By Masaki Kondo and Weiyi Lim
Nov. 20 (Bloomberg) -- Asian stocks fell for a fourth day, the longest losing streak since July, after Sony Corp. pushed back its profitability targets and Dell Inc. posted lower-than- estimated earnings.
Sony, the maker of the PlayStation 3 game machine, slid 2.4 percent in Tokyo, while Dell fell 6 percent in late U.S. trading. United Microelectronics Corp. sank 3.9 percent in Taipei after Merrill Lynch & Co. cut its recommendation. BHP Billiton Ltd., the world’s biggest mining company, declined 2 percent in Sydney after oil and metal prices fell.
The MSCI Asia Pacific Index fell 0.4 percent to 116.98 as of 7:12 p.m. in Tokyo. The gauge’s four-day drop is the longest losing streak since July 1-8. The measure lost 1.1 percent this week, the fourth weekly drop in five. It has slumped 3.5 percent from a 13-month high on Oct. 20 on concern governments will withdraw stimulus measures enacted to revive the global economy.
“Weak earnings such as Dell’s show that it’s still too early to say everything is OK,” said Nicholas Yeo, head of Hong Kong and China equities at Aberdeen Asset Management Co., which manages $40 billion in Asian equities. “The economic recovery is still uncertain as it could be due to aggressive cost-cutting which is one-off and not sustainable.”
Japan’s Nikkei 225 Stock Average retreated 0.5 percent, while Hong Kong’s Hang Seng Index dropped 0.8 percent. Australia’s S&P/ASX 200 Index lost 1.3 percent, with Rio Tinto Group falling 1.9 percent as a coal unit raised a less-than- anticipated amount in an initial public offering.
Among stocks that gained, T&D Holdings Inc., Japan’s largest publicly traded life insurer, climbed 5.7 percent after first-half profit quadrupled from a year ago.
Semiconductor Downgrade
Futures on the Standard & Poor’s 500 Index were little changed. The index retreated 1.3 percent yesterday, the most since Oct. 30. Intel Corp. and Texas Instruments Inc. slumped after Bank of America Corp.’s Merrill Lynch unit reduced its outlook for the global semiconductor industry to “negative” from “positive.”
Sony sank 2.4 percent to 2,410 yen. The Tokyo-based company said on Nov. 19 that it’s aiming for a 10 percent return on equity by March 2013, which is later than its previous target of March 2011.
Dell, the world’s No. 3 maker of personal computers, said third-quarter net income fell to $337 million, or 17 cents a share, from $727 million, or 37 cents, a year earlier. Analysts surveyed by Bloomberg predicted profit of 27 cents. Dell shares fell 6 percent to $14.91 in extended trading.
“We’ve had some slightly disappointing data pointing to a slowdown in the economic recovery, and the Dell numbers were also not encouraging,” said Diane Lin, a Sydney-based fund manager at Pengana Capital Ltd., which oversees about $1.1 billion.
Dell Suppliers
In Taipei, Hon Hai Precision Industry Co., which makes server computers for Dell, lost 1.1 percent to NT$135. Compal Electronics Inc., a maker of Dell notebooks, lost 1.9 percent to NT$42.50 and Quanta Computer Inc., another Dell laptop supplier, dropped 2.6 percent to NT$64.60.
The MSCI Asia Pacific Index has climbed 66 percent since March 9 amid signs the global economy is recovering from its worst slowdown since World War II. The Organization for Economic Cooperation and Development doubled its growth forecast for the leading developed economies next year to 1.9 percent, the Paris- based organization said in a report yesterday.
Stocks on the MSCI gauge trade at an average 1.5 times book value, up from 1 at the March low. Shares on the U.S. Standard & Poor’s 500 Index are valued at 2.2 times, while Europe’s Dow Jones Stoxx 600 Index is at 1.7 times.
“The market has gone up a lot in a short span of time, so I would expect to see a correction in the near-term, since it’s not extremely cheap,” said Aberdeen’s Yeo.
Taiwanese Chipmakers
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said yesterday the risk of new asset bubbles in global economies and markets is rising, echoing similar comments by Hong Kong Exchanges & Clearing Ltd.’s Chairman Ronald Arculli two days ago.
United Microelectronics, which was cut to “underperform” from “buy” at Merrill, sank 3.9 percent to NT$15.95. Taiwan Semiconductor Manufacturing Co., the world’s largest custom chipmaker, fell 1.9 percent to NT$61.70 after Merrill cut the stock to “neutral” from “buy.”
“There’s a growing disparity between supply growth and consumption, therefore the downside risk to earnings is increasing,” Dan Heyler, Hong Kong-based head of Asian semiconductor research, said yesterday. “We think the supply chain will be aggressively replenished through to March.”
Oil, Metals
BHP retreated 2 percent to A$40.03. Inpex Corp., Japan’s largest oil and gas explorer, slumped 3 percent to 712,000 yen. PetroChina Co., China’s largest oil producer, lost 1.2 percent to HK$9.96 in Hong Kong.
Crude oil for December delivery retreated for the first time in four days yesterday, sliding 2.7 percent to $77.46 a barrel in New York. The London Metals Index, a measure of six metals including copper and zinc, sank 1.5 percent.
Rio Tinto Group declined 1.9 percent to A$71.22 as its Cloud Peak Energy Inc. coal unit raised $459 million in an initial public offering at $15 a share, below its forecast range.
In Tokyo, T&D jumped 5.7 percent to 2,215 yen. Net income surged to 14.4 billion yen ($162 million) for the six months ended Sept. 30 from 3.7 billion yen a year earlier as losses on its securities holdings narrowed, the company said yesterday.
To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Weiyi Lim in Taipei at Wlim26@bloomberg.net.
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