Bloomberg News

Asian Stocks Drop After Seven-Week Rally; Nomura Drops

January 07, 2013

Asian stocks fell, with the regional benchmark retreating after posting its longest streak of weekly gains since March last year.

Nomura Holdings Inc., Japan’s biggest brokerage by market value, dropped 5 percent, halting a record winning streak on speculation the stock may be overheating. Aozora Bank Ltd. (8304) tumbled 10 percent after Reuters reported Cerberus Capital Management LP may sell most of its stake in the lender. Shui On Land Ltd. fell 1.5 percent after the Hong Kong-based developer said it expects a significant decline in full-year profit.

The MSCI Asia Pacific Index fell 0.3 percent to 131.49 as of 8:05 p.m. Tokyo time, erasing gains of as much as 0.3 percent earlier and heading for its first decline in five days. The gauge posted its seventh weekly advance last week, the longest winning streak since March last year, after U.S. Congress approved a budget deal and manufacturing reports from China and the U.S. added to signs of a global recovery.

“Some profit taking is to be expected given the recent strong rally, particularly in Japan,” said Yoji Takeda, who oversees about $1.2 billion as Hong Kong-based head of Asian equities at RBC Investment Management (Asia) Ltd. “There isn’t much downside for the market. China’s economy is recovering and the fiscal cliff in the U.S. has been resolved at least for the short term.”

Overbought Signal

Japan’s Nikkei 225 Stock Average (NKY) slipped 0.8 percent, after gaining 2.8 percent on Jan. 4, the best opening day for the gauge since 2002. The measure’s 14-day relative strength index, an indicator of trading momentum, reached 83 at the end of last week. Some investors view a reading above 70 as a sign the market has risen too far, too fast.

Australia’s S&P/ASX 200 Index (AS51) lost 0.1 percent, while South Korea’s Kospi Index was little changed. Hong Kong’s Hang Seng Index was little changed. China’s Shanghai Composite Index added 0.4 percent. The Philippine Stock Exchange Index climbed 1.2 percent to a record close.

Futures on the S&P 500 Index fell 0.1 percent today. The gauge increased 0.5 percent on Jan. 4 as employers added more workers while the jobless rate held at a level that’s unlikely to hasten the end of Federal Reserve stimulus.

U.S. payrolls rose by 155,000 workers last month following a revised 161,000 advance in November, which was more than initially estimated. The median estimate of 82 economists surveyed by Bloomberg called for an increase of 152,000. The unemployment rate held at 7.8 percent, matching the lowest level since December 2008.

Record Rally

The MSCI Asia Pacific Index (MXAP) surged 14 percent in 2012 as central banks from the U.S., Europe, Japan and China took action to spur economic growth. The Asia Pacific gauge traded at 14.1 times average estimated earnings, compared with about 13.2 times for the Standard & Poor’s 500 Index and about 11.9 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Nomura sank 5 percent to 498 yen, halting a record 13-day rally on speculation the stock may be overheating after the shares’ 14-day Relative Strength Index increased to 93.6 on Jan. 4, the highest since October 1974.

Aozora Bank tumbled 10 percent to 250 yen. Cerberus will sell as many as 632.5 million Aozora shares at a price to be determined as early as Jan. 16, according to a statement from the bank that confirmed the earlier Reuters report. Cerberus owns 44.2 percent of the lender, or 729 million shares, according to data compiled by Bloomberg News.

Softbank Complaint

Softbank Corp. dropped 1.9 percent to 3,065 yen after Crest Financial Corp. said it will ask the U.S. Federal Communications Commission to block the Japanese mobile-phone operator’s planned acquisition of Sprint Nextel Corp.

Shui On Land, controlled by billionaire Vincent Lo, slipped 1.5 percent to HK$3.88 in Hong Kong. The company said full-year profit will decline significantly as it completed fewer residential projects last year compared to 2011.

LG Display Co. declined 2.6 percent to 30,050 won in Seoul. The world’s second-biggest maker of liquid-crystal displays, along with Samsung Electronics Co., AU Optronics Corp., Innolux Corp., Chunghwa Picture Tubes Ltd. and HannStar Display Corp. were ordered by China to pay a combined 353 million yuan ($56.7 million) for fixing LCD panel prices.

Among stocks that gained, Treasury Wine Estates Ltd. (TWE), the world’s second-biggest listed wine producer, jumped 5.7 percent to A$4.98 in Sydney.

The company may be a potential takeover target, the Australian newspaper reported, citing an interview with Matt Williams, head of equities at Perpetual Ltd. The Australian fund manager holds 5.1 percent of Treasury Wine, according to data compiled by Bloomberg News.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

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


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