Poor results trigger Asian profit taking

Disappointing corporate earnings helped trigger a bout of profit-taking in Asia on Wednesday following a recent strong run for equity prices.

Tokyo retreated from a 10-month high amid uncertainty about some domestic companies’ outlooks.

The Nikkei 225 Average fell 1.2 per cent to 10,252.53, while the broader Topix ended a 13-day winning streak as it shed 1 per cent to 949.58.

Toyota Motor, the world’s biggest carmaker by sales, slipped 1.2 per cent to Y3,980 after reporting a third successive quarterly loss. The company reduced its loss forecast for the full year but said it was difficult to gauge demand for vehicles outside Japan.

Smaller carmakers also remained in the limelight as earnings created investor concerns about the outlook for demand.

Yamaha’s shares fell for a second day, losing 5.3 per cent to Y1,038, after widening its loss forecast. Isuzu lost 4.7 per cent to Y163 after the truckmaker said its net loss for the three months to June was Y16.6bn. It kept its annual loss forecast at Y20bn.

Even Fast Retailing, a clear beneficiary of the recession with its focus on discount clothing, lost 3.5 per cent to Y11,400 after the company said July sales at its existing stores dropped 4.2 per cent.

Elpida lost 5.1 per cent to Y1,115 after it disappointed investors with a Y44.4bn net loss for the quarter, more than triple its loss in the same period a year earlier, partly due to increased costs and extraordinary expenses.

Hong Kong and Shanghai remained under pressure from concerns that China may move to rein in liquidity.

The Hang Seng index fell 1.5 per cent to 20,494.77 while the Shanghai Composite shed 1.2 per cent to 3,428.50 – its first fall in five sessions – following reports that Beijing may informally ask smaller banks to raise their capital adequacy levels. Bank of China fell 1.1 per cent to Rmb4.54 while, in Hong Kong, China Construction Bank shed 3.3 per cent to HK$5.98.

Cathay Pacific Airways fell 3.6 per cent to HK$12.10 even after it unveiled a return to profit in the first half. Analysts warned that there was uncertainty over whether the carrier would see a sustained pick-up in demand.

Taipei fell to a three-week low as financials came under pressure. Chinatrust Financial tumbled 5.5 per cent to a three-week low of T$19.65 after it revised its first-half net income down by more than 90 per cent.

The drop helped push the benchmark Weighted index down 1.6 per cent to 6,848.24, the lowest since July 17.

Chip designer Mediatek bucked the weaker tone as it gained 4.6 per cent to T$474 after raising its target for shipping cellphone chips.

Australian stocks lost ground as caution set in ahead of the release of domestic jobs data this week. The S&P/ASX 200 fell 1 per cent to 4,264.5 with banks accounting for much of the decline.

In Seoul, the Kospi index fell 0.4 per cent to 1,559.47 while the Straits Times index in Singapore shed 1.6 per cent to 2,606.83.

In Jakarta, the Composite index fell 1.8 per cent to 2,317.06, even as Indonesia’s central bank cut interest rates to a record low. Analysts said the move was widely expected and that rates had probably reached the bottom of the current cycle.

Mumbai recovered from early weakness as a 1.7 per cent gain for Reliance Industriesto Rs2,075.25 helped the BSE Sensex index finish 0.5 per cent higher at 15,903.83.