Bloomberg News

Asia Stocks Fall as Economic Slowdown Cools China Lending

May 25, 2012

Italy's Prime Minister Mario Monti

Mario Monti, Italy's prime minister. Photographer: Kamoshida Koichi/Bloomberg

Asian stocks fell, dragging the regional benchmark index to its fourth weekly loss, on concern China’s biggest banks may fall short of loan targets for the first time in at least seven years as the economy slows.

China Minsheng Banking Corp. (1988) fell 1.8 percent, leading banks lower in Hong Kong. Esprit Holdings Ltd. (330), a clothier that depends on Europe for 79 percent of its sales, lost 1.1 percent in Hong Kong. Sims Metal Management Ltd. slid 6.1 percent in Sydney as the processor of scrap metal forecast full-year earnings will decline.

The MSCI Asia Pacific Index fell 0.2 percent to 111.72 as of 7:14 p.m. in Tokyo, taking its decline this week to 0.8 percent. The gauge earlier rose 0.3 percent after Italian Prime Minister Mario Monti said Greece is likely to stay in the euro and most of the region’s leaders supported issuing a joint bond.

“Definitely there’s poor appetite from industrial companies, and there’s very little demand for borrowing because you still have this restraint on property development and then you have export sentiment going down,” said Pauline Dan, chief investment officer at Samsung Asset Management Co.’s Hong Kong division. The firm oversees $100 billion globally. “There’s continuous concern about what happens in the euro zone, and this is causing people to stay off the market.”

The Asia-Pacific index is headed for its longest weekly losing streak since November, as Greece prepares for a second election on June 17 following an inconclusive ballot this month. European leaders urged Greece to stick with austerity measures needed to stay in the euro at a European Union summit in Brussels on May 23. They also debated joint bond sales to help contain the debt crisis.

Japan Consumer Prices

Japan’s broader Topix Index closed little changed with volume 11 percent below the 30-day average after a report today showed the nation’s consumer prices rose 0.2 percent in April from a year earlier. The index capped an eighth straight weekly decline, the longest losing streak since 1977.

New Zealand’s NZX 50 Index lost 0.3 percent in Wellington as an earthquake hit the city of Christchurch on the nation’s south island. Australia’s S&P/ASX 200 slipped 0.7 percent, while South Korea’s Kospi Index gained 0.5 percent.

Hong Kong’s Hang Seng Index rose 0.3 percent, and the Hang Seng China Enterprises Index of mainland stocks closed little changed. The Shanghai Composite Index declined 0.7 percent.

A drop in lending in April and May means it’s likely China’s biggest banks’ total new loans for 2012 will be about 7 trillion yuan ($1.1 trillion), less than the government goal of 8 trillion yuan to 8.5 trillion yuan, said a bank official, declining to be identified because the person isn’t authorized to speak publicly.

Lenders Fall

Chinese banks fell in Hong Kong. China Minsheng Banking slid 1.8 percent to HK$7. Agricultural Bank of China Ltd. lost 1.6 percent to HK$3.11.

Futures on the Standard & Poor’s 500 Index (SPXL1) fell 0.3 percent today. The index added 0.4 percent in New York yesterday, reversing losses, after Monti said in an interview on Italian television station La7 that “Europe can have euro bonds soon.” Italy can help push Germany to support the idea of collective debt and to embrace the “common good” of Europe, he said.

“Monti’s comments should provide some support to the market, but in terms of a more sustained turnaround, we still have to see more out of Europe,” said Matt Riordan, a portfolio manager who helps manage about $6.5 billion in Sydney at Paradice Investment Management Pty. “The next catalyst will be the Greek election and things that come out of that. The market is going to play a bit of a wait-and-see game on that front.”

Esprit, Nintendo

Companies that do business in Europe fell. Esprit lost 1.1 percent to HK$12.26. Nintendo Co., a maker of video-game players that depends on Europe for a third of its sales, slid 1.3 percent to 8,870 yen in Osaka.

The MSCI Asia Pacific Index slipped 1.7 percent this year through yesterday, compared with a 5 percent advance by the S&P 500 and a 1.1 percent drop by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 1.2 times book value, compared with 2.1 times for the S&P 500 and 1.3 times for the Stoxx 600, according to data compiled by data compiled by Bloomberg.

Among other stocks that fell, Sims Metal Management slid 6.1 percent to A$11.50 in Sydney after the processor of scrap metal said full-year earnings will be materially less than 85 percent of a year earlier.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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


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