Asian Stocks Fall From 20-Month High as Yen Strengthens

By Adam Haigh 

Asian stocks fell from the highest level in 20 months, paring the biggest weekly advance since September. Japan’s Topix Index (TPX) dropped for the first time in eight days as the yen strengthened against the dollar.

Canon Inc. (7751), a Japanese camera maker that gets 80 percent of sales abroad, slid 2.3 percent. GS Engineering & Construction Corp. (006360) tumbled by the daily 15 percent limit inSeoul for a second day after reporting an unexpected loss. Kyushu Electric Power Co. led a surge in Japanese electricity companies after SMBC Nikko Securities Inc. said it was bullish on the industry’s earnings outlook, citing an increasing likelihood that nuclear power plants will resume operations. The MSCI Asia Pacific Index slid 0.2 percent to 137.77 as of 12:36 p.m. in Tokyo, with five stocks falling for every three that rose. The gauge has advanced 3.2 percent this week and climbed the past five months on speculation Japan would do more to boost the economy and amid signs the U.S economy is recovering.

“The big question at the moment is whether or not the rally is sustainable,” said Masahiko Ejiri, a Tokyo-based fund manager for Mizuho Asset Management Co., which oversees about $45 billion. “There still should be a very reasonable amount of money to come into Japan. We have not seen any significant change in the structure of the Japanese economy. Monetary stimulus is easy to do, but to change the economy is hard.”

Japan’s Nikkei 225 Stock Average lost 0.9 percent, with volume 51 percent higher than the 30-day average for the time of day, as April options contracts settled. The broader Topix slid 0.6 percent. Canon sank 2.3 percent to 3,610 as the yen gained 0.2 percent to 99.52 per dollar.

Regional Gauges

Goldman Sachs Group Inc. boosted its outlook on Japanese shares for the fourth time this year, citing the Bank of Japan’s “credible commitment” to beat deflation.

Australia’s S&P/ASX 200 Index (AS51) added 0.1 percent and South Korea’s Kospi index slid 0.5 percent. New Zealand’s NZX 50 Index rose 0.3 percent and Taiwan’s Taiex Index lost 0.4 percent.

Hong Kong’s Hang Seng Index rose 0.3 percent and China’s Shanghai Composite swung between gains and losses before the release of China’s economic growth data next week.

China’s National Bureau of Statistics will release first- quarter economic growth data on April 15 along with March figures for industrial production and retail sales and first- quarter fixed-asset investment. The world’s second-largest economy probably grew 8 percent from a year earlier in the January-March period, according to the median forecast, down from an 8.2 percent projection in February.

Singapore GDP

Singapore’s Straits Times Index climbed less than 0.1 percent even as a report showed the nation’s economy unexpectedly contracted last quarter as companies grappled with a labor shortage and exports faltered amid an uneven global recovery.

GS Engineering lost 15 percent to 35,700 won, the worst performer on the MSCI Asia Pacific Index. (MXAP) The Seoul-based builder posted an operating loss of 535.4 billion won ($474 million) for the first quarter, the company said April 10.

Woodside Petroleum Ltd. (WPL) gained 3 percent to A$36.34 after Australia’s second-largest oil producer scrapped a plan to build a $46 billion liquefied-natural-gas project and said it may accelerate the return of capital to shareholders. Chiyoda Corp., a Japanese industrial plant operator which is bidding on the project, tumbled 9.2 percent to 989 yen.

Power Companies

Kyushu Electric soared 18 percent to 1,340 yen and Hokkaido Electric Co surged 11 percent to 1,357 yen. The firms will be among the first beneficiaries as pressurized water reactors are expected to resume operation “rather quickly,” SMBC analyst Hidetoshi Shioda wrote in a report.

Takata Corp. dropped 2.1 percent to 1,781 yen, extending yesterday’s slump, after Japan’s biggest automakers recalled cars because of defective airbags made by the company.

Futures on the Standard & Poor’s 500 Index dropped 0.2 percent. The gauge rose 0.4 percent to a record yesterday as retailers climbed amid rising March sales at U.S. retailers, and as jobless claims dropped more than estimated. The gauge has more than doubled from its 12-year low in March 2009, helped by the Federal Reserve’s unprecedented bond purchases and three straight years of profit growth.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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