Asian stocks fell for the first time in five days, led by South Korean oil refiners and Chinese steel makers on concern they will report lower-than-estimated earnings in coming months.
SK Energy Co. slumped 9.9 per cent in Seoul after Woori Investment & Securities Co. said refiners may post “earnings shocks” in the third quarter. Baoshan Iron & Steel Co. lost 1.3 per cent in Shanghai after the Xinhua News Agency said the company will cut product prices.
National Australia Bank dropped 1.9 per cent in Sydney, pacing declines among financial companies, on a brokerage downgrade.
Six stocks dropped for more than five that gained on the MSCI Asia Pacific excluding Japan Index, which lost 0.2 per cent to 400.28 as of 6:34 p.m. in Hong Kong. The measure rose 4.8 per cent in the previous four trading days. Japanese markets are closed. The MSCI gauge has surged 95 per cent since March amid signs of a global economic revival.
“The question is whether the rally has over-extended beyond the confirmation of economic stability that we’ve seen,” said Jason Teh, who helps manage about $3.2 billion at Investors Mutual in Sydney. “It’s still hard to know exactly where the world’s going to go, and the degree of growth remains very hard to quantify.”
In India, the Bombay Stock Exchange’s Sensitive Index climbed 2.6 per cent, the most since August 24, after the nation’s industrial production increased the most in 22 months and Prime Minister Manmohan Singh said economic growth will accelerate. Sri Lanka’s benchmark gauge rose to a record after President Mahinda Rajapaksa’s party won provincial elections in the south.
Hong Kong declines
Hong Kong’s Hang Seng Index sank 0.9 per cent, while South Korea’s Kospi Index slid 0.4 per cent. Singapore’s Straits Times Index gained 1.1 per cent after the government raised its 2009 economic forecast. Jardine Cycle & Carriage, an automobile distributor, added 3.3 per cent.
Promos Technologies Inc. climbed 6.7 per cent in Taipei, leading gains among chipmakers after memory-chip prices advanced to the highest in almost 11 months. Crown, Australia’s largest casino operator, surged 6.1 per cent after 3 per cent of the company changed hands in a single trade.
Futures on the Standard & Poor’s 500 Index added 0.5 per cent. The Dow Jones Industrial Average rose 0.8 per cent on October 9 to a one-year high, as analyst recommendations spurred gains in technology and health-care shares.
Global stock markets advanced last week as Alcoa unexpectedly reported a profit and economic data signaled the US recession is ending. Companies from Intel Corp. to Goldman Sachs Group are scheduled to report earnings this week.
The seven-month rally in equity markets has lifted the average price of stocks in the MSCI Asia Pacific excluding the Japan Index to 2 times the book value from 1.2 at the gauge’s March low.
SK Energy, South Korea’s biggest oil refiner, sank 9.9 per cent to 113,500 won. S-Oil Corp. lost 1.1 per cent to 61,000 won after a Woori report said the companies may report “earnings shocks” in the third quarter after margins for premium products narrowed and the won strengthened.
Woori cut its estimates for SK Energy and S-Oil’s 2009 and 2010 per-share earnings, the report said.
In China, Baoshan Iron & Steel Co., the country’s largest steelmaker, lost 1.3 per cent to 6.65 yuan. The company will cut November prices on hot-rolled and cold- rolled steel products by 400 yuan a metric ton, the state-run Xinhua News Agency said yesterday.
The average spot price for domestic hot-rolled steel sheet fell 0.6 per cent on October 9 to the lowest since April 23, based on data from Beijing Antaike Information Development Co.
Steel makers drop
Angang Steel Co., China’s No. 2 producer, retreated 0.9 per cent to 12 yuan. Wuhan Iron & Steel Co., the country’s third biggest, fell 1.9 per cent to 7.19 yuan.
National Australia Bank, the country’s biggest lender by assets, lost 1.9 per cent to A$31.01. Bank of America Corp.’s Merrill Lynch unit downgraded the stock to “underperform” from “neutral” on valuation concerns, according to an October 9 report. Commonwealth Bank of Australia fell 1 per cent to A$52.64.
Crown surged 6.1 per cent to A$9.01. Shares worth A$205 million ($185 million) changed hands after the market closed on October 9 at a 6 per cent premium, according to stock exchange data. Chairman James Packer was the buyer, the Australian Financial Review reported. Crown declined to comment.
In Singapore, Jardine Cycle & Carriage climbed 3.3 per cent to S$26.
DBS Group Holdings raised its share-price estimate to S$4.80 from S$4.52 and maintained its “buy” rating.
The city’s government raised its 2009 economic forecast today after gross domestic product expanded for a second consecutive quarter. The economy will shrink 2 per cent to 2.5 per cent this year, less than an earlier forecast for a contraction of 4 per cent to 6 per cent, the trade ministry said.
In Wellington, Cavalier Corp., New Zealand’s largest publicly traded carpet maker, gained 3.3 per cent to NZ$2.48 after the government’s valuation agency said the country’s house prices increased last month.
Michael Hill International, New Zealand’s largest specialty jewelry retailer, added 1.4 per cent to 72 New Zealand cents after saying first-quarter sales rose 6.3 per cent.
The Singapore and New Zealand reports are the latest signs of a pick-up in the global economy, which has driven the seven-month stock rally.
White House economic adviser Lawrence Summers on October 8 rejected the notion that the US faces an extended period of below-average growth and high unemployment in the wake of the worst recession since the 1930s.
‘Recovery taking shape’
“The data is supportive, the systemic risks have passed, and the recovery seems to be taking shape across the world,” said Prasad Patkar, who helps manage about $1.3 billion at Platypus Asset Management in Sydney. “Most people are positioned for a pullback. As the markets keep going up, they sort of nervously have to deploy cash into the market.”
Promos, Taiwan’s most unprofitable memory-chip maker, climbed 6.7 per cent to NT$1.92 after benchmark dynamic random access memory chip prices surged 8.5 per cent on October 9, to the highest since November 20, 2007.
Powerchip Semiconductor Corp. surged 6.8 per cent to NT$3.45. South Korea’s Hynix Semiconductor, the world’s No. 2 maker of computer-memory chips, gained 1.8 per cent to 20,000 won in Seoul.
The Philadelphia Semiconductor Index, which measures 18 US companies, jumped 3.3 per cent on October 9 after Ross Seymore, an analyst at Deutsche Bank, wrote in a note that chip makers’ third-quarter earnings will beat analysts’ estimates.