Bloomberg News

Asian Stocks Decline on Japanese Data, Greece Concerns

May 31, 2012

Asian stocks fell, with the benchmark regional gauge headed to its biggest monthly drop since 2008, as Europe’s debt crisis threatened to spread from Greece and Japan’s factory output trailed estimates.

Hitachi Construction Machinery Co. (6305) fell 2 percent in Tokyo. Technology companies led declines, with Samsung Electronics Co., which gets a fifth of its sales from Europe, sliding 1.2 percent in Seoul. James Hardie Industries SE, a seller of home siding, retreated 0.8 percent in Sydney after U.S. home sales declined. Cnooc Ltd., China’s leading offshore energy explorer, dropped 1.1 percent in Hong Kong as oil futures in New York entered a bear market.

The MSCI Asia Pacific Index (MXAP) slid 0.4 percent to 112.47 as of 7:55 p.m. in Tokyo, with about five stocks falling for every four that rose. The gauge, which earlier fell as much as 1.5 percent, is poised for a 10 percent drop in May, the steepest monthly decline since October 2008, when global markets tumbled in the wake of the collapse of Lehman Brother Holdings Inc.

“The market is genuinely worried about the potential disorderly default and exit by Greece and what that means in terms of contagion risks,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “It will have to be a response by governments and the central bank to stem the panic in the market.”

The MSCI Asia Pacific Index fell 0.8 percent this year through yesterday as China signaled slowing growth in the world’s second-biggest economy and amid concern Europe’s debt crisis is worsening. The decline compares with a 4.4 percent gain by the S&P 500 and a 1.6 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.6 times estimated earnings on average, compared with 12.5 times for the S&P 500 (SPXL1) and 10 times for the Stoxx 600.

‘Market Weak’

“Asian shares tend to be sold off more in a risk-off situation,” said Naoki Fujiwara, who helps oversee about $6.6 billion at Shinkin Asset Management Co. in Tokyo. “Risk money tends to go into Asia as investors try to capture high returns from strong economic growth,” but when limits to growth become evident, people sell, he said. “The market is weak on Greece exit concerns, and signs of slowdown in the U.S. and China.”

Japan’s Nikkei 225 Stock Average fell 1.1 percent as the yen extended gains, reaching a three-month high against the dollar and a four-month high against the euro. A stronger Japanese currency cuts the competitiveness of the nation’s exporters abroad.

Australia’s S&P/ASX 200 Index declined 0.4 percent and South Korea’s Kospi Index slid 0.1 percent. Hong Kong’s Hang Seng Index fell 0.3 percent, while China’s Shanghai Composite Index slid 0.5 percent.

India Growth Slows

The BSE India Sensitive Index (SENSEX), or Sensex, dropped 0.8 percent after India’s economy expanded 5.3 percent in the three months ended March from a year earlier, the weakest pace in at least eight years.

Japan’s industrial production rose 0.2 percent in March from February, the Trade Ministry said in Tokyo today. The median estimate of 26 economists surveyed by Bloomberg News was for a 0.5 percent increase.

Hitachi Construction declined 2 percent to 1,512 yen in Tokyo. Komatsu Ltd. (6301), another construction machinery maker, slid 2.6 percent to 1,878 yen.

Futures on the S&P 500 rose 0.4 percent today. The guage fell 1.4 percent in New York yesterday after a report showed the number of contracts to buy previously owned U.S. homes fell in April by the most in a year.

James Hardie, which counts the U.S. as its biggest market, declined 0.8 percent to A$7.42. Toyota Motor Corp. (7203), Asia’s biggest carmaker by market value, slid 1.1 percent to 3,040 yen in Tokyo.

European Turmoil

Stocks dropped as an opinion poll showed most Greeks want to see the terms of a financial rescue revised, stoking fears the nation may default and be forced to exit the euro. Separately, the European Central Bank denied it has rejected a plan floated by the Spanish government to recapitalize Bankia group.

Samsung Electronics retreated 1.2 percent to 1,211,000 won, while Nippon Sheet Glass Co. (5202), which counts Europe as its top market, declined 4.9 percent to 77 yen in Tokyo.

Resources stocks dropped on falling commodity prices. Oil futures in New York yesterday closed 20 percent below their peak this year, the common definition of a bear market. The London Metal Exchange Index of prices for six industrial commodities including copper and aluminum slid 1.9 percent yesterday.

Cnooc slid 1.1 percent to HK$14.04 in Hong Kong, while PT Aneka Persero Tambang Tbk, an Indonesian mining company, tumbled 12 percent to 1,150 rupiah in Jakarta ahead of its removal from the MSCI Indonesia Index.

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