Asia Stocks Fall Led by Japan Stocks Before Earnings Peak

Asian stocks fell, with the regional benchmark index paring its longest weekly winning streak since January. Japanese shares fell the most in six weeks ahead of the busiest week of earnings.

Toyota Motor Corp. (7203) lost 3.6 percent as the Japanese carmaker said it was outsold by General Motors Co. for the first time in six quarters. Advantest Corp. slumped 9.7 percent in Tokyo after the chip-equipment maker posted a wider-than-expected quarterly loss. BBMG Corp. and Shandong Chenming Paper Holdings Ltd. slid in Hong Kong and mainland trading after they were cited by the Chinese government in a list of companies that must curb capacity this year.

The MSCI Asia Pacific Index lost 0.7 percent to 135.12 as of 3:35 p.m. in Tokyo, with about two stocks dropping for each that rose. The measure has gained 0.2 percent this week, heading for a five-week advance. U.S. data showed mixed clues as to when the Federal Reserve may taper stimulus.

"The market is still trying to make sense of whether tapering is good or bad, and I think it will bring us good, but we are in this process of going up and down depending on daily moves," said Mikio Kumada, a Hong Kong-based global strategist for LGT Capital Partners. In China, "the message they are trying to convey is that 'look, we are going to put a floor on growth.'"

The MSCI measure gained 5.2 percent this year through yesterday, with consumer discretionary shares rising the most and energy shares falling the most. The index traded at 13.4 times estimated earnings, compared with 15.4 times for the Standard & Poor's 500 Index and 13.5 times for the Stoxx Europe 600 Index.

Earnings Analysis

Of the 89 companies in the Asia-Pacific gauge that have posted quarterly results and for which Bloomberg has estimates, 55 percent beat projections while 45 percent missed them.

Japan's Topix index lost 2.9 percent, the biggest slump since June 13. About 690 companies including Toyota in the 1,710-member measure are scheduled to announce results next week.

"Japanese earnings aren't good enough to alleviate the fears from global concerns," said Tomomi Yamashita, who helps oversee the equivalent of $5 billion at Shinkin Asset Management Co. in Tokyo. "There's still concern about how the U.S. tapering story will pan out, and about China's economy. It's quite surprising how volatile markets are being today though, given how quiet it's been recently."

Higher Yen

Toyota dropped 3.6 percent to 6,150 yen after reporting global sales from January to June fell 1.2 percent and as the yen strengthened against all of its 16 major counterparts. A stronger yen weakens the earnings outlook for export income. Sony Corp., a TV maker with 68 percent of its sales coming from overseas, slid 3.4 percent to 2,133 yen.

The MSCI Asia Pacific excluding Japan Index gained 0.3 percent. South Korea's Kospi Index, Australia's S&P/ASX 200 Index and New Zealand's NZX 50 Index all rose 0.1 percent.

Taiwan's Taiex Index fell 0.2 percent, while Singapore's Straits Times Index advanced 0.2 percent. Hong Kong's Hang Seng Index (HSI) was little changed, erasing gains of as much as 0.6 percent.

China's Shanghai Composite fell 0.5 percent after the government ordered more than 1,400 companies in 19 industries to cut excess production capacity this year, part of efforts to shift toward slower, more-sustainable economic growth. Steel, ferro alloys, electrolytic aluminum, copper smelting, cement and paper are among areas affected, the Ministry of Industry and Information Technology said in a statement yesterday.

U.S. Data

Futures of the Standard & Poor's 500 Index added 0.2 percent today. The measure gained 0.3 percent in New York yesterday, when reports showed that U.S. orders for durable goods rose more than forecast in June, while more Americans filed for unemployment benefits last week. The Fed next meets to review policy on July 30 and 31.

Advantest slumped 9.7 percent to 1,390 yen after posting a 3.6 billion yen net loss for the quarter ended June 30. The stock fell the most in Japan's Nikkei 225 Stock Average, which dropped 3 percent.

JFE Holdings Inc., Japan's second-biggest steelmaker, tumbled 8.3 percent to 2,363 yen after declining to provide a full-year profit forecast, citing difficulty in reaching a rational estimate.

Tencent Holdings Ltd., the world's No. 2 Internet company by market value, rose 4.4 percent to HK$349 in Hong Kong. The company is benefiting from online and mobile games advertising. Also, a surge in U.S. technology stocks including Facebook Inc. yesterday is stimulating today's gains, said Ricky Lai, analyst at Guotai Junan International Holdings Ltd.