Asian Stocks Fall After China Data as Investors Weigh Earnings

Aug 05, 2014 6:46 am ET

Aug. 5 (Bloomberg) -- Asian stocks fell after a private gauge of China’s services industries declined to a record low and as investors weighed company earnings.

Greentown China Holdings Ltd. plunged 12 percent after the developer said first-half profit may drop. Taiwan Semiconductor Manufacturing Co. slid 3.2 percent, the biggest drag on the regional index. Crown Resorts Ltd., an Australian gaming company, slid 3.9 percent after its rating was cut at Credit Suisse Group AG. Isuzu Motors Ltd. added 3.2 percent after the Japanese truckmaker reported higher-than-expected net income.

The MSCI Asia Pacific Index slid 0.7 percent to 146.92 at 6:30 p.m. in Hong Kong as five stocks fell for every one that rose. The measure added 0.1 percent yesterday after dropping 0.7 percent last week. Today’s China services data came after a report last week showed the nation’s manufacturing industry expanded in July at the fastest pace in more than two years.

“You’d think they would move in tandem, but it’s going in the other direction,” said Pauline Dan, Hong Kong-based head of greater China equities at Pictet Asset Management Ltd. “Momentum traders and investors who are looking to take profit in the short term will use that as an excuse to sell.”

The July reading for an index of China’s services industry by HSBC Holdings Plc and Markit Economics came in at 50, the lowest since the series began in November 2005 and down from 53.1 in June. A report over the weekend showed the government’s non-manufacturing purchasing managers’ index fell to 54.2 in July from 55 in June. A reading above 50 indicates expansion.

Regional Gauges

The Hang Seng Index rose 0.2 percent in Hong Kong, while the Hang Seng China Enterprises Index of mainland shares traded in the city lost 0.7 percent. China’s Shanghai Composite Index dropped 0.2 percent. Taiwan’s Taiex retreated 2 percent as Taiwan Semiconductor, the heaviest-weighted stock on the gauge, fell 3.2 percent to NT$119.50.

Japan’s Topix lost 1 percent and South Korea’s Kospi fell 0.7 percent. Australia’s S&P/ASX 200 Index slid 0.4 percent as the Reserve Bank of Australia left its key interest rate at a record low. New Zealand’s NZX 50 Index gained 0.3 percent and Singapore’s Straits Times Index rose 0.3 percent. India’s S&P BSE Sensex gained 0.7 percent as the nation’s central bank left interest rates unchanged for a third straight meeting.

Earnings Results

Of the businesses on the Asian stock gauge that released results from the beginning of July through yesterday and for which Bloomberg had estimates, 60 percent beat earnings expectations.

“Overall, earnings are not bad with more companies upgrading forecasts than downgrading,” said Junya Naruse, chief strategist at Daiwa Securities Group Inc. in Tokyo. “But there are winners and losers and the market is moving on a stock-by- stock basis. That’s why the market’s momentum is limited.”

Greentown China plummeted 12 percent to HK$8.55 in Hong Kong, its biggest slump in a year, after saying first-half profit may drop more than 65 percent from the previous year.

Crown Resorts fell 3.9 percent to A$15.20 in Sydney after its rating was lowered to “underperform” from “neutral” at Credit Suisse.

Isuzu Motors rose 3.2 percent to 731.10 yen in Tokyo after saying its first-quarter net income was 21.4 billion yen ($208 million), beating the mean analyst estimate of 19.3 billion yen.

Cochlear Ltd., an Australian maker of hearing implants, jumped 10 percent to A$69, its biggest rally since December 2011. The company reported its full-year profit was A$93.7 million ($87 million), compared with A$132.6 million a year earlier. There’s some relief that the company’s known problems haven’t hit earnings as hard as expected, said Michael McCarthy, chief market strategist at CMC Markets.

WH Group Ltd. rose on its debut in Hong Kong after the world’s biggest pork producer raised HK$15.3 billion ($2 billion) in its second attempt at an initial public share sale. The stock gained 7.4 percent to HK$6.66.

--With assistance from Kana Nishizawa in Hong Kong.