By Adam Haigh - Jul 9, 2012 8:09 AM GMT+0700
Asian stocks fell for a third day amid concern slower growth is damaging earnings after Premier Wen Jiabao said China’s economy faces “relatively large” downward pressure and Japanese machinery orders fell more than expected following a disappointing U.S. jobs report.
Komatsu Ltd. (6301), a Japanese maker of construction equipment, lost 3.1 percent. BHP Billiton Ltd. (BHP), the world’s biggest mining company, slid 1.6 percent as metals prices dropped. Iluka Resources Ltd. (ILU) tumbled 18 percent after the Australian miner said revenue will miss estimates. Chinese developers traded in Hong Kong may be active after Wen pledged to stabilize home prices.
The MSCI Asia-Pacific declined 0.7 percent to 117.75 as of 9:10 a.m. in Tokyo. Photographer: Kiyoshi Ota/Bloomberg
Komatsu Ltd., a Japanese maker of construction equipment, lost 2.5 percent. Photographer: Tomohiro Ohsumi/Bloomberg
The MSCI Asia Pacific Index (MXAP) declined 0.8 percent to 117.68 as of 9:40 a.m. in Tokyo before markets in China and Hong Kong opened. Four stocks dropped for each that rose. The gauge has fallen 8.8 percent from this year’s high in February amid concern economic expansion is faltering in China and the U.S. as Europe’s debt crisis deepens.
“Long-term growth issues remain,” said Masahiko Ejiri, a senior fund manager in Tokyo at Mizuho Asset Management Co., which oversees $39 billion. “I’m negative on the macro-economic environment and I’m staying defensively positioned. There needs to be more stimulus from authorities to address slowing growth.”
The MSCI Asia-Pacific declined 8.8 percent from this year’s highest level in February through July 6 amid concern economies in China and the U.S. are slowing as Europe’s debt crisis deepens. Still, the gauge has risen 4.2 percent in 2012 through July 6, compared with a 7.7 percent advance on the S&P 500 and a 4 percent increase on the Stoxx Europe 600 Index. Asian shares advanced last week on anticipation central banks would ease monetary policy to spur growth.
Relative Value
Stocks in the Asian benchmark are valued at 12 times estimated earnings on average, compared with 13 times for the S&P 500 and 10.6 times for the Stoxx 600.
Japan’s Nikkei 255 Stock Average slid 1 percent and the broader Topix Index lost 0.9 percent. South Korea’s Kospi declined 1.2 percent and Australia’s S&P/ASX 200 Index retreated 1 percent.
Futures on the Standard & Poor’s 500 Index fell 0.3 percent today. The underlying gauge slid 0.6 percent last week. American employers hired fewer workers than forecast in June and the unemployment rate held at 8.2 percent, a June 6 report showed.
Earnings Season
Alcoa Inc. (AA) is due to posts results today, the first Dow Jones Industrial Average company in the U.S. to release earnings. Analysts project a 1.8 percent decline in profits for S&P 500 companies in the April-June period, which would mark the first year-over-year decrease since 2009.
Wen Jiabao, speaking four days after China’s central bank announced the second interest-rate cut in a month, said downward pressure on the economy is still “relatively large.” The government will intensify fine-tuning of policies even as measures taken since April are helping to stabilize a slowdown, he said, the official Xinhua News Agency reported yesterday.
“We must unswervingly continue to implement all manner of controls in the property market to allow prices to return to reasonable levels,” the reported Wen as saying. “We cannot allow prices to rebound.”
Japanese machinery orders, an indicator of capital spending, fell 14.8 percent in May from the previous month, the Cabinet Office said. Economists expected a 2.6 percent decline.
To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
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