By Masaki Kondo and Shani Raja
Nov. 19 (Bloomberg) -- Asian stocks fell, dragging the MSCI Asia Pacific Index down for a third day, as share-sale plans at Japanese companies raised concern the value of existing holdings will be reduced.
Mitsubishi UFJ Financial Group Inc. sank 3.7 percent and Nomura Real Estate Residential Fund Inc. slumped 8.6 percent after filing to sell stock. Industrial & Commercial Bank of China Ltd. lost 2.4 percent on concern China Minsheng Banking Corp.’s share sale will lure investors away from pricier stocks. Singapore Technologies Engineering Ltd. rose 2.6 percent on its home exchange, where the Straits Times Index climbed 0.5 percent after the city-state forecast increased economic growth.
“What you’re seeing is very much Japan related,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which holds $75 billion in assets. “Everywhere else in Asia you have a very strong growth profile, but Japan has a lot of long- term structural issues that still need to be tackled.”
The MSCI Asia Pacific Index lost 0.9 percent to 117.55 as of 7:22 p.m. in Tokyo. The gauge has fallen 3 percent from a 13- month high on Oct. 20 amid speculation governments will start withdrawing stimulus measures that have helped revive the global economy. Singapore’s trade ministry said today the city-state plans to scale back its support programs.
Japan’s Nikkei 225 Stock Average retreated 1.3 percent and the Topix sank 1.5 percent, the biggest declines in the region. Hong Kong’s Hang Seng Index dropped 0.9 percent.
Trading Debuts
The Kospi Index advanced 1 percent in Seoul. Korea Line Corp. rose 2 percent after commodity-shipping fees climbed for a 15th day. Grand Korea Leisure Co., a casino operator, soared 32 percent on its first day of trading. Maxis Bhd., Malaysia’s biggest mobile-phone operator, climbed 8.4 percent on its debut.
Futures on the Standard & Poor’s 500 Index lost 0.6 percent. The gauge fell 0.1 percent yesterday, amid disappointing profit forecasts from Autodesk Inc. and Salesforce.com.
Mitsubishi UFJ declined 3.7 percent to 466 yen after registering to raise as much as 1 trillion yen ($11.2 billion) in its second share sale since January as regulators demand banks bolster capital to prevent another financial crisis.
A sale of that size would be Japan’s biggest public sale of additional common shares, according to data compiled by Bloomberg.
Nomura Real Estate sank 8.6 percent to 352,000 yen. It plans to raise as much as 11.5 billion yen ($129 million) from a sale of new shares, according to a filing with Japan’s Finance Ministry.
Risk Aversion
“Risk aversion is taking hold somewhat, bringing down Japan’s stocks, as serious concerns remain about the financial sector,” said Masahide Tanaka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s No. 2 lender.
In Hong Kong, ICBC, China’s No. 1 bank by market value, lost 2.4 percent to HK$6.85. Bank of China, the third largest, slid 2.3 percent to HK$4.72. ICBC shares are valued at 3.3 times book value, while Bank of China is at 2.3 times.
China Minsheng Banking’s HK$30.1 billion ($3.9 billion) share sale was priced at 1.77 times estimated 2010 book value, people familiar with the matter said. The Hang Seng Index has risen 100 percent from its March 9 low, bringing the average price of its constituents to 2.2 times book value. That’s twice the level stocks were valued at during this year’s low.
“For the short term, valuations seem quite high already,” said Chris Leung, a Hong Kong-based portfolio manager at Taifook Asset Management Ltd., which oversees about $400 million. “I think they’re close to the cycle peak in the short term.”
Rising Valuations
The MSCI Asia Pacific Index has climbed 67 percent from a more than five-year low on March 9 on speculation of a global recovery. Companies on the gauge are priced at an average 1.5 times book value, up from 1 at the March low. Stocks on the S&P 500 trade at 2.2 times, while those on Europe’s Dow Jones Stoxx 600 Index are at 1.7 times.
The International Monetary Fund raised its forecast for growth in the global economy next year to 3.1 percent from 2.5 percent, led by a 9 percent expansion in China and 6.4 percent in India, the Washington-based organization said on Oct. 1. That compares with growth of 1.7 percent in Japan, 1.5 percent in the U.S. and 0.3 percent in the euro region.
Singapore’s economy will grow 3 percent to 5 percent in 2010 after shrinking as much as 2.5 percent this year, the trade ministry said today. Gross domestic product climbed a revised annualized 14.2 percent last quarter from the previous three months, the second consecutive expansion, it said.
‘Reasonably Attractive’
Singapore Technologies, Asia’s biggest aircraft maintenance company, climbed 2.6 percent to S$3.16. United Overseas Bank Ltd., Singapore’s second-largest bank by market value, climbed 0.6 percent to S$19.50, while Oversea-Chinese Banking Corp. added 1.2 percent to S$8.46.
Asian banks are “reasonably attractive” even after recent gains, especially when compared with Western banks, investor Marc Faber said in an interview with Bloomberg Television yesterday in Singapore. He said he holds shares of United Overseas Bank and Oversea-Chinese Banking.
Korea Line added 2 percent to 45,150 won after the Baltic Dry Index, a measure of shipping costs for commodities, jumped 6 percent yesterday. The gauge’s 15-day advance is the longest winning streak since June 3.
Pacific Basin Shipping Ltd., Hong Kong’s largest operator of dry-bulk vessels, climbed 3.5 percent to HK$6.84. China Shipping Development Co., the dry-bulk arm of the nation’s second-biggest shipping group, advanced 3.4 percent to HK$12.82.
In Seoul, Grand Korea Leisure surged 32 percent to 15,850 won from its initial share offer price of 12,000 won.
The stock was rated “buy” as Daewoo Securities Co. initiated coverage on the stock with a 16,000 won price target. Earnings at the company will continue to grow in 2010, the brokerage said today in a report.
Maxis rose 8.4 percent to 5.42 ringgit on its debut. The Kuala Lumpur-based carrier raised 11.2 billion ringgit ($3.3 billion) for its parent Maxis Communications Bhd. in the share sale, in which institutional investors bid for 3.7 times the stock on offer.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
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