Bloomberg News

Asia Stocks End Record-Weekly Win Streak on China Growth Concern

March 09, 2012

Asian stocks fell this week, with the regional benchmark index snapping its longest-ever weekly winning streak, after China cut its economic growth target. Shares pared losses in the last two days as Greece clinched a debt-swap deal seen as key to containing Europe’s crisis.

Industrial & Commercial Bank of China (601398) Ltd., the world’s biggest lender by market value, fell 5.7 percent in Hong Kong. Agile Property Holdings Ltd. (3383) declined 11 percent after the mainland developer’s profit missed estimates. Rio Tinto Group, the third-largest global miner, fell 2.7 percent in Sydney after metals prices declined. Nintendo Co., a Japanese maker of game consoles that depends on Europe for a third of its sales, pared losses to finish the week down 1.1 percent.

“Asia is all about moderation now,” said Andrew Pease, Sydney-based chief Asia-Pacific investment strategist at Russell Investment Group, which manages about $150 billion. “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.”

MSCI Slides

The MSCI Asia Pacific Index (MXAP) slid 1 percent to 126.90 this week, ending an 11-week winning streak. The measure entered a bull market on Feb. 29, gaining more than 20 percent from an Oct. 5 low, after U.S. economic optimism and monetary easing in Europe, Japan and China fueled the fastest rally in more than two years.

The MSCI All-Country World Index (MXWD) has surged 91 percent from a low reached on March 9, 2009, amid deepening global recession.

Japan’s Nikkei 225 Stock Average (NKY) gained 1.6 percent this week, extending its rally this year as a weaker yen boosted the outlook for exporters. The gauge also climbed after a report showed Japan’s economy contracted less than initially estimated in the fourth quarter. The index yesterday surged above 10,000 for the first time since Aug. 1. Tomorrow marks the one-year anniversary of the magnitude-9 earthquake and tsunami.

Toyota Motor Corp. (7203), Asia’s biggest carmaker by market value, gained 3.2 percent to 3,420 yen. Hitachi Ltd. (6501), an electronic equipment maker that gets almost half its revenue outside Japan, increased 1.9 percent to 475 yen.

China Cuts Growth

The Shanghai Composite Index fell 0.9 percent after China trimmed its economic growth target to 7.5 percent from an 8 percent goal in place since 2005. Separately, the nation’s inflation eased to the slowest pace in 20 months in February, a report showed yesterday.

ICBC dropped 5.7 percent this week to HK$5.30 in Hong Kong. Agile Property slumped 11 percent to HK$9.15 after reporting full-year net income of 4.11 billion yuan ($652 million), missing the median analyst estimate of 4.39 billion yuan.

“The market is digesting its gains over the past few months and consolidating,” said Khiem Do, the Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees about $10 billion. “China is slowing down and the U.S. is growing, but at a modest pace.”

Hong Kong’s Hang Seng Index fell 2.2 percent. The Hang Seng China Enterprises Index (HSCEI) of mainland companies declined 4.1 percent. The city’s stock exchange shortened its lunch break by 30 minutes to an hour this week.

Kospi Falls

South Korea’s Kospi Index fell 0.8 percent as the central bank left borrowing costs unchanged for a ninth straight month. Australia’s S&P/ASX 200 Index dropped 1.4 percent after the economy expanded 0.4 percent in the fourth quarter from the previous three months, half the pace economists estimated.

Rio Tinto slumped 2.7 percent to A$64.13 this week in Sydney. BHP Billiton Ltd. (BHP), the world’s biggest mining company, retreated 2.8 percent to A$34.71. The London Metal Exchange Index of prices for six industrial commodities including copper and aluminum lost 3.6 percent in the four days through March 8 on concern that slower growth in China will hurt demand.

Asian shares pared losses in the latter half of the week amid speculation Greece would strike a deal with creditors. The government yesterday said it reached its target in the biggest sovereign restructuring in history, with a 95.7 percent participation rate among investors.

Nintendo finished the week down 1.1 percent to 11,680 yen in Osaka after recovering from a decline of as much as 5.3 percent. Esprit Holdings Ltd. (330), a clothier that counts Europe as its biggest market, dropped 3.8 percent to HK$18.52 in Hong Kong.

“We are seeing a correction after a rapid rally,” said Hitoshi Asaoka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co. “The market will remain sensitive to European news flow.”

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: John McCluskey at j.mccluskey@bloomberg.net.


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