Bloomberg News

Asian Stocks Drop on Growth Concerns, Sun Hung Kai Falls

May 04, 2012

Asian stocks fell for a second day, with a regional benchmark index heading for its biggest drop in two weeks, as Australia’s central bank cut its economic growth forecast and U.S. service industries rose less than forecast, sparking concern the global recovery may be faltering.

Samsung Electronics Co. (005930), the world’s No. 1 mobile-phone maker by sales, fell 2.9 percent in Seoul. Gloucester Coal Ltd. slipped 1.3 percent on speculation the price of fuel used in power stations may not recover from an 18-month low. Sun Hung Kai Properties Ltd. dropped 1.8 percent after Hong Kong’s biggest developer announced former Chairman Walter Kwok’s arrest.

“Global growth is looking a little bit sluggish as the European situation is not getting any better,” said Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management Asia Ltd., which oversees about $10 billion. “Some investors are also becoming disappointed that China hasn’t continued cutting the reserve requirement for lenders.”

The MSCI Asia Pacific Excluding Japan Index dropped 0.7 percent to 439.08 as of 4:06 p.m. in Hong Kong, the most since April 23. About four shares slid for every three that rose in the index. The regional gauge added 0.4 percent this week, its first weekly advance in five weeks following moves to stimulate economic growth in Australia and amid signs manufacturing output in U.S. and China is improving.

Trading volumes in Hong Kong were 21 percent lower compared to the 30-day average, while those in Australia and China were at least 2.6 percent higher, according to data compiled by Bloomberg News. Japanese markets are closed today for a holiday. South Korea’s Kospi Index (KOSPI) dropped 0.3 percent. Hong Kong’s Hang Seng Index slipped 0.8 percent.

RBA Cuts Forecast

Australia’s S&P/ASX 200 Index (AS51) decreased 0.7 percent. The Reserve Bank of Australia cut its 2012 economic growth forecast for the country to 3 percent from 3.5 percent, citing weaker jobs and housing markets. The RBA unexpectedly lowered its benchmark interest rate by half a percentage point this week to support the economy as inflation slows.

China’s Shanghai Composite Index (SHCOMP) added 0.5 percent on speculation the government may take steps to avoid a deeper economic slowdown. The central bank last cut lenders’ reserve requirements in February.

Futures on the Standard & Poor’s 500 Index were little changed today. The gauge declined 0.8 percent in New York yesterday as U.S. service industries grew at a slower pace than projected in April, adding to signs recovery in the world’s largest economy may be faltering.

Energy Stocks Drop

Exporters declined. Samsung Electronics dropped 2.9 percent to 1.36 million won in Seoul. Hyundai Motor Co., South Korea’s biggest carmaker, declined 3.2 percent to 257,000 won. Billabong International Ltd. (BBG), an Australian surfwear maker that gets about 70 percent of sales from America and Europe, fell 1.2 percent to A$2.51 in Sydney.

Energy companies posted the biggest decline among the 10 industry groups on the MSCI Asia Pacific Excluding Japan Index. (MXAPJ)

Coal producers fell on speculation the price of the fuel used in power stations won’t recover from an 18-month low as economic growth in China, the world’s biggest coal user, slows Gloucester Coal fell 1.3 percent to A$7.50 in Sydney. China Coal Energy Co., the nation’s No. 2 producer of the fuel, dropped 1.3 percent to HK$8.84 in Hong Kong.

Sun Hung Kai Properties dropped 1.8 percent to HK$92.60 as it resumed trading following this morning’s suspension. The company said its former chairman was arrested by the anti- corruption commission, widening a probe that includes his brothers and a former government official.

The MSCI Asia Pacific Ex-Japan Index rose 12.6 percent this year through yesterday, compared with a 10.7 percent gain by the S&P 500 and a 5.3 percent advance by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.7 times estimated earnings on average, compared with a multiple of 13.2 for the S&P 500 and 10.8 times for the Stoxx 600.

Huabao Resumes Trading

Huabao International Holdings Ltd., a maker of flavors and fragrances used in cigarettes, sank 7 percent to HK$3.70 in Hong Kong, the most on the Asian gauge. The stock resumed trading today after halting on April 25, when Huabao said a short- seller’s report was misleading. Anonymous Analytics said the Hong Kong-based company “reports absurdly high margins, which industry sources say should not be possible.”

To contact the reporter on this story: 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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