Bloomberg News

Asian Stocks Fall as China Targets Lowest Economic Growth Rate Since 2004

March 05, 2012

Asian stocks fell, paring gains from last week that saw the benchmark index post its longest weekly winning streak on record, after China said it will target the slowest economic growth since 2004.

China Construction Bank Corp. (939), the nation’s No. 2 lender by market value, slid 2 percent. It was the biggest drag on the MSCI Asia Pacific Index. The third-largest drag was BHP Billiton Ltd. (BHP), the world’s No. 1 mining company, which fell 0.8 percent in Sydney as metal prices dropped. Hiwin Technologies Corp. (2049), a ball-bearing maker, declined 6.9 percent in Taipei after saying its February unconsolidated sales slumped 23 percent from a year earlier.

“Asia is all about moderation now,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages about $150 billion. “It’s a much more challenging market to be bullish in. While the risk of financial Armageddon in Europe is gone, Europe is still going to have a large recession. Europe is China’s biggest export market. That tempers optimism on how much the risk rally can continue.”

The MSCI Asia Pacific Index (MXAP) slid 0.8 percent to 127.16 as of 3 p.m. in Tokyo. The gauge has risen for the past 11 weeks, extending its record winning streak on signs the U.S. economy is recovering and China is loosening monetary policy. Stocks in the benchmark are valued at 14.9 times estimated earnings on average, compared with 13.1 times for the Standard & Poor’s 500 Index and 11.1 times for Stoxx Europe 600 Index.

Japan’s Nikkei 225 Stock Average (NKY) fell 0.8 percent. South Korea’s Kospi Index retreated 0.9 percent.

China Growth Target

China’s Shanghai Composite Index sank 0.6 percent. The nation’s government will target economic growth of 7.5 percent this year, and set an inflation target of 4 percent, unchanged from last year’s goal, according to a state-of-the-nation speech that Premier Wen Jiabao delivered to about 3,000 lawmakers at the annual meeting of the National People’s Congress in Beijing today.

China Construction Bank slid 2 percent to HK$6.43 in Hong Kong, while Industrial & Commercial Bank of China Ltd., the nation’s biggest lender by market value, fell 2.3 percent to HK$5.49.

Hong Kong’s Hang Seng Index (HSI) declined 1.3 percent, led by banks. The city’s stock exchange reduced its lunch break from today by 30 minutes to an hour.

AIA Group Ltd. (1299), the third-largest Asia-based insurer by market value, was suspended from trading today. American International Group Inc., a bailed-out insurer, said it’s selling its shares of AIA to unidentified institutional investors to repay a U.S. government rescue.

Profits Drop

Australia’s S&P/ASX 200 Index fell 0.2 percent after government reports showed the nation’s services industry declined in February to the lowest level in almost a year and company profits unexpectedly dropped in the three months through December.

Taiwan’s Taiex Index dropped 1.4 percent. Hiwin Technologies slumped 6.9 percent to NT$316.5, the second-biggest drop in the MSCI Asia Pacific Index.

The Standard & Poor’s 500 Index (SPXL1) futures retreated 0.3 percent today. The index fell 0.3 percent in New York on March 2, trimming a weekly advance, amid concern a rally that drove the benchmark gauge to the highest level since 2008 has outpaced global economic growth prospects.

Measures of material and energy companies had the biggest drops among the MSCI Asia Pacific Index’s 10 industry groups. BHP fell 0.8 percent to A$35.39 in Sydney, while Rio Tinto Group, the world’s the world’s third-biggest mining company, lost 1.3 percent to A$65.09. Inpex Corp., Japan’s No. 1 energy explorer, dropped 2.1 percent to 561,000 yen.

Metal Prices

The London Metal Exchange Index of prices for six industrial commodities including copper and aluminum lost 0.5 percent on March 2, while crude oil for April delivery fell 2 percent to settle at $106.70 a barrel in New York.

LG Chem Ltd. (051910), a South Korean supplier of batteries for General Motors Co.’s Chevrolet Volt plug-in hybrid car, slid 4.7 percent to 385,000 won in Seoul. General Motors, missing sales goals for the Volt, will stop production of the sedan at its Detroit-Hamtramck assembly plant from March 19 until April 23, Chris Lee, a company spokesman, said in an e-mail March 2.

Among stocks that rose, Fast Retailing Co., an apparel chain, increased 1.4 percent to 17,080 yen in Tokyo after saying same-store sales gained 1.2 percent at its Uniqlo Japan stores last month.

To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net; Jonathan Burgos in Singapore at jburgos4@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net


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