Asian stocks dip on stronger yen

Asian stocks snapped a weeklong rally. Sony Corp and Honda Motor Co led Japanese exporters lower after the yen strengthened against the dollar, reducing the value of US sales.

"The yen may remain strong against the dollar and we have to be careful about investment in US-dependent exporters,'' said Takeshi Yamaguchi, who looks after $674 million at Sumitomo Mitsui Asset Management Co in Tokyo. "Exporters' earnings growth will be curbed in the coming business year.''

Nikko Cordial Corp gained after retaining its stock market listing, raising speculation Citigroup Inc will increase its $10.8 billion bid for the brokerage. Samsung Electro-Mechanics Co paced declines among South Korean technology stocks on concern earnings estimates may be lowered.

The Morgan Stanley Capital International Asia-Pacific Index lost 0.4 per cent to 143.81 at 8:02 pm in Tokyo. It had gained 4.4 per cent in the past week. Japan's Nikkei 225 Stock Average dropped 0.7 per cent to 17,178.84. Markets also fell in Australia, South Korea, Singapore, Malaysia, Hong Kong, Pakistan and Sri Lanka.

Qantas Airways declined after the Australian Financial Review said two shareholders with a potentially blocking stake may reject an offer for the company. Taiwan Semiconductor Manufacturing gained after local investors bought NT$57.7 billion ($1.7 billion) of stock from its largest shareholder.

The rally in MSCI's Asian index in the past week came after a four-day, 7 per cent slide. The slump was part of a selloff that wiped more than $3.3 trillion from the value of global stocks.

Honda, Japan's third-biggest automaker by market value, lost 1.2 per cent to 4,260 yen. It made more than half of its sales in North America last year. Sony, the world's biggest maker of game consoles, dropped 2.1 per cent to 6,110 yen. Toyota Motor Corp, the world's No 2 automaker, fell 1.1 per cent to 7,790 yen.

The yen recently traded at 117.35 against the dollar, after falling to as low as 118.50 at 4:30 pm in Tokyo yesterday. A stronger Japanese currency means the nation's exporters get less for their dollar-denominated sales when converted to yen, while their products become less competitive.

Nikko Cordial, Japan's third-biggest brokerage, jumped 6.1 per cent to 1,490 yen, the biggest percentage gainer on the Morgan Stanley Capital International World Index. The company, which has admitted falsifying financial statements, will be allowed to keep its listing, the Tokyo Stock Exchange said yesterday after the market closed.

The irregularities didn't merit removing the stock, TSE President Taizo Nishimuro said. Citigroup, Nikko's investment-banking partner in Japan, on March 6 offered to buy the company for 1,350 yen per share, a bid rejected by stockholders with more than a quarter of the company's equity.

"The news about Nikko Cordial's listing is positive because it removed uncertainty in the market,'' said Terunobu Kinoshita, who helps manage $785 million at Tokyo-based Fund Creation Co.

"There's continued speculation Citigroup's acquisition of Nikko Cordial will revitalize Japan's brokerage industry.''

Samsung Electro-Mechanics, which makes electronic components, slid 4.5 per cent to 32,100 won, its lowest close since July 19.

Hyundai Securities Co slashed its estimate for the company's first-quarter operating profit, or sales minus the cost of goods sold and administrative expenses, by 52 per cent.

"If the tech sector wants to regain investors' confidence, they have to show some earnings improvements,'' said Kim Hyung Chan, who manages about $630 million at KTB Asset Management Co in Seoul. "We haven't seen the end of downward revisions yet.''

Samsung Electronics Co, the world's largest computer-memory maker, lost 0.3 per cent to 600,000 won. Hynix Semiconductor Inc, the second biggest, slid 2.1 per cent, to 32,350 won.

Elsewhere, HSBC Holdings Plc fell on speculation New Century Financial Corp, the second-biggest subprime mortgage lender in the US, may go bankrupt, adding to concern over HSBC's North America business. The stock declined 0.3 per cent to HK$137.10.

New Century doesn't have the cash to pay creditors who are demanding their money, the company said in a federal filing, increasing speculation it will go bankrupt.

HSBC said this month its second-half pretax profit plunged 87 per cent in North America, where it suffered almost two-thirds of its $10.6 billion loan defaults in 2006. Subprime loans are made to borrowers with lower-than-average credit histories.

"This remains as a factor that concerns investors,'' said Mona Chung, who helps manage about $950 million at Daiwa Asset Management Ltd in Hong Kong. "Going forward they're likely to continue to make provisions for bad loans," she said.

Qantas, Australia's biggest airline, fell 1.4 per cent to A$5.09. UBS Global Asset Management and Balanced Equity Management, which together control about 10 per cent of Sydney-based Qantas's stock, are holding out for a higher bid, the Australian Financial Review reported.

Macquarie Bank, Texas Pacific Group and Allco Equity Partners need to get 90 per cent of Qantas for their A$5.45 a share offer to succeed.

Taiwan Semiconductor, the world's largest maker of customised computer chips, climbed 2.8 per cent to NT$69.10. Royal Philips Electronics NV yesterday sold 887 million shares in the company for NT$65 each after the market closed, cutting its stake to 12.8 per cent from 16.2 per cent, according to an e-mail from Philips and a statement issued by the Taiwan Stock Exchange.

Cathay Financial Holding Co was among the purchasers of the shares yesterday, spokesman Lee Chang-ken said in a phone interview. Fubon Life Assurance Co was one of the buyers, the Economic Daily News reported, without citing sources.

PetroChina Co, China's largest oil producer, dropped 1.5 per cent to HK$8.78 in Hong Kong. Inpex Holdings Inc, Japan's biggest oil explorer, slid 0.9 per cent to 952,000 yen. Santos Ltd, Australia's No 3 oil producer, fell 1.2 per cent to A$9.70.

Crude oil for April delivery fell 1.9 per cent in New York yesterday to $58.91 a barrel. The contract was recently at $59.22 in after-hours trading.

Santos is preparing to resume production at the A$440 million ($346 million) Mutineer-Exeter oil field off the northwestern coast after two tropical cyclones, said Kathryn Mitchell, a company spokeswoman.