Bloomberg News

Asian Stocks Drop Most in Month on Global Growth Concerns

July 09, 2012

Asian Stocks Decline as U.S., Japan Data Fuels Growth Concern

The MSCI Asia-Pacific declined 0.7 percent to 117.75 as of 9:10 a.m. in Tokyo. Photographer: Kiyoshi Ota/Bloomberg

Asian stocks fell, with the regional benchmark index headed for the biggest slide in a month, after Premier Wen Jiabao said China’s economy faces “relatively large” downward pressure and Japanese machinery orders fell the most in a decade.

BHP Billiton Ltd. (BHP), the world’s biggest mining company, slid 1.9 percent as metals prices dropped following a U.S. jobs report that showed hiring isn’t increasing fast enough to lower the unemployment rate. China Overseas Land & Investment Ltd. (688) led declines among Chinese developers traded in Hong Kong after Wen pledged to prevent home prices rebounding. Iluka Resources Ltd. (ILU) tumbled 24 percent after the world’s biggest zircon producer cut its sales forecast for the mineral by as much as 50 percent.

The MSCI Asia Pacific Index fell 1.4 percent to 116.89 as of 4:09 p.m. in Tokyo, heading for its largest drop since June 4. Almost four stocks dropped for each that rose. The gauge slid July 6 as interest-rate cuts in Europe and China failed to allay concern that global economic growth is slowing amid a spreading sovereign-debt crisis.

“Long-term growth issues remain,” said Masahiko Ejiri, a senior fund manager in Tokyo at Mizuho Asset Management Co., which oversees $39 billion. “I’m negative on the macro-economic environment and I’m staying defensively positioned. There needs to be more stimulus from authorities to address slowing growth.”

Relative Value

The MSCI Asia Pacific Index (MXAP) declined 8 percent from this year’s highest level in February through the end of last week amid concern economies in China and the U.S. are slowing as Europe’s debt crisis deepens. Stocks in the Asian benchmark were valued at 12 times estimated earnings on average on July 6, compared with 13 times for the Standard & Poor’s 500 Index and 10.6 times for the Stoxx Europe 600 Index.

Japan’s Nikkei 255 Stock Average slid 1.4 percent and the broader Topix Index lost 1 percent. Trading volume in Topix stocks was the lowest since January 5, according to data compiled by Bloomberg.

South Korea’s Kospi declined 1.2 percent and Australia’s S&P/ASX 200 Index retreated 1 percent.

Singapore’s Straits Times Index fell 1.2 percent, snapping an eight-day advance that was the longest winning run since April last year.

Hong Kong’s Hang Seng Index (HSI) fell 1.7 percent, the most in a month, and China’s Shanghai Composite slid 2.4 percent.

Gauges of equity volatility increased as stocks declined. The Nikkei Volatility index rose 0.7 percent, a third day of gains. The HSI Volatility Index (VHSI) surged 8.1 percent in Hong Kong, the most since June 4, while a measure of options prices on the Kospi 200 index climbed for a third day.

Monetary Easing

China’s consumer-price index eased to a 29-month low in June, giving Wen Jiabao more room to relax economic policies after the second interest-rate cut in a month. The consumer price index rose 2.2 percent from a year earlier, the National Bureau of Statistics said today in Beijing. That compares with the 2.3 percent median estimate in a Bloomberg News survey of 32 analysts.

Wen said downward pressure on the economy is still “relatively large.” The government will intensify fine-tuning of policies even as measures taken since April are helping to stabilize a slowdown, he said, the official Xinhua News Agency reported yesterday.

“We must unswervingly continue to implement all manner of controls in the property market to allow prices to return to reasonable levels,” the report quoted Wen as saying. “We cannot allow prices to rebound.”

Machinery Orders

Japanese machinery orders, an indicator of capital spending, fell 14.8 percent in May from the previous month, the Cabinet Office said. That’s the biggest drop since 2001, according to data compiled by Bloomberg. Economists expected a 2.6 percent decline, according to the median estimate of 29 surveyed by Bloomberg.

Futures on the S&P 500 Index fell 0.4 percent today. The gauge slid 0.6 percent last week. American employers hired fewer workers than forecast in June and the unemployment rate held at 8.2 percent, a July 6 report showed.

Alcoa Inc. (AA:US) is due to posts results today, the first Dow Jones Industrial Average company in the U.S. to release earnings. Analysts project a 1.8 percent decline in profits for S&P 500 companies in the April-June period, which would mark the first year-over-year decrease since 2009.

China Yurun Food Group Ltd. (1068) sank 9.8 percent to HK$6.39 in Hong Kong after the meat-product supplier replaced its chief executive officer for the second time in four months.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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


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