By Jonathan Burgos and Shani Raja
June 2 (Bloomberg) -- Most Asian stocks fell, led by banks and energy companies, as concerns North Korea will step up military tests outweighed signs the global recession is abating.
Shinhan Financial Group Co., which controls South Korea’s second-biggest bank, sank 2.3 percent, erasing a 2.1 percent gain, after Yonhap News said North Korea was preparing to launch a medium-range missile. PetroChina Co. lost 3.6 percent in Hong Kong after oil prices retreated. Honda Motor Co., which gets 48 percent of its profit in North America, climbed 2.2 percent in Tokyo, while Sony Corp., which makes Bravia televisions, jumped 4.3 percent on better-than-expected U.S. economic data.
“The equity market has had such massive gains that it’s ripe for any excuse to trigger a sell-off,” said Nader Naeimi, an investment strategist at AMP Capital Investors in Sydney, which manages about $95 billion. “Geopolitical worries could be one of them.”
Five stocks declined for every four that advanced on the MSCI Asia Pacific Index, which added 0.2 percent to 104.15 as of 7:15 p.m. in Tokyo. It earlier climbed as much as 1.2 percent and has gained 48 percent in a rally since March 9. The Kospi Index lost 0.2 percent in Seoul, erasing a 1.6 percent gain.
Japan’s Nikkei 225 Stock Average closed 0.3 percent higher, paring a climb of as much as 1.2 percent. Hong Kong’s Hang Seng Index slumped 2.6 percent, led by Industrial & Commercial Bank of China Ltd. after Goldman Sachs Group Inc. sold a stake in the Chinese lender at a discount.
Share Sale
Also in Hong Kong, Parkson Retail Group Ltd., a department- store operator, slumped 6.7 percent as its controlling shareholder sought to divest stock. Neptune Orient Lines Ltd., Southeast Asia’s No. 1 container carrier, surged 9.8 percent on plans to repay debt. EVA Airways Corp. surged 6.9 percent in Taipei after winning permission to raise ticket surcharges.
Futures of the Standard & Poor’s 500 Index added 0.3 percent. The gauge climbed 2.6 percent above its 200-day moving average in New York yesterday, a bullish indicator, as reports on personal income, manufacturing and construction beat economists’ forecasts.
The Institute for Supply Management’s factory index rose in May to 42.8, less than the 50 level that signals growth, but above the 42.3 reading that economists had estimated. The reports had buoyed investor sentiment today until speculation of North Korea’s missile launch surfaced.
The communist country is preparing the rocket in the region of Anbyon, northeast of Pyongyang, Yonhap reported. The latest exercise comes eight days after North Korea conducted its second nuclear test in three years. The Kospi Index fell 0.6 percent last week.
Leadership Change
The Dong-A Ilbo newspaper separately reported today that North Korean leader Kim Jong Il had named his third son as his successor.
Shinhan Financial sank 2.3 percent to 31,900 won. LG Electronics Inc., the world’s third-largest maker of mobile phones, fell 1.3 percent to 117,500 won, erasing a climb of as much as 4.2 percent.
“Until now, the market hasn’t reacted much to North Korea’s missile tests, but, together with the leadership change, this launch carries a different weight,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of $53 billion. “If the leadership handoff gets complicated, there’s a risk the state itself could fall into chaos.”
PetroChina, China’s largest oil producer, slumped 3.6 percent to HK$9.05, while Cnooc Ltd. China’s largest offshore oil explorer, dropped 1.6 percent to HK$10.92. Crude-oil futures in New York, which yesterday settled at their highest since Nov. 4, sank as much as 1.4 percent in after-hours trading.
‘Extraordinary Stimulus’
Oil climbed yesterday as the U.S. data added to signs the global economy is recovering. A Chinese purchasing manager’s index yesterday showed the country’s manufacturing industry expanded for a third month. Japan’s government last week raised its assessment of the economy for the first time in three years.
Honda gained 2.2 percent to 2,820 yen. Kia Motors Corp. added 1.6 percent to 12,400 won in Seoul. Sony climbed 4.3 percent to 2,690 yen. BHP Billiton Ltd., the world’s largest mining company, rose 2.7 percent to A$36.70 on optimism metals demand will increase.
“The data continues to improve everywhere because of the extraordinary policy stimulus,” said Stephen Halmarick, Sydney- based head of investment markets research at Colonial First State, which holds about $104 billion. “I’m just worried that the demand to meet all that production may not materialize, and that you get a significant relapse in the economic data over the second half of 2009.”
Bankruptcy Protection
The Group of 20 nations had pledged $2.1 trillion of spending as of April 15 to support growth, data compiled by Bloomberg show, helping drive the stock rally since March. MSCI’s Asian gauge climbed 12 percent in May, its third monthly advance and the longest winning streak since Bear Stearns Cos. filed for bankruptcy protection in July 2007 for two hedge funds.
The rally drove the average valuation of companies on MSCI’s Asian index to 1.4 times the book value of assets on May 29, an increase of 17 percent from the end of 2008. Developing- nation stock funds attracted $12 billion of assets in the four weeks through May 27, according to EPFR Global, which tracks investment flows worldwide.
Honda and Kia also advanced as General Motors Corp.’s bankruptcy raised optimism Asian automakers will gain market share. GM, the world’s largest carmaker until its 77-year reign ended last year, filed for bankruptcy protection in the U.S. yesterday.
Share Sales
ICBC dropped 4.1 percent to HK$4.90 in Hong Kong. Goldman Sachs sold 3.03 billion shares, or a 0.9 percent stake in the Chinese lender at HK$4.88 apiece each, according to a document e-mailed to fund managers today.
Parkson Retail slumped 6.7 percent to HK$11.50. A shareholder had offered 55 million shares at HK$11.71 to HK$12.07 apiece, according to an e-mail sent to investors by UBS AG, the sale’s arranger. Parkson said the shares were being sold by its controlling shareholder PRG Corp.
Neptune Orient jumped 9.8 percent to S$1.68. The company plans to raise S$1.44 billion ($1 billion) selling new shares to repay debt.
In Taipei, EVA Airways surged 6.9 percent to NT$9.76, while China Airlines Ltd. climbed 1.8 percent to NT$8.86. The carriers, Taiwan’s two biggest, won government permission to raise ticket surcharges by as much as 25 percent to offset higher fuel prices.
To contact the reporters responsible for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
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