Asian stocks fell for a fifth week, the regional index’s longest streak of weekly losses in a year, as Spain’s borrowing costs soared and amid further signs that China’s economic slowdown is deepening, dimming the outlook for companies dependent on global demand.
The MSCI Asia Pacific Index fell to levels last seen in December, with Japan’s Topix Index (TPX) recording a ninth week of decline, the longest such run since 1975. HSBC Holdings Plc, Europe’s biggest lender, fell 3 percent. China Railway Construction Corp. (1186) dropped more than 7 percent as China’s industrial production expanded at a slower rate and the country ruled out stimulus measures on a scale similar to 2008.
“Investors are still not convinced about the debt crisis in Europe and that’s being reflected in higher bond yields in Spain and Italy,” said Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees about $8 billion. Europe is “the most significant risk from a global investor view point. Over the past 12 months, the Western world has been trying to find holes in the China growth story.”
The MSCI Asia Pacific Index fell 0.2 percent to 111.38 this week. The gauge dropped 10 percent in May, the most since October 2008, as economic reports showed the economies of China and the U.S. slowing while the debt crisis that began in Greece spreads to larger countries in Europe.
The losses erased $4.5 trillion in global equity value last month, according to data compiled by Bloomberg. That dragged the value of shares on the MSCI Asia Pacific Index to 11.4 times estimated earnings, according to data compiled by Bloomberg. That compares with 12.2 times for Standard & Poor’s 500 Index companies and 9.8 times for the Stoxx Europe 600.
Japan’s Topix Index declined 1.8 percent as it fell for a ninth week, its longest losing streak since September 1975, as Europe’s crisis crimped the outlook for exporters and sent the yen to its highest level against the euro since 2000. The benchmark Nikkei 225 Stock Average lost 1.6 percent.
Australia’s S&P/ASX 200 Index gained 0.9 percent and South Korea’s Kospi index increased 0.6 percent. Indonesia’s Jakarta Composite Index (SHCOMP) slumped 2.6 percent as coal miner PT Bumi Resources plunged 20 percent on the reduced outlook for fuel demand and the prospect of quotas on production.
Hong Kong’s benchmark Hang Seng Index slipped 0.8 percent and Shanghai Composite Index, which tracks shares on China’s biggest stock market, increased 1.7 percent amid speculation that slowing manufacturing activity and lower home prices give the government room for additional measures to support the economy.
Companies that do business in Europe declined. Canon Inc., the Japanese camera maker that counts Europe as its largest market, dropped 5.6 percent to 3,050 yen in Tokyo. HSBC fell 3 percent to HK$60.85 in Hong Kong. Hutchison Whampoa Ltd. (13), the port operator that gets about 55 percent of revenue from Europe 3.8 percent to HK$64.
China has no plan to introduce stimulus measures on the scale deployed during the global financial crisis to counter this year’s economic slowdown, the official Xinhua News Agency reported. The government has cut banks’ reserve ratios three times since November and vowed to fast-track infrastructure projects to boost growth.
No Monetary Stimulus
“The Chinese government will continue to cut the reserve ratio but I don’t think they will implement any monetary stimulus,” Cedric Ma, Senior Investment Strategist at Convoy Asset Management Ltd. “There is no emergency right now.”
China Railway Construction Corp., a builder of train lines and other infrastructure, dropped 7.3 percent to HK$5.86. BYD Co., a maker of electric cars that’s partly owned by Warren Buffett, dropped 3.1 percent to HK$15.70.
PetroChina Co., the country’s biggest listed company, slipped 3.9 percent to HK$9.78 as oil entered a bear market after falling more than 20 percent from its high for the year.
Materials and energy companies were among the industries with the biggest declines on the Asia-Pacific gauge this week.
Bumi Resources dropped 20 percent to 1,410 rupiah in Jakarta. JX Holdings Inc. (5020), a Japanese petroleum company, dropped 6.3 percent to 375 yen in Tokyo, its lowest level since at least 2010.
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