BLBG: Asian Stocks Drop as Panasonic, Aozora Fuel Earnings Concern
Asian stocks fell as Panasonic Corp. and Mizuho Financial Group Inc. reported losses and oil prices slumped. Treasuries and the yen advanced as declines in equities prompted investors to seek safe-haven assets.
Panasonic, the world’s biggest maker of plasma televisions, tumbled 7.2 percent in Tokyo. Mizuho, Japan’s second-biggest listed bank, fell 3.4 percent after posting a 588.8 billion yen ($6.2 billion) loss for last year. Cnooc Ltd., China’s largest offshore oil producer, sank 3.8 percent in Hong Kong as crude fell the most in four weeks on May 15. India suspended trading after the Nifty Index jumped as much as 16 percent following the ruling party’s biggest election victory since 1991.
The MSCI Asia Pacific Index slipped 0.9 percent to 96.43 at 1:48 p.m. in Tokyo. Through the end of last week, the gauge had climbed 38 percent from a more than five-year low on March 9. The rally lifted the average valuation of stocks in the measure to 1.4 times the book value of assets as of May 15, 17 percent higher from the end of 2008.
“Until we see the economic outlook improve and earnings show signs of rising above current levels, we won’t see stocks push to higher levels,” said Masaru Hamasaki, a senior strategist at Toyota Asset Management Co., which oversees about $3.3 billion.
Japan’s Nikkei 225 Stock Average declined 2.5 percent, while South Korea’s Kospi index fell 1.3 percent. Hong Kong’s Hang Seng Index lost 1.3 percent as the city’s economy shrank more than economists expected in the first quarter. Sri Lanka’s Colombo All Share Index gained 4.1 percent as the government moved closer to ending a three-decade war with Tamil rebels.
Risk Aversion
Yokogawa Electric Corp., which makes measuring equipment, slumped 15 percent on a full-year loss. Unitika Ltd. rose 18 percent, pacing gains among Japanese makers of materials used in medical masks, as broadcaster NHK reported the country’s confirmed swine flu cases rose to 96. Gloucester Coal Ltd. surged 18 percent in Sydney trading after agreeing to a higher takeover bid form Noble Group Ltd.
Futures on the U.S. Standard & Poor’s 500 Index declined 0.7 percent. The measure dropped 1.1 percent on May 15 as Federal Deposit Insurance Corp. Chairman Sheila Bair predicted the heads of some banks may be replaced.
The yield on the 10-year Treasury note fell three basis points to 3.11 percent, according to data compiled by Bloomberg. A basis point is 0.01 percentage point. The yen advanced to 94.88 per dollar from 95.21 last week, after touching 94.70, the strongest since March 20.
“We are seeing risk aversion across the board,” said Masafumi Yamamoto, head of foreign-exchange strategy for Japan at Royal Bank of Scotland Group Plc in Tokyo and a former Bank of Japan currency trader. “The market is becoming more vulnerable to negative news.”
‘Too Hard, Too Quickly’
Economic figures in the past week have fueled concerns that the two-month stock rally had left equities overvalued relative to earnings prospects. Japan’s wholesale prices fell at the fastest pace in 22 years in April, according to central bank figures on May 15. Hong Kong’s gross domestic product shrank 4.3 percent in the first quarter from the previous three months, which was worse than the 2.6 percent median decline expected by economists in a Bloomberg survey.
“There’s the perception that maybe things have gone too hard, too quickly,” said Tim Schroeders in Melbourne, who helps manage $1 billion at Pengana Capital Ltd. “People are looking a bit more circumspectly about how things are progressing.”
Panasonic tumbled 7.2 percent to 1,351 yen. The company said on May 15 it will probably post a net loss of 195 billion yen in the 12 months ending March 31, compared with a 379 billion yen deficit a year earlier.
Loss Forecasts
Mizuho Financial sank 3.4 percent to 229 yen in Tokyo. The bank plans to raise as much as 800 billion yen selling stock and preferred securities after posting its first loss in six years.
Aozora Bank Ltd., the Japanese lender controlled by Cerberus Capital Management LP, declined 5 percent to 134 yen after posting a wider-than-expected full-year loss.
Cnooc sank 3.8 percent to HK$9.60 after oil futures fell 3.9 percent on May 15 to $56.34 a barrel in New York. The drop was the biggest since April 20. Woodside Petroleum Ltd., Australia’s No. 2 oil producer, declined 2.1 percent to A$42.57 in Sydney. Inpex Corp., Japan’s largest oil exploration company, lost 4 percent to 670,000 yen.
India’s Nifty Index surged as much as 16 percent to 4,271.40 before trading was suspended. The Sensitive Index, or Sensex, surged 10.7 percent, the stock exchange’s Web site said.
Stable Government
Prime Minister Manmohan Singh’s Congress party and its allies won 260 of the 543 seats in the lower house of India’s parliament, the Election Commission said on its Web site on May 16. The victory margin exceeded the most optimistic prediction for 216 in exit polls released by NDTV television.
“The election result is extremely positive and very, very bullish,” said Madhusudan Kela, head of equities at Reliance Capital Asset Management, the nation’s largest money manager. “This will provide a government which is stable and has powers to take decisions.”
Yokogawa slumped 15 percent to 445 yen after reporting a net loss of 38.4 billion yen for the year ended March 31, compared with an 11.7 billion yen profit a year earlier, it said in a release on May 15.
Unitika soared 18 percent to 109 yen on speculation the spread of swine flu in Japan will boost demand for its products. Kurabo Industries Ltd. surged 24 percent to 182 yen. More than three-quarters of the cases are in Osaka and Hyogo prefectures, western Japan, NHK reported, citing health officials.
Gloucester Coal jumped 18 percent to A$6.95. Noble raised its offer to A$7 a share in cash, from A$6, to win unanimous endorsement from Gloucester directors, the Hong Kong-based commodity supplier said. Noble, which owns a 21.7 percent stake in Gloucester, fell 4.8 percent to S$1.40 in Singapore.
