Aug. 18 (Bloomberg) -- Most Asian stocks fell, led by commodity companies, after metals prices slumped amid concern the global economic recovery will fail to meet investors’ expectations.
Mitsubishi Corp., which generates nearly half its revenue from trading commodities, sank 2.2 percent in Tokyo, while Fortescue Metals Group Ltd. lost 3.1 percent in Sydney. James Hardie Industries NV, the biggest seller of home siding in the U.S., surged 21 percent after forecasting profit at the high end of analyst estimates. Everbright Securities Co. soared 34 percent on its first trading day in Shanghai.
The MSCI Asia Pacific Index dropped 0.3 percent to 110.26 as of 12:05 p.m. in Tokyo. Two stocks declined for each one that advanced. The gauge sank 3.1 percent yesterday, paring its rally from a more than five-year low on March 9 to 57 percent.
“These technical corrections, profit taking and pullbacks are to be expected, but my feeling is that they’ll be relatively shallow,” said Prasad Patkar, who helps manage about $1.2 billion at Platypus Asset Management in Sydney. “Valuations looked stretched, but as long as earnings keep going up, they will start to look more normal as time goes by.”
Japan’s Nikkei 225 Stock Average gained 0.4 percent. Casio Computer Co. rose 5.8 percent after Credit Suisse Group AG increased its rating on the electronics maker. Hong Kong’s Hang Seng Index added 0.6 percent.
The Shanghai Composite Index lost 0.7 percent, extending yesterday’s 5.8 percent slump, which was the steepest since November. Air China Ltd. sank 7.1 percent on concern it may have paid too much to raise its stake in Hong Kong’s Cathay Pacific Airways Ltd.
Trailing Estimates
Futures on the Standard & Poor’s 500 Index gained 0.3 percent. The gauge fell 2.4 percent yesterday, extending a global stock slump after figures on Japan’s economic growth trailed some economists’ estimates and foreign direct investment in China dropped for a 10th month. The MSCI World Index was little changed today after sinking 2.8 percent yesterday.
Reports last week showed that Chinese exports dropped in July, lending fell, and investment growth slowed, while Australia’s statistics bureau said wage growth stalled last quarter as the worst global slump since the Great Depression drove up unemployment.
Mitsubishi sank 2.2 percent to 1,880 yen. Mitsui & Co., a trading house that generates more than half its profit from metals and energy, lost 1.8 percent to 1,219. Fortescue slumped 3.1 percent to A$4.44, following a 10 percent advance in the four previous trading days.
Metal Prices Gain
A measure of six metals, including copper and zinc, traded on the London Metal Exchange fell 2.7 percent yesterday to the lowest level in a week. Copper futures in New York dropped 2.3 percent, while oil sank 1.1 percent.
The MSCI Asia Pacific Index rallied 62 percent through Aug. 14 from its March 9 low on speculation a global economic recovery will boost earnings. Companies in the gauge trade at 1.57 times book value, compared with 1.03 times at the March low. The benchmark has averaged about 1.7 times book value since 2001.
“We were due for a correction, but the overall rising trend for the market remains as earnings and the economy are on the mend,” said Yoshinori Nagano, a senior strategist at Tokyo- based Daiwa Asset Management Co., which oversees the equivalent of $89 billion.
A third of the 503 companies in the MSCI Asia Pacific Index that have reported results since early July have beaten analysts’ profit estimates, while 18 percent have missed, according to data compiled by Bloomberg.
James Hardie
James Hardie, which reported a first-quarter loss on declining earnings from the U.S., surged 21 percent to A$6.97. The company said it expects full-year operating profit at the high end of analysts’ forecasts, excluding costs relating to asbestos claims, and that the U.S. housing slump may be easing.
Everbright Securities, the first Chinese brokerage to make an initial public offering in almost seven years, soared 34 percent to 28.21 yuan. The company raised 11 billion yuan ($1.6 billion) by selling shares to institutional and retail investors.
Air China, the world’s biggest airline by market value, sank 7.1 percent to 7.29 yuan. The company said it will spend HK$6.3 billion ($813 million) raising its stake in Cathay Pacific to 29.99 percent. Cathay lost 1 percent to HK$11.50.
“Further alignment with Cathay will enhance Air China’s strategic control of China’s most important international gateways -- Beijing and Hong Kong,” said Ally Ma, an analyst at Citigroup Inc. Still, the price “seems too high and disappoints our positive view on Air China.”
In Tokyo, Casio gained 5.8 percent to 788 yen. Credit Suisse upgraded the stock to “outperform” from “underperform” amid optimism the company will restore profits in money-losing businesses.
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