Bloomberg News

Asian Stocks Drop on China’s Foreign Investment, Spain

April 17, 2012

Asian stocks fell for a second day as foreign direct investment into China dropped for a fifth month, and Spanish borrowing costs climbed to the highest level this year before a debt auction today.

China Construction Bank Corp. (939) retreated 2 percent in Hong Kong even as investment slipped at about half the rate forecast by economists. Esprit Holdings Ltd. (330), a clothier that depends on Europe for about 80 percent of its sales, retreated 1.2 percent. Asian suppliers of Apple Inc. fell amid concern demand for the company’s electronics will slow. Social-network gaming operator Gree Inc. (3632) rose 9.1 percent in Tokyo after Bank of America Merrill Lynch said its domestic revenue growth is accelerating.

The MSCI Asia Pacific Index declined 0.4 percent to 123.68 as of 7 p.m. in Tokyo, its lowest since April 11. About five stocks fell for every three that rose.

“It’s difficult to see if there will be acceleration in China’s growth at this point,” said Pauline Dan, Hong Kong- based chief investment officer at Samsung Asset Management Co., which manages $100 billion. With uncertainties about Europe’s debt crisis and U.S. economic growth, investors are taking a wait-and-see approach, she said. “We won’t see a major upturn or downturn unless we see some external catalyst from the U.S. or Europe.”

The Asia-Pacific gauge, which includes companies from some emerging markets, advanced 9.1 percent this year through yesterday as central banks moved toward additional easing and the U.S. recovery showed signs of strength.

Japan’s Nikkei 225 Stock Average slid 0.1 percent. Taiwan’s Taiex Index dropped 1.9 percent as Apple suppliers slumped.

China Investment Falls

Hong Kong’s Hang Seng Index (HSI) declined 0.2 percent, while China’s Shanghai Composite Index retreated 0.9 percent. Foreign direct investment in the mainland fell 6.1 percent in March to $11.76 billion from a year earlier, the Ministry of Commerce said today in Beijing, after a 0.9 percent decline the previous month and a 32.9 percent jump in March last year. Economists had predicted a 14 percent drop, according to data compiled by Bloomberg.

“Investment growth is likely to slow as foreign investors are less upbeat on the outlook for China’s economy,” Dariusz Kowalczyk, a Hong Kong-based strategist with Credit Agricole CIB, said before the figures were released.

Australia’s S&P/ASX 200 Index slid 0.3 percent after central bank members lowered their assessment of economic growth, according to the minutes released today from an April 3 meeting. Slower inflation would increase prospects for the first interest-rate cut this year, the minutes said.

South Korea’s Kospi Index declined 0.4 percent, falling for a fifth day in six. Bank of Korea Governor Kim Choong Soo urged major central banks to plan an orderly withdrawal of excess liquidity and said further easing may hurt emerging economies and the global economic recovery.

India Cuts Rates

The BSE India Sensitive Index (SENSEX) rose 1.3 percent after the nation unexpectedly cut its benchmark interest rate by half a percentage point, seeking to bolster economic growth with the first reduction since 2009.

Stocks in the MSCI Asia Pacific Index are valued at 12.6 times estimated earnings on average, compared with 13.1 times for the Standard & Poor’s 500 Index and 10.6 times for the Stoxx Europe 600 Index.

Futures on the S&P 500 (SPXL1) gained 0.2 percent today after the gauge slipped less than 0.1 percent in New York yesterday. Most U.S. shares rose after a report showed retail sales gained 0.8 percent in March, exceeding economists’ projections.

Spanish Debt

After most Asian markets closed, Spain sold 3.18 billion euros ($4.2 billion) of bills, compared with a maximum target of 3 billion euros. Yields on Spain’s 10-year notes reached a four- month high after Prime Minister Mariano Rajoy said the country must cut its deficit to maintain access to financing. The cost of insuring the nation’s debt against default advanced to a record, while Portuguese 10-year rates rose for an 11th day. Spain will also auctions debt due on April 19.

China Construction Bank slid 2 percent to HK$5.99 in Hong Kong. Chongqing Rural Commercial Bank (3618) Co., a lender in the southwestern Chinese city, slumped 6.6 percent to HK$3.55, falling for a second day after the China Business Journal reported that the local government has started investigating the city’s construction projects, without citing anyone.

Esprit retreated 1.2 percent to HK$15.94 in Hong Kong. HSBC Holdings Plc, Europe’s largest lender by market value, dropped as much as 1 percent before rising 0.2 percent to HK$67.10.

Hon Hai Precision Industry Co. (2317), a Taiwanese assembler of electronics for Apple, slid 3.9 percent to NT$110 in Taipei after the U.S. company’s shares fell yesterday amid speculation that demand for the iPad may wane and that mobile carriers will cut subsidies for the iPhone. TPK Holding Co., a touch-screen maker, retreated 6.5 percent to NT$425.50.

Gree Advances

Among stocks that rose, Gree jumped 9.1 percent to 2,187 yen in Tokyo, the biggest gain in the MSCI Asia Pacific Index. (MXAP) DeNA Co., a social-network operator, rose 4.7 percent to 2,519 yen.

Bank of America Merrill Lynch said there are no signs Japanese authorities are moving toward stricter controls on online charges. The bank raised Gree’s target price to 4,620 yen from 4,040 yen.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

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


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