By Masaki Kondo and Jonathan Burgos
Jan. 7 (Bloomberg) -- Asian stocks fell, dragging the MSCI Asia Pacific Index lower for the first time in five days, as stronger currencies threatened export earnings and China took steps to curb lending growth.
LG Electronics Inc. tumbled 7.6 percent in Seoul on concern profit at the handset business may miss analyst estimates and after South Korea’s won appreciated against the dollar. Canon Inc., which gets 28 percent of its sales from the Americas, sank 2.5 percent after Credit Suisse Group AG cut its recommendation. China Citic Bank Corp. fell 3.4 percent in Shanghai after the central bank said it will target “moderate” loan growth in 2010.
The MSCI Asia Pacific Index sank 0.4 percent to 123.63 as of 6:33 p.m. in Tokyo. The gauge climbed 34 percent last year, the biggest annual gain since 2003, as central banks cut borrowing costs and governments boosted spending to drag their economies out of recession.
“Markets will struggle to go higher,” said Norman Villamin, Singapore-based head of investment analysis for Asia Pacific at Citigroup Private Bank. “We’re much more sensitive to valuations given last year’s gains and will focus more on selected stock picks.”
China’s Shanghai Composite Index retreated 1.9 percent, while Hong Kong’s Hang Seng Index declined 0.7 percent. The Kospi Index sank 1.3 percent in Seoul amid speculation the central bank will raise rates after a policy meeting tomorrow.
San Miguel
Japan’s Nikkei 225 Stock Average fell 0.5 percent. Banks were the biggest contributor to the Topix Index’s 0.1 percent gain, with a gauge of lenders rising 1.7 percent, amid optimism bank share sales are close to an end. After the stock market shut, the yen slumped versus the dollar as the finance minister said he would like the currency to fall “a bit more.”
The Philippine Stock Exchange Index jumped 1.3 percent, the most among benchmark gauges in Asia. San Miguel Corp., the nation’s largest food and drinks maker, climbed 7.5 percent after agreeing to a takeover plan by its directors.
Futures on the Standard & Poor’s 500 Index lost 0.3 percent. The stock gauge added 0.1 percent yesterday as minutes from the Federal Reserve’s last policy meeting showed central bankers considered more stimulus measures.
In Seoul, LG Electronics, the world’s No. 3 mobile-phone maker, dived 7.6 percent to 115,000 won, the biggest slump since Sept. 9, after saying today it aims to post global revenue of 59 trillion won ($52 billion) this year.
There are concerns about earnings growth at LG’s mobile- phone business, as the company has been late in introducing so- called smart phones, according to Han Eun Mee, an analyst at HI Investment & Securities Co.
Won Appreciation
Samsung Electronics Co., Asia’s biggest maker of semiconductors, flat screens and mobile phones, declined 3.3 percent to 813,000 won even after reporting fourth-quarter operating profit of about 3.7 trillion won, compared with a loss a year earlier.
The stock was the heaviest drag on the MSCI Asia Pacific Index as the stronger won threatened the value of overseas sales at South Korean companies when converted into their home currency. The won appreciated versus the dollar to as much as 1,129.42 today, a level not seen since September 2008.
Hyundai Motor Co., South Korea’s largest carmaker, dropped 4.5 percent to 106,000 yen.
The Bank of Korea will announce its monthly decision on interest rates on Jan. 8, after it kept borrowing costs on hold last month. Governor Lee Seong Tae said in his New Year speech the central bank will manage its benchmark interest rate to “help support” the economy, while monitoring for possible side effects of a loose monetary policy.
Signs Of Growth
“There seems to be investor speculation that Korea is set to join those increasing interest rates given the pace of its economic recovery,” said Chu Moon Sung, a fund manager at Shinhan BNP Paribas Asset Management Co. in Seoul, which manages about $28 billion in assets.
Reports in the past week showed South Korea’s exports surged 33.7 percent last month and November home-building permits rose 5.9 percent in Australia, where the central bank lifted the benchmark lending rate for a third month in December.
Australian retail sales increased 1.4 percent in November from the previous month, the statistics bureau said today. The data helped drive Harvey Norman Holdings Ltd., Australia’s No. 1 electronics retailer, up by 3.7 percent to A$3.95.
The MSCI Asia Pacific Index’s advance last year came amid expectations growth in the region, driven by China, will outperform the rest of the world. The gauge’s 2009 gain drove up its price-book value ratio to 1.61, the highest level since September 2008, according to data compiled by Bloomberg.
Yen Strength
In Tokyo, Canon, the world’s biggest digital-camera maker, slid 2.5 percent to 3,930 yen after Credit Suisse reduced its rating to “neutral” from “outperform.” Honda Motor Co., which gets 47 percent of its sales in North America, lost 1.6 percent to 3,090 yen.
Japanese exporters fell as the yen appreciated to as high as 92.11 versus the dollar. The yen depreciated to 92.87 per dollar following Finance Minister Naoto Kan’s remarks.
Kan, who replaced Hirohisa Fujii as Japan’s finance minister yesterday, said he will try to keep the yen at an appropriate level while considering various impacts on the economy that may be caused by currencies.
In Shanghai, China Citic Bank slid 3.4 percent to 7.67 yuan as an increase in rates on three-month bills for the first time in 19 weeks signaled tighter liquidity.
Chinese Lenders
China Minsheng Banking Corp., the nation’s first privately owned bank, lost 2.7 percent to 7.70 yuan. Bank of Communications Co. slid 1.4 percent to HK$9.30 in Hong Kong.
Policy makers need to support “relatively fast” economic growth while stabilizing prices and managing inflation expectations, the People’s Bank of China said yesterday after an annual work meeting. It reaffirmed a “moderately loose” monetary policy.
Material producers advanced after the London Metal Exchange Index, a measure of six metals including copper and zinc, rose 3 percent yesterday to the highest level since August 2008. The advance was the most since Nov. 16. Crude oil for February delivery surged to a 14-month high yesterday in New York, rising 1.7 percent.
Korea Zinc Co., the world’s second-biggest zinc refiner, jumped 3.2 percent to 211,000 won, while Alumina Ltd. rose 1.8 percent to A$1.96 in Sydney. Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, added 1 percent to A$48.90.
Higher Growth Estimates
“Commodities are continuing their climb as anticipation strengthens of growing demand from a global economic recovery,” said Mitsushige Akino, who manages about $450 million at Tokyo- based Ichiyoshi Investment Management Co.
The International Monetary Fund will probably raise its forecast for global growth later this month, John Lipsky, the IMF’s first deputy managing director, said in a Bloomberg Radio interview. The IMF forecast in October the global economy will expand 3.1 percent this year.
San Miguel jumped 7.5 percent to 72 pesos in Manila. Top Frontier Holdings Inc., part-owned by board members Roberto Ongpin and Inigo Zobel, plans to offer 75 pesos for each share in the foodmaker, San Miguel said yesterday.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Jonathan Burgos in Singapore at jburgos4@bloomberg.net.
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