By Anna Kitanaka and Kana Nishizawa
Jan. 21 (Bloomberg) -- Asian stocks fell the fourth straight day as China’s fastest quarterly economic growth since 2007 and Indian food inflation raised concern about government action to control price increases.
Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. sank at least 1.6 percent in Hong Kong. Larsen & Toubro Ltd., India’s biggest engineering company, tumbled 6.5 percent after profit slid by half Santos Ltd., Australia’s third-largest oil and gas producer, declined 1.1 percent after fourth-quarter sales dropped.
The MSCI Asia Pacific Index lost 0.5 percent to 123.61 at 7:45 p.m. in Tokyo, with about five stocks falling for every four that rose. The measure has jumped 50 percent in the past 12 months as growth in China helped the global economy emerge from the worst slowdown since World War II.
“China has done the heavy lifting in the recovery process, and now needs to cool its economy down a little bit,” said Prasad Patkar, who helps manage about $1.6 billion at Platypus Asset Management in Sydney. “Policy tightening measures will be forthcoming, but they need to be viewed in the context of how strong the economy has been.”
Hong Kong’s Hang Seng Index fell 2 percent, while China’s Shanghai Composite Index advanced 0.2 percent. Australia’s S&P/ASX 200 Index lost 0.8 percent. The Bombay Stock Exchange’s Sensitive Index fell 2.4 percent after a government index of food inflation stayed above 15 percent.
Japan’s Nikkei 225 Stock Average climbed 1.2 percent, with Toyota Motor Corp. pacing gains among automakers as a weaker yen boosted the outlook for export earnings. South Korea’s Hynix Semiconductor Inc. advanced 2.2 percent after reporting its biggest quarterly profit in three years.
Starbucks, EBay
Futures on the U.S. Standard & Poor’s 500 Index lost 0.2 percent even as Starbucks Corp., the world’s largest coffee-shop operator, and EBay Inc., the most-visited U.S. e-commerce site, reported better-than-estimated profit after markets closed. The S&P 500 lost 1.1 percent yesterday.
Industrial & Commercial Bank of China, the world’s biggest bank by market value, fell 2.9 percent to HK$5.72, the third- biggest drag on the MSCI Asia Pacific Index. China Construction Bank dropped 1.6 percent to HK$6.12.
China’s fourth-quarter gross domestic product grew 10.7 percent from the same period a year ago, more than the median forecast of 10.5 percent in a Bloomberg News survey, a statistics bureau report showed in Beijing today.
The report may stoke speculation the central bank will raise its benchmark interest rate and tighten restrictions on the nation’s lenders. Minutes after the release, traders said the People’s Bank of China guided three-month bill yields higher at an auction for the second time in two weeks.
Oil Prices
Economic growth of 10 percent or more is excessive, monetary policy committee member Fan Gang said in November. The PBOC ordered ICBC to raise its reserve ratio by 0.5 percentage point, Reuters reported late yesterday, citing two unidentified people. A spokesman for the lender declined to comment.
“At this point, too much growth increases fear of inflation, and not enough growth increases the fear of a recession,” said Roger Groebli, Singapore-based head of financial-market analysis at LGT Capital Management, which oversees about $75 billion in assets. “The government has to make sure the recovery will continue smoothly and not build up a bubble,” he added.
Property developers with projects in China declined on concern tighter lending restrictions will curb real-estate demand. Shimao Property Holdings Ltd. dropped 3.7 percent to HK$12.58, the lowest since Sept. 2. Henderson Land Development Co., a Hong Kong-based developer which gets 12 percent of sales from China, slumped 4.1 percent to HK$51.90.
Consumer Prices
“The strong GDP growth will spur a normalization of easy monetary conditions in China but I don’t think there will be a serious tightening,” said Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees $11 billion. “That’s not going to trigger a slowdown.”
Consumer prices in China rose 1.9 percent in December from a year earlier, today’s data showed, after a 0.6 percent gain in November. Producer prices climbed 1.7 percent, after declining for the previous 12 months.
Signs of a recovery in Asia’s economies have helped drive the MSCI Asia Pacific Index up by 75 percent from a more than five-year low on March 9. Stocks on the gauge are priced at 1.63 times book value, near the highest level since September 2008.
Asset Bubbles
Developing Asian economies face the risk of asset bubbles or overheating as the region’s growth outpaces the rest of the world this year, the World Bank said in a report today. An index of wholesale food articles compiled by the commerce ministry rose 16.81 percent in the week ended Jan. 9 from a year earlier.
Larsen & Toubro sank 6.8 percent to 1,524.1 rupees. The company cut its sales forecast for the year ending March 31 after customers delayed projects, Chief Financial Officer Y.M. Deosthalee said on CNBC-TV18 channel. His comment came after Larsen & Toubro reported third-quarter profit fell 50 percent.
Santos fell 1.1 percent to A$13.48 after saying fourth- quarter sales dropped 7 percent because of lower oil prices. Crude oil for March delivery sank 2 percent to $77.74 a barrel in New York yesterday, while copper futures fell 2.7 percent.
BHP Billiton Ltd., the world’s largest mining company, dropped 1.7 percent to A$42.67. Rio Tinto Group, the world’s third-biggest mining company, retreated 3.2 percent to A$75.55. The two companies were the biggest drags on the MSCI Asia Pacific Index.
Yen Benefits
Japanese automakers advanced on optimism the weaker yen will boost the value of overseas sales when converted into the companies’ home currency. The yen depreciated to 91.56 against the dollar, the weakest intraday level since Jan. 14, from 91.24 yesterday.
Toyota, which gets 31 percent of sales in North America, jumped 2.1 percent to 4,190 yen. Honda Motor Co. added 1.7 percent to 3,310 yen.
Every 1 yen increase by the currency against the dollar this fiscal year will cut Honda’s operating profit by about 12 billion yen ($132 million) and reduce Toyota’s profit by about 30 billion yen, the automakers said in November.
Hynix, the world’s second-largest computer-memory chipmaker, gained 2.2 percent to 25,950 won after saying fourth-quarter net income was 652 billion won ($573 million), compared with a 1.69 trillion-won loss a year earlier. The company also said sales more than doubled.
Rising Demand?
Hynix’s earnings follow those of Intel Corp., the world’s largest chipmaker, which last week forecast higher first-quarter sales than analysts had estimated. Micron Technology Inc., the biggest U.S. producer of computer-memory chips, last month reported its first quarterly profit in more than two years.
Samsung Electronics Co. rose 1.9 percent to 850,000 won, the second-leading mover on the MSCI Asia Pacific Index, behind Toyota. Advantest Corp., the world’s largest maker of memory- chip testers, gained 3.6 percent to 2,597 yen, the highest since Aug. 11. Elpida Memory Inc., Japan’s biggest computer memory- chip maker, added 4.6 percent to 1,769 yen.
“The outlook for the first half looks positive” because of demand for personal computers, said Benjamin Ban, an analyst at Daishin Securities Co. “Still, if there’s too much investment in the industry going forward, we may have to see what happens in the second half.”
To contact the reporter for this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net.
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