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16:10 2006/08/06
East Asian exporter stocks climb on weaker won, yen
TAIPEI: East Asian exporter stocks climbed, led by Toyota Motor Corp and Samsung Electronics Co as a weaker won and yen against the dollar boosted the value of their overseas sales.
"A weaker currency should be positive for the earnings at exporters such as technology companies and automakers,'' said Jung Kyun Sik, who helps manage $1.5bn at Shinhan BNP Paribas Investment Trust Management Co in Seoul.
Phone companies fell after Nippon Telegraph & Telephone Corp reported a decline in first-quarter profit and SK Telecom Co cut its full-year earnings forecast.
The Morgan Stanley Capital International Asia-Pacific Index, which tracks 14 markets, rose 0.7% to 126.59 this week. Eight of its 10 industry groups advanced. In Japan, which accounts for 60% of the MSCI Asia index's market value, the Nikkei 225 Stock Average gained 1% this week, while the broader Topix index added 0.8%.
Indexes rose around the region, except in Hong Kong, Australia, Taiwan, and Sri Lanka.
Chinese stocks lost the most in the region. The Shanghai Composite Index slumped 5.5%, while its counterpart in Shenzhen plunged 8.4% on concern Air China Ltd's share sale will divert capital from existing equities.
Pakistan's stocks gained 4.1%, Asia's best performer.
Samsung Electronics, South Korea's largest electronics maker and exporter, gained 2.5%. Toyota, the world's largest automaker by value, increased 1%.
The won lost 1.1% to 964.75 against the US dollar this week, the most among Asian currencies. The Japanese yen slid 0.1%. A weaker won and yen means exporters get more for their dollar-denominated sales when converted back to the local currency.
Toyota Motor Corp, the world's second-largest carmaker, said after the market closed on Friday that first-quarter profit rose 39%, on increased sales of the fuel-efficient Corolla and RAV4 vehicles in the US and a weaker yen.
Net income increased to ??371.5bn ($3.23bn) for the three months ended June 30, from ??266.9bn a year earlier, the Toyota City, Japan-based carmaker said. That was more than the ??330bn median estimate of seven analysts surveyed by Bloomberg News.
An index that tracks the performance of telecom companies had the biggest drop among the 10 industry groups.
Nippon Telegraph & Telephone retreated 4.2%. The world's largest phone company said first-quarter profit fell 19% from a year earlier to ??144.7bn ($1.3bn), dragged down by lower earnings at its NTT DoCoMo Inc wireless unit and declining fixed-line sales.
SK Telecom slumped 9.9%. The company, South Korea's largest mobile-phone operator, cut its earnings forecast to 4tn won ($4.2bn) for 2006 from an earlier projection of 4.4tn won after the lifting of a ban on handset subsidies drove up marketing costs.
Telecom losses were pared by PT Telekomunikasi Indonesia, the nation's biggest telephone company, which reported a 53% increase in first-half earnings. Its mobile unit, PT Telekomunikasi Selular, raised its target for new mobile-phone users. PT Telekomunikasi Indonesia jumped 6.8%.
Mitsubishi UFJ Financial Group Inc, Japan's largest lender, and Kookmin Bank, South Korea's biggest bank, paced declines by Asian lenders on concern their profitability may disappoint investors.
Mitsubishi UFJ reported net income declined 16% to ??219.5bn in the three months ended June 30, as an increase in taxes and bond losses outweighed a rise in fees and interest income.
Kookmin's interest margin, or the percentage of interest income over interest-bearing assets, stood at 3.81 percentage points in the second quarter, compared with 3.94 percentage points in the previous three months.
"Investors' expectations for lenders' earnings were a bit too high and the results failed to provide any positive surprise,'' said Haruo Otsuka, who oversees about $870mn at Toyota Asset Management Co in Tokyo.
Mitsubishi UFJ dropped 1.9% while Kookmin Bank fell 4.6%.
China's stock indexes fell to seven-week lows, on concern Air China Ltd's share sale will divert capital from existing equities.
"Investors are using the fast pace of new share sales to exit the market, where most stocks appear to be a bit expensive after this year's rally,'' said Lu Yizhen, who oversees about $375mn as head of research with Citic-Prudential Fund Management Co in Shanghai.
Bank of China Ltd, the nation's second-largest lender, slumped 4.6% this week. The Chinese state media said a former executive at the lender was indicted for taking bribes. - Bloomberg
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