By Kana Nishizawa and Shani Raja
April 19 (Bloomberg) -- Asian stocks fell, dragging the MSCI Asia Pacific Index down by the most in two months, on concern a U.S. suit against Goldman Sachs Group Inc. signals increasing regulatory scrutiny on financial companies.
Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by market value, fell 3.5 percent in Tokyo after U.K. Prime Minister Gordon Brown called yesterday for the Financial Services Authority to start an inquiry into Goldman Sachs. BHP Billiton Ltd., the world’s biggest mining company, declined 1.5 percent in Sydney on lower commodity prices. Canon Inc., the world’s No. 1 camera maker, sank 2.3 percent after the yen strengthened against the dollar.
“The Goldman news, in isolation, undermines credibility in the financial system,” said Tim Schroeders, who helps manage about $1.1 billion at Pengana Capital Ltd. in Melbourne. “It also creates uncertainty as to whether this is a one-off action, or the first of many that results in greater scrutiny regarding the integrity of U.S. financial institutions.”
The MSCI Asia Pacific Index slumped 1.8 percent to 126.01 as of 10:42 a.m. in Tokyo, with 15 stocks declining for each one that advanced. The measure dropped the most since Feb. 19. The gauge posted its third straight weekly advance last week as better-than-estimated economic and U.S. earnings reports fueled confidence in the global economic recovery.
Japan’s Nikkei 225 Stock Average sank 1.8 percent and South Korea’s Kospi index dropped 1.5 percent. China’s Shanghai Composite Index slumped 2.4 percent and Hong Kong’s Hang Seng Index lost 1.7 percent after the government stepped up measures to curb gains in real-estate prices. China Vanke Co., the nation’s biggest publicly traded developer, tumbled 3.7 percent in Shenzhen.
Banks, Mining Companies
Futures on the Standard & Poor’s 500 Index lost 0.4 percent. The gauge slumped 1.6 percent on April 16 after the Securities and Exchange Commission sued Goldman Sachs for misstating and omitting facts about collateralized debt obligations. Germany’s financial regulator has asked the SEC for details on the suit.
The MSCI Asia Pacific Index tumbled 39 percent from Sept. 15, 2008 to March 9, 2009 as the credit crisis caused the collapse of Lehman Brothers Holdings Inc. and dragged the global economy into its worst slowdown since World War II. The MSCI gauge has since surged 78 percent.
HSBC Holdings Plc, which made 20 percent of its 2009 revenue in North America, fell 2.1 percent to HK$82.75 in Hong Kong. Mitsubishi UFJ dropped 3.5 percent to 496 yen in Tokyo. Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest bank by market value, sank 4.6 percent to 3,140 yen. In Sydney, Westpac Banking Corp. fell 1.8 percent to A$27.67.
Oil, Metals
Banks and material companies posted the biggest declines among the MSCI Asia Pacific Index’s 10 industry groups. Companies in the gauge trade at an average 16 times estimated earnings, compared with 15.2 times for the S&P 500.
BHP Billiton retreated 1.5 percent to A$42.90. Newcrest Mining Ltd., Australia’s biggest gold producer, slid 1.3 percent to A$34.16. Woodside Petroleum Ltd., Australia’s second-biggest oil and gas producer, declined 1.2 percent to A$46.14. In Wellington, New Zealand Oil & Gas Ltd. fell 1.9 percent to NZ$1.53.
Gold futures for June delivery fell 2 percent in New York on April 16, the most since February, as the SEC’s lawsuit against Goldman Sachs, one of Wall Street’s biggest traders and brokers of raw materials, spurred investors to seek a haven in the dollar and eroded the metal’s appeal as an alternative asset.
Crude oil futures slumped 2.7 percent in New York on April 16, while the London Metals Index, a measure of six metals including copper and zinc, declined 2.1 percent.
Risk Aversion
“The Goldman shock is discouraging investors from taking on risk in stocks, currencies and commodities,” said Tomochika Kitaoka, a senior strategist at Mizuho Securities Co. in Tokyo.
Japanese exporters declined as the yen strengthened to as much as 91.82 to the dollar after trading at 92.74 at the close of the Tokyo stock market on April 16. A stronger yen reduces companies’ revenue from overseas sales when converted into the local currency.
Canon slid 2.3 percent to 4,250 yen. Panasonic Corp., the world’s biggest maker of plasma televisions, retreated 1.7 percent to 1,368 yen. Mazda Motor Corp., Japan’s second-largest car exporter, fell 1.5 percent to 255 yen.
China’s property-related equities fell after the nation said banks should stop loans for third-home purchases in cities with excessive property price gains and suspend lending to buyers who cannot provide tax returns or proof of social security contributions in that city, the State Council said.
China Developers
China Vanke tumbled 3.7 percent to 8.71 yuan in Shenzhen. Poly Real Estate Group Co. sank 4.2 percent to 17.87 yuan in Shanghai. In Hong Kong, China Overseas Land & Investment Ltd., controlled by the country’s construction ministry, slumped 4.1 percent to HK$14.86. Guangzhou R&F Properties Co., the biggest real-estate company in the southern Chinese city, slumped 6.5 percent to HK$11.16.
Airline stocks slumped after a volcanic eruption in Iceland prompted airlines to cancel flights. Airlines worldwide are losing at least $200 million a day in revenue as an ash cloud over Europe grounded planes, the International Air Transport Association said on April 16.
All Nippon Airways Co., Asia’s No. 2 carrier, declined 3.1 percent to 281 yen. Australia’s Virgin Blue Holdings Ltd. tumbled 6.1 percent to 61.5 cents in Sydney. Singapore Airlines Ltd., the world’s second-largest carrier by market value, lost 2.7 percent to S$15.10.
Hong Kong’s Cathay Pacific Airways Ltd. lost 2.4 percent to HK$15.48. Separately, the company said its Deputy Chairman Philip Chen resigned to pursue personal interests.
To contact the reporters for this story: Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
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