Bloomberg News

Asian Stocks Decline From 19-Month High; Japex Jumps

March 12, 2013

Asian stocks fell from a 19-month high as Chinese shares extended their decline. Japan Petroleum Exploration Co. (1662) surged after Japan confirmed it has extracted frozen natural gas from under the seabed.

China Cosco Holdings Co. (1919), the nation’s biggest shipping company, dropped 5.3 percent after Citigroup Inc. said the sale of its logistics unit means the loss of a stable, growing business. Whitehaven Coal Ltd. (WHC), Australia’s second-biggest independent coal producer, sank 5.5 percent on government plans for stricter coal mining approvals. Japan Petroleum, the country’s second-largest oil and gas explorer, surged 5.7 percent after Japan confirmed gas output from methane hydrate, known as “burnable ice.”

The MSCI Asia Pacific Index slid 0.3 percent to 136.11 as of 9:16 p.m. in Tokyo after rising as much as 0.3 percent. More than twice as many stocks fell as gained on the measure, which closed yesterday at the highest level since August 2011.

“Shares have risen a lot already, and there’s a short-term risk of a pull-back,” said Takashi Aoki, a Tokyo-based fund manager at Mizuho Asset Management Co., which oversees about $38 billion. “The global economy is recovering steadily, led by the U.S. China is growing at a cruising speed rather than continued acceleration, so you shouldn’t have excessively high hopes.”

The regional gauge advanced about 12 percent from the start of November through yesterday, led by Japanese shares as Prime Minister Shinzo Abe pursues policies to beat deflation and pressures the central bank to ease monetary policy.

Relative Value

Asia’s benchmark index traded at 15.2 times estimated earnings as of yesterday compared with 14.1 for the Standard & Poor’s 500 Index (SPX) and 12.7 for the Stoxx Europe 600 Index (SXXP), according to data compiled by Bloomberg.

Futures on the S&P 500 (SPXL1) fell 0.1 percent today. The index rose 0.3 percent at the close of trading in New York yesterday to be within nine points of its record high.

Japan’s Nikkei 225 Stock Average (NKY) retreated 0.3 percent, reversing a gain of as much as 0.9 percent. BOJ deputy-governor nominee Kikuo Iwata said in parliament that decisive monetary easing was needed to pull the country out of deflation.

Hong Kong’s Hang Seng Index (HSI) slipped 0.9 percent, with trading volume 11 percent below its 30-day average for the time of day. China’s Shanghai Composite Index fell 1 percent, reversing an earlier gain of 1 percent and capping its longest losing streak since November.

Cosco Falls

South Korea’s Kospi Index dropped 0.5 percent. Australia’s S&P/ASX 200 Index slid 0.6 percent, led by utility and energy companies. Taiwan’s Taiex Index slumped 0.6 percent while Singapore’s Straits Times Index gained 0.3 percent.

China Cosco slumped 5.3 percent to HK$4.08. The company said it plans to sell its logistic unit to its parent to improve financial results. The company may gain 2.4 billion ($386 million) to 4.6 billion yuan from the sale, but will lose a growing business in the long run, Citigroup said.

China Life Insurance Co., the nation’s biggest insurer, slumped 1.7 percent to 17.58 yuan in Shanghai as shares resumed trading after being suspended amid comments by its chairman on this year’s earnings. Chairman Yang Mingsheng’s comment that profit will “surely” improve in 2013 referred to the company’s parent, China Life said in a statement yesterday.

China Railway Group Ltd. and China Railway Construction Corp., the nation’s two biggest train line builders, fell at least 5.1 percent in Hong Kong. China’s plan to dismantle its rail ministry is market-oriented and pro-competition, and companies that have enjoyed government support will be affected, SinoPac Securities Asia Ltd. analyst Vivian Liu said.

Datang Slump

China Longyuan Power Group Corp. (916), a coal and wind power producer, slid 5.7 percent to HK$6.51. China Datang (1798) Corp. Renewable Power Co., a state-owned wind-energy developer, declined 3.1 percent to HK$1.56.

Credit Suisse Group AG cut their rating to neutral from outperform after China Longyuan surged 44 percent from mid- November through March 8, while China Datang more than doubled. Hong Kong’s benchmark Hang Seng Index climbed 9.4 percent during the period.

Whitehaven sank 5.5 percent to A$2.39, declining for a 10th time in 11 days. Australia’s government plans to make the approval process for coal-seam gas and coal mining projects more stringent to ensure protection of water resources, according to Environment Minister Tony Burke.

AGL Energy Ltd. (AGK) and Santos Ltd., Australian energy companies whose coal-seam gas projects have faced opposition from some environmental groups and farmers, dropped at least 1.6 percent.

Methane Hydrates

Japan Petroleum Exploration surged 5.7 percent to 4,175 yen in Tokyo, its highest close since April 2011 and the second- biggest gain in the MSCI Asia Pacific Index. Japan confirmed gas output from methane hydrate buried under the seabed off the coast of Japan’s main island of Honshu. Modec Inc. (6269), a maker of floating production systems for the offshore oil and gas industry, jumped 7.1 percent to 3,245 yen.

Hydroelectric power producer Aboitiz Power Corp. (AP) gained 6.5 percent to 39.40 pesos in Manila, rebounding from its biggest drop since 2009 in the final minutes of yesterday’s trading.

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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