Bloomberg News

Asian Stocks Decline After Valuations Climb to 2014 High

August 26, 2014

Asian stocks fell for the first time in three days after valuations on the regional gauge climbed to the highest level this year.

Boart Longyear Ltd. (BLY) dropped 13 percent, the most in six weeks, after the Australian mining-services firm posted a first-half loss. SoftBank Corp. slid 1.8 percent in Tokyo for the biggest drag on the Asian measure. Guangzhou R&F Properties Co. slumped 7.2 percent in Hong Kong after the mainland homebuilder cut its sales target. China Modern Dairy Holdings Ltd. climbed 4.6 percent after revenue topped analyst estimates.

The MSCI Asia Pacific Index (MXAP) slid 0.2 percent to 148.41 as of 7:29 p.m in Hong Kong. Two weeks of increases pushed the price-earnings ratio on the measure to 13.7 yesterday, the highest since December, as concern eased about conflicts in Iraq, Israel and Ukraine. The Standard & Poor’s 500 Index climbed 0.5 percent yesterday to a record, briefly topping the 2,000 level for the first time.

“Gravity tends to pull on the markets after they’ve had a strong directional move,” Ric Spooner, Sydney-based chief market analyst at CMC Markets, said in a phone interview. “The market needs good news to sustain it and in the absence of this, tends to drift down. Valuations are fairly full.”

Japan’s Topix index fell 0.5 percent and Hong Kong’s Hang Seng Index declined 0.4 percent. The Hang Seng China Enterprises Index of mainland stocks traded in the city gained 0.1 percent. India’s S&P BSE Sensex Index was little changed. The Shanghai Composite Index dropped 1 percent amid concern new initial public offerings may divert funds from existing equities. Singapore’s Straits Times Index slid 0.2 percent.

Regional Gauges

Australia’s S&P/ASX 200 Index rose 0.1 percent as Boart Longyear tumbled 13 percent to 17 Australian cents. New Zealand’s NZX 50 Index and South Korea’s Kospi index rose 0.3 percent. Taiwan’s Taiex index was little changed, as were futures on the S&P 500.

Data yesterday showed the pace of new-home sales in the U.S. fell to the slowest in four months in July. Housing has advanced in fits and starts this year, buffeted by tight credit and slow wage growth. Federal Reserve Chair Janet Yellen signaled last week that while slack remains in the U.S. labor market, interest rates could be raised sooner than expected.

SoftBank, the Japanese wireless carrier led by Masayoshi Son, dropped 1.8 percent to 7,261 yen in Tokyo after rallying for six straight days.

Guangzhou R&F slumped 7.2 percent to HK$10.04 for its biggest drop in more than a year. The company cut its full-year contracted sales target to 60 billion yuan ($9.8 billion) from 70 billion yuan.

China State Construction International Holdings Ltd. declined 1.7 percent to HK$12.70 after Morgan Stanley rated the shares underweight in new coverage at the brokerage.

Among stocks that rose, China Modern Dairy rallied 4.6 percent to HK$3.63. The company posted first-half net income of 523.2 million yuan, more than tripling from a year earlier.

DeNA Co. climbed 3.7 percent to 1,324 yen in Tokyo after its Kiritani-san x Bike Run game jumped to the top ranking of free Apple Inc. iOS application downloads in Japan.

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

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net John McCluskey, Jim Powell


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