Asian Stocks Fall for Second Day as Chipmakers, Banks Decline

By Anna Kitanaka and Shani Raja

Jan. 19 (Bloomberg) -- Asian stocks fell for a second day as declining computer-memory prices hurt chipmakers, banks dropped on concern earnings growth will slow, and a stronger yen threatened profits at Japanese exporters.

Powerchip Semiconductor Corp. sank 6.8 percent in Taipei and Elpida Memory Inc. lost 4.5 percent in Tokyo. Mitsubishi UFJ Financial Group Inc., Japan’s largest listed bank, slipped 2.4 percent after Barclays Plc said banks’ income from lending may slump. Toyota Motor Corp., which gets 31 percent of revenue from North America, declined 1.2 percent in Tokyo after the yen rose to the highest level in a month against the dollar.

The MSCI Asia Pacific Index fell 0.6 percent to 125.52 at 7:08 p.m. in Tokyo, with nearly twice as many stocks declining as advancing. It was the index’s first back-to-back drop since a decline on Dec. 17-21. The measure climbed 48 percent in the past 12 months amid signs of a global recovery.

“Markets are pausing for a breath,” said Prasad Patkar, who helps manage about $1.6 billion at Platypus Asset Management in Sydney. “Expected corporate earnings are now factoring in the economic recovery. For markets to press on from here upwards, we’ll need to see the earnings growth come through.”

Stocks on the MSCI index trade at 20 times estimated earnings, compared with 15 times for the Standard & Poor’s 500 Index in the U.S. and 13 times for the Dow Jones Stoxx 600 Index in Europe. Futures on the U.S. gauge, which was closed yesterday for the Martin Luther King Jr. holiday, advanced 0.2 percent.

Japan’s Nikkei 225 Stock Average lost 0.8 percent to 10,764.90 in Tokyo and Taiwan’s Taiex Index sank 1.1 percent. Australia’s S&P/ASX 200 Index dropped 1 percent.

Chinese Investment

Hong Kong’s Hang Seng Index climbed 1 percent, reversing a decline of 0.6 percent, after the Caijing magazine said Shanghai may allow individuals to invest abroad. China’s Shanghai Composite Index gained 0.3 percent.

A gauge of technology-related companies on the MSCI Asia Pacific Index, the best performing of 10 industry groups in the past three months, was the biggest drag on the broader gauge.

Powerchip Semiconductor plunged 6.8 percent to NT$4.52, the steepest decline in the MSCI Asia Pacific Index. Inotera Memories Inc. sank 6.3 percent to NT$25.85 in Taipei. Samsung Electronics Co., Asia’s biggest maker of semiconductors, slid 2.4 percent to 823,000 won in Seoul. Elpida, Japan’s largest maker of memory chips, dropped 4.5 percent to 1,725 yen in Tokyo.

A benchmark index of prices for dynamic-random-access- memory chips retreated 1.7 percent, the sixth-straight day of declines, according to Dramexchange Technology Inc.

Bank Stocks Fall

Mitsubishi UFJ lost 2.4 percent to 486 yen after Barclays said in a report that declining interest rates are having “negative implications” for interest income at Japanese banks. Sumitomo Mitsui Financial Group Inc., which sets the price from tomorrow on shares it’s selling, fell 3.1 percent to 2,931 yen.

Commonwealth Bank of Australia, the country’s biggest bank, retreated 2.4 percent to A$56.64, the biggest drag on the MSCI index. Westpac Banking Corp., the No. 2 lender by market value in Australia, lost 1.2 percent to A$25.70.

Citigroup Inc. is due to report earnings today in New York. JPMorgan Chase & Co., the largest U.S. bank by market value, fell on Jan. 15 after saying it’s “cautious” about the outlook for consumer loan defaults, and its retail unit had the first quarterly loss since the first three months of 2008.

“Investors who chased the banks the last few days are taking risk off the table ahead of the U.S. open tonight,” said Angus Gluskie, who oversees $300 million at White Funds Management Pty in Sydney. “With banks having been weak after JPMorgan’s earnings, investors will be uncertain as to the trend of profitability in the U.S.”

Yen Hurts Exporters

Toyota, the world’s largest carmaker, dropped 1.2 percent to 4,140 yen. Honda Motor Co., which receives 81 percent of its sales from abroad, declined 2.1 to 3,300 yen. Canon Inc., a maker of electronics that gets 79 percent of revenue outside Japan, lost 1.4 percent to 3,810 yen.

The yen appreciated to 90.33 against the dollar today, the strongest since Dec. 21, from 91.04 at yesterday’s close of stock trading in Tokyo. That erodes the value of overseas income at Japanese companies when converted into their home currency.

Every 1 yen increase in the yen against the dollar this fiscal year will cut Honda’s operating profit by about 12 billion yen ($132 million) and reduce Toyota’s profit by about 30 billion yen, the automakers said in November.

Trial Program

Orient Overseas (International) Ltd. surged 6.2 percent to HK$54.70 in Hong Kong, the highest since May 2008. CapitaLand Ltd., Southeast Asia’s biggest developer, agreed yesterday to buy the company’s Chinese property assets for $2.2 billion. CapitaLand gained 1.9 percent to S$4.36 in Singapore.

China Construction Bank Corp., the nation’s second-biggest bank by market value, advanced 4.1 percent to HK$6.42. Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, rose 3.1 percent to HK$6.05.

Caijing said Shanghai may start a trial allowing individuals to invest in markets such as Hong Kong and other overseas areas. Caijing, a Beijing-based magazine, cited Fang Xinghai, head of Shanghai’s financial services office. Fang could not be reached at his office number and did not answer his mobile phone.

“If the program materializes, the domestic stock market will falter as it adds to the liquidity concern that’s caused by increasing new share sales and changing monetary policies,” said Zheng Tuo, president of Shanghai Good Hope Equity Investment Management Co. “Hong Kong will still be the biggest beneficiary of the program, because of the familiarity and its close links with the mainland.”

To contact the reporters for this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.