Bloomberg News

Most Asia Stocks Drop on China Slowdown, Europe Concerns

May 10, 2012

Most Asian stocks declined as China reported slower export growth and amid growing concern Greece will be forced out of the euro and that austerity plans needed to contain the Europe’s debt crisis will be derailed.

Bank of Communications Co. fell 0.9 percent in Hong Kong, pacing declines among Chinese lenders. LG Display Co. (034220), a maker of liquid-crystal displays that depends on Europe for about 18 percent of sales, slipped 2.4 percent in Seoul. Singapore Telecommunications Ltd. gained 1.6 percent after Southeast Asia’s biggest phone company posted earnings that beat estimates.

“The market’s swinging between pessimism and the drive to buy shares after they’ve dropped a lot,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd., which has about $414 billion in assets. “While there are some risk-off moves from Greece concern, investors are not pessimistic enough to take risk off the table entirely.”

The MSCI Asia Pacific Index slid less than 0.1 percent to 119.83 as of 6:07 p.m. in Tokyo, reversing gains of as much as 0.5 percent. About five shares fell for every four that rose in the measure, which is heading for its biggest weekly loss in almost six months as France’s political changes and instability in Greece threaten to derail austerity plans and worsen Europe’s debt crisis.

South Korea’s Kospi Index fell 0.3 percent after the Bank of Korea held borrowing costs steady for an 11th month after inflation eased and policy makers cut their forecasts for economic growth. Hong Kong’s Hang Seng Index dropped 0.5 percent. Japan’s Nikkei 225 Stock Average lost 0.4 percent.

China Exports

Australia’s S&P/ASX 200 Index (AS51) rose 0.5 percent as a report showed the nation’s unemployment rate unexpectedly dropped to a one-year low in 2011.

The Shanghai Composite Index (SHCOMP) rose 0.1 percent after swinging between gains and losses. China’s exports rose 4.9 percent in April, missing the 8.5 percent median estimate by economists in a Bloomberg survey and adding pressure to ease policy to spur growth in the world’s second-largest economy.

Chinese lenders declined. Bank of Communications lost 0.9 percent to HK$5.53 in Hong Kong. China Construction Bank Corp., the nation’s second-largest lender, slipped 0.5 percent to HK$5.67.

Futures on the Standard & Poor’s 500 Index added 0.2 percent today. The gauge slid 0.7 percent in New York yesterday, dropping to the lowest level in two months. The Dow Jones Industrial Average declined for a sixth straight day, its longest losing streak since August.

Greek Impasse

Companies that do business in Europe fell as coalition talks in Greece reached an impasse, raising concern the country may not hold to the terms of its two bailouts negotiated since May 2010. With parliament split and policy makers in Berlin and Brussels urging Greece to stay the course, the country at the epicenter of the debt crisis is again facing the risk of an exit from the euro.

LG Display dropped 2.4 percent 22,900 won in Seoul. HSBC Holdings Plc, Europe’s biggest lender, declined 0.7 percent to HK$69.05. Cosco Pacific Ltd., which operates a port in Greece, slipped 1.6 percent to HK$10.16.

Wilmar International Ltd. slumped 9.2 percent to S$4.27 after the world’s biggest palm-oil processor reported first- quarter net income that fell short of expectations by 42 percent. Cathay Pacific Airways Ltd. tumbled 6.3 percent to HK$12.52 in Hong Kong after the carrier cut expansion plans and predicting softening travel demand.

Alfresa, SingTel

Of the 524 companies on the MSCI Asia Pacific Index that posted quarterly earnings since April 10, 198 exceeded analysts’ estimates, while 200 fell short, according to data compiled by Bloomberg News.

Among stocks that advanced, Singapore Telecommunications added 1.6 percent to S$3.21 after reporting fourth-quarter profit that exceeded analysts’ estimates by 34 percent. Alfresa Holdings Corp. jumped 7.4 percent to 3,910 yen in Tokyo after the drug wholesaler said net income will more than double this fiscal year.

The MSCI Asia Pacific Index (MXAP) rose 5.3 percent this year through yesterday, compared with a 7.7 percent gain by the S&P 500 and a 2.1 percent advance by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.3 times estimated earnings on average, compared with a multiple of 12.9 for the S&P 500 and 10.4 times for the Stoxx 600.

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

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net


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