 3.6 percent to $77 a barrel, on Oct. 30. The London Metals Index, a measure of six metals including copper and zinc, dropped 2.8 percent.
Daiwa fell 4.5 percent to 469 yen after posting second- quarter net income that was 72 percent lower than the average analyst estimate from a Bloomberg survey.
Disney Theme Park
HSBC Holdings Plc lost 1.3 percent to HK$86.05 in Hong Kong. Apple Daily said the bank’s provision for bad debts in the U.S. may stay at a high level for the near future, citing Sandy Flockhart, who heads HSBC’s Asia-Pacific unit.
In Shanghai, Lujiazui rose 8.1 percent to 30.23 yuan, while Shanghai Jielong Industry Corp. jumped by the 10 percent daily limit to 18.57 yuan.
The Disney park project has been approved by China’s top economic planning body, the National Development and Reform Commission, the South China Morning Post reported today, citing an unidentified official with direct knowledge of the matter. An official at the Beijing-based NDRC who wouldn’t give her name declined to comment today.
Aiful, Japan’s No. 2 consumer-finance company by assets, jumped 17 percent to 156 yen, and Takefuji soared 23 percent to 427 yen. A gauge of consumer lenders posted the steepest advance among the Topix index’s 33 industry groups.
The government may freeze the implementation of new regulations that limit lending to a customer to a third of the borrower’s annual income and caps interest charges at 20 percent, the Nikkei newspaper reported, citing a government official it didn’t name.
Lopro Corp., an Osaka-based corporate lender, was suspended from trading after the company filed for bankruptcy today amid swelling interest repayments.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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