Asian markets decline on China rates, low earnings

MISSING THE MARK::More than half of the companies on the MSCI Asia Pacific Index that have reported quarterly results have failed to meet profit and sales expectations

Staff writer, with agencies

Sun, Oct 27, 2013 - Page 15

Asian stocks posted the biggest weekly decline since August after forecasts from Canon Inc to Japan Exchange Group Inc disappointed investors and money market rates in China surged.

Japan Exchange sank 5.8 percent in Tokyo this week after the main bourse operator in the world’s second-largest equity market failed to boost its full-year profit guidance, as analysts had expected.

Canon retreated 1.9 percent as the world’s largest camera maker trimmed its earnings forecast.

Industrial & Commercial Bank of China Ltd (中國工商銀行) fell 5.4 percent in Hong Kong as Asia’s biggest lender by market value paced a fall among financial shares.

The MSCI Asia Pacific Index sank 1.5 percent to 141.31 this week after climbing to a five-month high on Tuesday amid speculation that the US Federal Reserve would delay tapering stimulus. The slide pulled its earnings multiple down to 13.6 times estimated profit, data compiled by Bloomberg show.

“There are a lot of risks,” Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd, said by telephone. “Only 50 percent of companies are beating forecasts on revenues. There’s also been a tightening in Chinese money markets and when you get news like this, markets are going to be more volatile.”

Of the 99 companies in the MSCI Asia Pacific Index that have reported quarterly results this earnings season and for which Bloomberg compiles estimates, 54 posted profit that missed expectations, while 56 missed sales estimates, the data show.

In Taipei, the TAIEX retreated 1.1 percent this week to end at 8,346.62 on Friday, compared with 8,441.19 on Oct. 18.

On Friday, the local bourse fell 0.8 percent, or 67.1 points, while HTC Corp (宏達電) rose 3.09 percent to NT$150 and Hon Hai Precision Industry Co Ltd (鴻海精密) fell 0.79 percent to NT$75.20.

Japan’s TOPIX fell 2.3 percent this week, but is still 37 percent higher this year — the largest rally among the 24 developed equity markets tracked by Bloomberg — amid optimism that Japanese Prime Minister Shinzo Abe’s policies and unprecedented monetary easing from the Bank of Japan will lead the country out of deflation.

South Korea’s KOSPI fell 0.9 percent even after data showed that the country’s economy grew more than forecast last quarter, while Hong Kong’s Hang Seng Index slid 2.8 percent in its biggest weekly retreat since August and China’s Shanghai Composite Index posted a second week of decline, falling 2.8 percent.

Elsewhere, Singapore’s Straits Times Index gained 0.4 percent, Australia’s S&P/ASX 200 Index rose 1.2 percent to post its third week of gains and New Zealand’s NZX 50 Index, which reached a record-high this week, advanced 2.2 percent.

In other markets on Friday:

Manila fell 0.67 percent, or 43.96 points, from Thursday to close at 6,539.81.

Mumbai fell 0.20 percent, or 41.91 points, to end the week at 20,683.52.

Wellington rose 0.59 percent, or 28.41 points, to finish at 4,863.35.