Asian Stocks Fall on Earnings Concern; Olympus, Posco Decline

By Chen Shiyin and Michele Batchelor


Feb. 5 (Bloomberg) -- Asian stocks fell for the first time in four days as a lower profit forecast from Olympus Corp. and downgrades of Posco and South Korean shipbuilders by Goldman, Sachs & Co. fueled concern regional earnings growth will slow.

Olympus, Japan's third-largest maker of digital cameras, plunged the most in almost six years. Posco, Asia's third- largest steelmaker, slid after Goldman recommended investors sell the stock amid higher raw-material prices and slower global growth. Nintendo Co. dropped on speculation a weakening U.S. economy will erode profit for exporters.

``It is quite possible in the next few months to see more earnings downgrades,'' said Michael Foo, who helps manage $300 million as Singapore-based head of portfolio management in Asia at Clariden Leu AG. ``The U.S. economy has deteriorated much faster than what most of us were expecting.''

The MSCI Asia Pacific Index lost 1 percent to 146.80 at 11:16 a.m. in Tokyo, halting a three-day, 5 percent rally that lifted the benchmark yesterday to the highest since Jan. 15.

Japan's Nikkei 225 Stock Average slipped 1.2 percent to 13,688.01. The S&P/ASX 200 Index declined 1.2 percent in Australia, where the central bank is expected to raise interest rates to an 11-year high today. Benchmarks retreated in all other markets open for trading. Taiwan is closed for a holiday.

U.S. stocks fell yesterday for the first time in three days after some analysts told investors to sell American Express Co., Wells Fargo & Co. and Wachovia Corp. on concern a recession will worsen defaults among consumers.

Olympus Drops

Olympus plunged 14 percent to 3,100 yen, set for the biggest decline since March 6, 2002. The company cut its operating-profit estimate for the year ending March 31 to 120 billion yen ($1.12 billion) from an earlier forecast of 125 billion yen, citing a stronger yen and product price declines.

Canon Inc., the world's largest digital-camera manufacturer, slipped 2.2 percent to 4,520 yen. Nintendo, the maker of the Wii game console, lost 3.9 percent to 48,450 yen.

Mitsubishi Rayon Co., a Japanese maker of fabric, chemical and resin products, plunged 18 percent to 351 yen, the biggest decline on MSCI's Asian index. The company lowered its net income forecast for the year ending March 31 by 30 percent, citing rising raw material costs.

``This quarter's results have been a bit worse than general expectations so far,'' said Soichiro Monji, who helps oversee $47 billion at Daiwa SB Investments Ltd.

Posco, Shipyards

Posco dropped 2.6 percent to 517,000 won, snapping a three- day, 6.8 percent climb. Goldman cut its rating on the stock to ``sell'' from ``neutral'' and lowered its forecast for the shares by 13 percent.

``Raw material price hikes will top market's expectations and lead to a margin squeeze,'' while growth in China and the rest of the world may slow, analysts including Rajeev Das wrote in a report.

Goldman Sachs also cut its rating on South Korean shipbuilding stocks to ``neutral'' from ``attractive,'' citing lower container-shipping demand and bulk-freight rates. It reduced its share-price estimates for both Samsung Heavy Industries Co. and Hyundai Mipo Dockyard Co. by 43 percent.

Samsung Heavy, the world's second-biggest shipbuilder, dropped 2.2 percent to 28,850 won. Hyundai Mipo, a unit of the world's largest shipyard, slipped 3.2 percent to 211,000 won.

Woolworths Ltd. led a decline among Australian retailers, sliding 3 percent to A$28.87. Wesfarmers Ltd., Australia's biggest home improvement chain, declined 1.9 percent to A$38.28.

Australia's central bank will probably raise the nation's benchmark interest rate to an 11-year high of 7 percent when it announces its decision at 2:30 p.m. in Sydney today, deterring consumer spending. All 27 economists surveyed by Bloomberg News are forecasting an increase.