By Jonathan Burgos and Patrick Rial
May 18 (Bloomberg) -- Asian stocks fell, while Treasuries and the yen rose, as losses at Panasonic Corp. fueled concern a two-month equity rally had outpaced earnings prospects. Indian stocks surged following the ruling party’s election victory.
Panasonic, the world’s biggest maker of plasma televisions, tumbled 7.6 percent in Tokyo. Mizuho Financial Group Inc., Japan’s No. 2 listed bank, fell 3.8 percent on share-sale plans. Reliance Industries Ltd., India’s biggest company by market value, soared 23 percent before the market’s surge triggered a halt in stock trading.
The MSCI Asia Pacific Index slipped 0.5 percent to 96.84 at 5:32 p.m. in Tokyo. Through the end of last week, the gauge had climbed 38 percent from a more than five-year low on March 9. The rally lifted the average valuation of stocks in the measure to 1.4 times the book value of assets as of May 15, 17 percent higher from the end of 2008.
“Until we see the economic outlook improve and earnings show signs of rising above current levels, we won’t see stocks push to higher levels,” said Masaru Hamasaki, a senior strategist at Toyota Asset Management Co., which oversees about $3.3 billion.
Japan’s Nikkei 225 Stock Average declined 2.4 percent. Hong Kong’s Hang Seng Index climbed 1.4 percent and China’s Shanghai Composite Index rose 0.3 percent, led by coal producers after China Shenhua Energy Co. said consumption of the fuel may increase. Sri Lanka’s Colombo All Share Index surged 7.1 percent as the government claimed victory against Tamil rebels.
Treasuries, Yen
Yokogawa Electric Corp., which makes measuring equipment, slumped 15 percent on a full-year loss. Unitika Ltd. rose 18 percent, pacing gains among Japanese makers of materials used in medical masks, as the country confirmed 125 swine flu cases. Gloucester Coal Ltd. surged 18 percent in Sydney trading after agreeing to a higher takeover bid from Noble Group Ltd.
Futures on the U.S. Standard & Poor’s 500 Index declined 0.3 percent. The measure dropped 1.1 percent on May 15 as Federal Deposit Insurance Corp. Chairman Sheila Bair predicted the heads of some banks may be replaced.
Treasuries and the yen rose as the drop in stocks prompted investors to seek haven assets. The yield on the 10-year Treasury note fell three basis points to 3.11 percent, according to data compiled by Bloomberg. A basis point is 0.01 percentage point. The yen advanced to 94.55 per dollar, the strongest since March 20, from 95.21 last week.
“We are seeing risk aversion across the board,” said Masafumi Yamamoto, head of foreign-exchange strategy for Japan at Royal Bank of Scotland Group Plc in Tokyo and a former Bank of Japan currency trader. “The market is becoming more vulnerable to negative news.”
‘Too Hard, Too Quickly’
Economic figures in the past week have fueled concerns that the stock rally since March was overdone. Japan’s wholesale prices fell at the fastest pace in 22 years in April, according to central bank figures on May 15. Hong Kong’s gross domestic product shrank 4.3 percent in the first quarter from the previous three months, which was worse than the 2.6 percent median decline expected by economists in a Bloomberg survey.
“There’s the perception that maybe things have gone too hard, too quickly,” said Tim Schroeders in Melbourne, who helps manage $1 billion at Pengana Capital Ltd. “People are looking a bit more circumspectly about how things are progressing.”
Panasonic tumbled 7.6 percent to 1,344 yen. The company said on May 15 it will probably post a net loss of 195 billion yen in the 12 months ending March 31, compared with a 379 billion yen deficit a year earlier.
Stable Government
Mizuho Financial sank 3.8 percent to 228 yen in Tokyo after posting a 588.8 billion yen ($6.2 billion) loss for the 12 months ended March 31. The bank plans to raise as much as 800 billion yen selling stock and preferred securities after posting its first loss in six years.
Aozora Bank Ltd., the Japanese lender controlled by Cerberus Capital Management LP, declined 5 percent to 134 yen after posting a wider-than-expected full-year loss.
India’s Sensitive Index, or Sensex, surged 17 percent to 14,284.21 before trading was suspended. Reliance Industries climbed 23 percent to 2,393.9 rupees. ICICI Bank Ltd., the nations second-largest, jumped 25 percent to 719.8 rupees.
Prime Minister Manmohan Singh’s Congress party and its allies won 260 of the 543 seats in the lower house of India’s parliament, the Election Commission said on its Web site on May 16. The victory margin exceeded the most optimistic prediction for 216 in exit polls released by NDTV television.
“The election result is extremely positive and very, very bullish,” said Madhusudan Kela, head of equities at Reliance Capital Asset Management, the nation’s largest money manager. “This will provide a government which is stable and has powers to take decisions.”
Swine Flu
Shenhua Energy, China’s biggest coal producer, gained 3.2 percent to HK$23.95 in Hong Kong and rose 3.2 percent to 28.05 Yuan in Shanghai. The company said power stations may have to pay higher prices for the fuel because demand may rise.
Datong Coal Industry Co. surged 9.8 percent to 37.73 Yuan.
Yokogawa slumped 15 percent to 446 yen after reporting a net loss of 38.4 billion yen for the year ended March 31, compared with an 11.7 billion yen profit a year earlier, it said in a release on May 15.
Unitika soared 18 percent to 109 yen on speculation the spread of swine flu in Japan will boost demand for its products. Kurabo Industries Ltd., which makes woven fabrics, surged 20 percent to 177 yen. Japan has so far confirmed 125 cases of swine flu, formally known as H1N1, Chief Cabinet Secretary Takeo Kawamura said today at a briefing in Tokyo.
Gloucester Coal jumped 18 percent to A$6.95. Noble raised its offer to A$7 a share in cash, from A$6, to win unanimous endorsement from Gloucester directors, the Hong Kong-based commodity supplier said. Noble, which owns a 21.7 percent stake in Gloucester, fell 2.7 percent to S$1.43 in Singapore.
For Related News and Information: World equity valuations: WPE
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