By Jonathan Burgos and Kotaro Tsunetomi
Nov. 12 (Bloomberg) -- Most Asian stocks fell as declines by Japanese drugmakers countered advances among mining companies and automakers.
Hisamitsu Pharmaceutical Co. and Tsumura & Co. sank more than 7 percent in Tokyo after the Yomiuri newspaper said a government committee advised cutting drug costs to trim medical expenses. Rio Tinto Group, the world’s No. 3 mining company, climbed 1.8 percent in Sydney as metal prices advanced. Honda Motor Co., Japan’s second-biggest carmaker, jumped 1.4 percent after Goldman Sachs Group Inc. recommended buying the stock.
Two stocks fell for each one that rose on the MSCI Asia Pacific Index, which dropped 0.3 percent to 118.48 as of 2:22 p.m. in Tokyo. The gauge has lost 2.2 percent from a 13-month high on Oct. 20 amid concern the withdrawal of government stimulus measures will cause the global recovery to falter.
“Concerns about whether the recovery is sustainable or not are weighing on shares,” said Hiroshi Morikawa, a senior strategist in Tokyo at MU Investments Co., which manages the equivalent of $14 billion.
Japan’s Nikkei 225 Stock Average fell 0.1 percent to 9,861.89 in Tokyo. Australia’s S&P/ASX 200 Index lost 0.1 percent even as the government reported an unexpected increase in jobs last month. The Kospi Index dropped 0.2 percent in South Korea, where the nation’s central bank left its benchmark interest rate at a record low.
Changes to MSCI Inc.’s global indexes moved some stocks. Yangzijiang Shipbuilding Holdings Ltd. surged 7.1 percent in Singapore and Greentown China Holdings Ltd. gained 5.7 percent in Hong Kong after they were added. Guangshen Railway Co., which was removed, fell 2.3 percent in Hong Kong.
Low Borrowing Costs?
Futures on the Standard & Poor’s 500 Index slipped 0.4 percent. The measure advanced 0.5 percent to a 13-month high in New York yesterday, as China’s industrial production surged and as Federal Reserve policy makers signaled interest rates will remain at a record low.
San Francisco Fed Bank President Janet Yellen raised the prospect of a “jobless recovery” in a speech in Phoenix, while Dennis Lockhart, who heads the Atlanta Fed, predicted a “relatively subdued pace of growth” this quarter and beyond.
A gauge of healthcare stocks on the MSCI Asia Pacific Index lost 1.3 percent, the most of 10 industry groups. Hisamitsu Pharmaceutical, which makes anti-inflammatory plasters, sank 7.6 percent to 2,855 yen. Tsumura slumped 8.8 percent to 2,800 yen. Takeda Pharmaceutical Co., Asia’s largest drugmaker, lost 1.7 percent to 3,510 yen.
Cutting Waste
The Government Revitalization Unit, tasked with cutting waste from the national budget, will review Japan’s medical- service fees and drug prices and promote the use of cheaper generic medicines over branded drugs, the Yomiuri newspaper said.
The MSCI Asia Pacific Index’s rally since March has driven the average price of stocks in the gauge to 22 times estimated profit, compared with 17 times for the S&P 500 and 15 times for the Dow Jones Stoxx 600 Index.
The gauge has surged 68 percent from a more than five-year low on March 9 on signs stimulus policies introduced around the world were starting to revive the global economy. The gauge fell 1.3 percent last month, the first monthly decline since February, as Australia’s central bank raised interest rates, while India’s shifted policy focus toward stemming inflation.
The Bank of Korea today maintained its seven-day repurchase rate at a record low of 2 percent as it sought to strengthen the economy before increasing borrowing costs.
Australia’s unemployment rate rose to 5.8 percent last month from 5.7 percent in September, government data released today showed. Employers added 24,500 workers in October, compared with economists’ expectations for a decline of 10,000.
Record Gold Prices
In Sydney, Rio Tinto rose 1.8 percent to A$69.84. BHP Billiton Ltd., the world’s biggest mining company, advanced 1.2 percent to A$39.55. Mitsui & Co., which gets 30 percent of sales from commodities, climbed 1.2 percent to 1,193 yen in Tokyo.
Gold added 0.5 percent in New York to $1,120.60 an ounce today, after earlier reaching a record $1,120.90. It was the ninth day of gains for the precious metal’s futures. The London Metals Index, a measure of six metals including copper and zinc, added 0.2 percent yesterday.
Honda Motor climbed 1.4 percent to 2,895 yen as Goldman added the stock to its “conviction buy” list. The company said yesterday it is developing a small car for India, which prefers compact cars.
FamilyMart Co., a Japanese convenience-store operator, rose 1.4 percent to 2,520 yen. The Nikkei newspaper said the company and its top shareholder, Itochu Corp., plan to purchase Am/pm Japan Co., a competitor, for about 10 billion yen ($111 million).
MSCI Changes
In Singapore, Yangzijiang Shipbuilding, a China-based shipbuilder, surged 7.1 percent to S$1.06 after the company was included in MSCI’s indexes. Greentown China, a real-estate developer, gained 5.7 percent to HK$12.26 in Hong Kong. Guangshen Railway lost 2.3 percent to HK$3.39.
MSCI is raising the number of Chinese and Brazilian stocks in its global standard indexes following a semi-annual review, reflecting a rally in the world’s two largest developing markets.
“Emerging markets’ contribution to global GDP has been increasing substantially in recent years but from an indexes point of view, they still have a very small weighting overall,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Markets, which holds $75 billion in assets. “That’s a trend that we’re likely to see over the coming years.”
Adjustments in the MSCI indexes may cause shares chosen for inclusion to advance and those slated for deletion to drop as funds mirroring the benchmarks buy and sell stocks in accordance with those changes. The company estimates more than $3 trillion in funds are benchmarked against its indexes globally.
To contact the reporters for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Kotaro Tsunetomi at ktsunetomi@bloomberg.net.
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