Asian Stocks Drop From Record; Honda, Nissan Slide as Yen Gains

Asian stocks dropped from a record high, led by Japanese exporters as the yen headed for the biggest weekly gain against the dollar since May.

Honda Motor Co. fell the most in almost two weeks and Nissan Motor Co. declined on concern a stronger currency will erode the value of their overseas sales.

``The yen's gain yesterday was big and that prompted investors to stay away from automakers and other exporter shares,'' said Atsushi Osa, who helps oversee $4.1 billion at Sumitomo Mitsui Asset Management Co. in Tokyo.

National Australia Bank Ltd. and South Korea's Kookmin Bank retreated as some investors judged recent gains excessive. Singapore Airlines Ltd., the world's largest carrier by market value, fell after filling less of its combined passenger and freight space for the second straight month.

The Morgan Stanley Capital International Asia-Pacific Index lost 0.1 percent to 146.77 as of 3:58 p.m. in Tokyo, as seven of the measure's 10 industry groups declined. The index has climbed 2.3 percent this week, the most since the period ended Dec. 1.

Japan's Nikkei 225 Stock Average fell 0.1 percent to 17,857.65. Declines were limited after Canon Inc. said it will buy back up to 17 million shares for as much as 100 billion yen ($838 million).

Benchmarks in Australia and Singapore slid from record highs, while those in Malaysia and the Philippines dropped from 10-year highs. Indexes slid around the region, except China, South Korea and Indonesia.

Lunar New Year

Markets are closed today in Taiwan and India, while others are winding down before the Lunar New Year break. Taiwan and China will be closed all next week, while South Korea will shut Feb. 19. Hong Kong, Singapore and Malaysia exchanges next open Feb. 21.

Stocks also fell amid concern the MSCI's recent rally more than reflected prospects for earnings growth. The index's 14-day relative strength index yesterday rose to 71.6 yesterday, above the 70 level some investors view as a trigger to sell shares.

``Today's drops are simply a reaction to the recent gains,'' said Chung Yun Sik, who helps manage about $7.5 billion in equities at Daehan Investment Trust Management Co. in Seoul.

Honda, the fifth-largest automaker in the U.S., declined 2.5 percent to 4,660 yen, the biggest drop since Feb. 5. Annual operating profit increases 11.5 billion yen for every 1 yen decline in Japan's currency against the dollar, according to Koji Endo, a senior analyst at Credit Suisse Group in Tokyo. Nissan, Japan's third-biggest automaker, fell 0.5 percent to 1,398 yen.

`Very Strong' GDP

Japan's currency recently traded at 119.37 per dollar, set for the largest weekly advance since May 12. It climbed to 119.27 in New York, the highest since Jan. 8, after a government report showed Japan's economy grew at the fastest pace in almost three years last quarter.

A stronger yen helped boost shares of South Korean exporters, including Samsung Electronics Co. and Hyundai Motor Co., on speculation they would be better able to compete with Japanese companies in overseas markets.

Samsung, South Korea's biggest exporter, advanced 2.8 percent to 590,000 won. Hyundai Motor, which sells four out of five cars it makes overseas, added 2 percent to 71,600 won.

The won lost 0.2 percent to 936.30 to the dollar, according to Seoul Money Brokerage Services Ltd.

``The Japanese GDP figure was very strong, which gives the central bank a reason to raise rates,'' said Daehan Investment's Chung. ``The yen's value is very important for exporters like tech and car companies because it affects their competitiveness.''

Psychological Barrier

Canon, the world's largest digital camera maker, jumped 3.8 percent to 6,550 yen. Canon said it will buy back 1.3 percent of its total outstanding shares through March 16.

Australia's S&P/ASX 200 Index dropped 0.7 percent to 5953.70 after touching 6000 for the first time yesterday.

``The 6000 mark is a psychological barrier more than anything, so you'd expect a sell-off immediately following a 500-point run over the past five weeks or so,'' said Shane Oliver, who helps manage about $64 billion at AMP Ltd. in Sydney. Oliver has an end-of-year target of 6250 for the benchmark.

National Australia, the nation's biggest bank, slid 1.5 percent to A$40.54. The stock reached a record high on Feb. 6. Westfield Group, the world's biggest owner of shopping malls, dropped 1.5 percent to A$22.71. It peaked at a record on Feb. 9.

Kookmin Bank, South Korea's largest bank, dropped 0.7 percent to 87,600 won, paring gains this year to 16 percent. Woori Finance Holdings Co., the nation's third-largest lender by market value, sank 2.3 percent to 25,150, paring gains this week to 3.1 percent.

Meanwhile, Singapore Airlines fell 2.3 percent to S$16.80. The airline packed an average 66.9 percent of its combined passenger and cargo capacity in January, down from 68.4 percent a year earlier, it said in a statement yesterday after the market close.

source:www.bloomberg.com