Asian Stocks Fall as Earnings Miss Estimates; Nintendo, Mitsubishi Decline

Asian stocks declined for a second day as companies from Nintendo Co. to Nidec Corp. (6594) reported earnings that missed analyst estimates and after commodity prices dropped.

Nintendo, the world’s largest maker of video-game players, slumped 4 percent in Tokyo. Nidec, the biggest global maker of motors for hard-disk drives, decreased 2.3 percent. China Life Insurance Co. fell 2.5 percent after its first-quarter net income declined. Mitsubishi Corp., Japan’s No. 1 commodities trader, retreated 1 percent after copper and oil prices fell.

“As stimulus measures are withdrawn, company profits will be affected,” said Pauline Dan, Hong Kong-based chief investment officer at Samsung Asset Management, which oversees about $72 billion. “A lot of the demand in the past two years has been driven by government spending. While valuations are reasonably attractive, investors need to be selective when picking stocks as inflation remains a big concern.”

The MSCI Asia Pacific Index slid 0.5 percent to 137.81 as of 11:50 a.m. in Tokyo, with two shares falling for each that rose. The gauge climbed 2.2 percent last week after U.S. companies including Apple Inc. reported increased profits, signaling the global economic recovery is accelerating.

Japan’s Nikkei 225 (NKY) Stock Average decreased 1 percent, while Hong Kong’s Hang Index fell 0.8 percent. China’s Shanghai Composite Index dropped 0.6 percent and South Korea’s Kospi Index lost 0.3 percent. New Zealand’s NZX 50 Index was little changed.

Futures on the Standard & Poor’s 500 Index were little changed today. In New York yesterday, the index slipped 0.2 percent to 1,335.25 as lower commodity prices drove down energy and raw-material producers, and as Kimberly-Clark Corp., the maker of Scott toilet paper and Huggies diapers, cut its profit forecast.

Asia vs U.S. Earnings

About 40 percent of companies on the MSCI Asia Pacific Index that have reported earnings since April 11 beat estimates, compared with 88 percent among companies on the S&P 500 Index. (SPX)

Nintendo declined 4 percent to 19,520 yen in Tokyo. The company said net income slumped 66 percent to 77.6 billion yen ($946 million) in the year ended in March. The earnings, Nintendo’s forecast for a 42 percent jump in profit this fiscal year and predictions for operating profit and sales, all lagged behind analyst estimates.

Nidec dropped 2.3 percent to 6,920 yen after projecting net income will be 52.5 billion yen this fiscal year, compared with the median analyst estimate of 74 billion yen. Drugmaker Shionogi & Co. tumbled 5.7 percent to 1,300 yen after reporting full-year net income totaled 20 billion yen, missing its profit outlook by 33 percent.

China Life, the country’s largest insurer, fell 2.5 percent to HK$29.90 in Hong Kong. The company said first-quarter net profit slumped 22 percent to 7.97 billion yuan ($1.2 billion) from a year earlier as payouts increased after policies matured.
Commodities Drop

Hyundai Merchant Marine Co., a South Korean shipping line, decreased 3.8 percent to 32,650 won in Seoul. The company said it had a first-quarter operating loss of 24.1 billion won ($22.2 million) compared with a profit of 6.17 billion won a year earlier.

Raw material producers declined after copper and oil futures dropped. Three-month copper futures on the London Metal Exchange fell as much as 3.3 percent to $9,390 a metric ton today. Crude oil for June delivery dropped as much as 1 percent to $111.20 today.

Mitsubishi Corp. (8058), the Japanese trading house that gets about 40 percent of revenue from commodities, lost 1 percent to 2,166 yen in Tokyo. Rival Mitsui & Co. slipped 0.6 percent to 1,417 yen. Inpex Corp., Japan’s biggest energy explorer, dropped 1.2 percent to 604,000 yen. Cnooc Ltd., China’s largest offshore oil and gas producer, decreased 1.8 percent to HK$19.52 in Hong Kong.

The MSCI Asia Pacific Index rose 0.6 percent this year through yesterday, compared with gains of 6.2 percent by the S&P 500 and 1.7 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark index are valued at 13.2 times estimated earnings on average, compared with 13.6 times for the S&P 500 and 11.3 times for the Stoxx 600.