By Jonathan Burgos
April 27 (Bloomberg) -- Asian stocks declined, dragging the MSCI Asia Pacific Index lower for the third time in four days, as concern deepened that China’s steps to cool its property market will curb growth in the world’s third-largest economy.
Industrial & Commercial Bank of China Ltd. sank 2 percent in Shanghai on concern lending will slow. PetroChina Co., China’s largest oil producer, lost 1.9 percent on lower oil prices. CSL Ltd., the world’s No. 2 maker of treatments made from blood, slipped 3.7 percent in Sydney after Credit Suisse Group AG downgraded the stock. Elpida Memory Inc. dropped 2.2 percent in Tokyo as memory-chip prices declined.
The MSCI Asia Pacific Index lost 0.2 percent to 126.97 as of 2:44 p.m. in Tokyo, with two stocks falling for each one that rose. The gauge has climbed 11 percent from its low this year on Feb. 8 as better-than-estimated economic and earnings reports offset concerns Greece will default on its debt. German Chancellor Angela Merkel said yesterday a Greek bailout isn’t a done deal.
“Concerns about potential delays in financial aid for Greece as well as further monetary tightening in China continue to dampen investor sentiment,’ said Michiya Tomita, a Hong Kong- based fund manager for Mitsubishi UFJ Management Co., which holds $65 billion in assets. “Valuations are still expensive. We need to see more earnings improvement.”
China’s Shanghai Composite Index slumped 2.7 percent. Hong Kong’s Hang Seng Index dropped 1 percent. South Korea’s Kospi Index lost 0.3 percent. Japan’s Nikkei 225 Stock Average rose 0.3 percent, led by Fanuc Ltd., which climbed 9.9 percent after reporting earnings.
U.S. Earnings
Futures on the Standard & Poor’s 500 Index were little changed today. The index fell 0.4 percent yesterday in New York as concern that proposed legislation will hurt banks overshadowed improving earnings at Caterpillar Inc. and Whirlpool Corp. After markets closed, U.S. Senate Republicans blocked Democrats from advancing their plan to overhaul Wall Street regulation.
Industrial & Commercial Bank lost 2 percent to 4.44 yuan. China Vanke Co., the country’s largest listed property developer, lost 1.2 percent to 7.71 yuan in the southern city of Shenzhen after reporting a decline in first-quarter sales.
In Hong Kong, China Resources Land Ltd., a state-controlled developer, slid 1.9 percent to HK$14.18. Hang Lung Properties Ltd., a Hong Kong developer which generated 40 percent of its fiscal 2009 revenue in China, sank 2.5 percent to HK$29.25.
Capital Requirements
“The market is worried China is over-tightening,” said Grace Tam, Hong Kong-based vice president of investment services at JPMorgan Asset Management Ltd., which manages about $102 billion in Asia-Pacific assets. “The concern is that this could result in a worse-than-expected impact on China’s growth.”
China may use capital requirements for developers as a policy tool to cool the property market, Ba Shusong, deputy director general of the State Council’s Development Research Center, told Shanghai Securities News in an interview.
The Shanghai Composite Index has slumped 11 percent in 2010 as the government unwinds monetary stimulus and steps up measures to prevent a housing bubble inflated by record lending last year.
Oil producers fell after crude prices in New York lost 0.7 percent to $83.64 in after-hours trading, extending yesterday’s 1.1 percent drop. PetroChina lost 1.9 percent to 11.97 yuan in Shanghai, while Inpex Corp., Japan’s largest oil explorer, sank 1.4 percent to 689,000 yen.
Higher Valuations
The MSCI Asia Pacific Index rose 1.6 percent yesterday, its biggest gain since March 17, as speculation mounted earnings will benefit from the global economic recovery. Stocks in the index trade at 16.1 times estimated earnings, compared with 15.2 times for the S&P 500 Index, according to data compiled by Bloomberg.
Government data last week showed sales of new homes in the U.S. soared 27 percent in March, climbing the most in 47 years. Service industries in the U.S. expanded last month at the fastest pace since May 2006, indicating the U.S. recovery is spreading beyond manufacturing and starting to create jobs, data from the Institute for Supply Management on April 5 showed.
A pledge by European governments to put together a loan package for Greece has also boosted share prices. Germany is prepared to release funds to Greece, but “first I want to see the program,” the country’s Chancellor Merkel said late yesterday.
Elpida, Japan’s biggest maker of computer memory, lost 1.9 percent to 2,031 yen, while Hynix Semiconductor Inc. slumped 3.3 percent to 27,550 won in Seoul. The spot price for the benchmark dynamic random access memory chip sank 0.7 percent yesterday to the lowest level since March 22, according to Dramexchange Technology Inc.
Lower Chip Prices
Phison Electronics Corp., a maker of computer data storage devices, slumped 6.9 percent in Taipei. Chairman Pua Khien-Seng said NAND flash chip prices may decline this quarter, the Commercial Times reported. The company’s spokesman Yu Zhi-Chyang didn’t answer calls at his office.
Semiconductor Manufacturing International Corp., China’s buggest chipmaker, dropped 2.2 percent to 90 Hong Kong cents. The company reported a net loss in 2009 as sales dropped 21 percent.
CSL fell 3.4 percent to A$32.78 after Credit Suisse cut the stock to “neutral” from “outperform,” citing the impact from U.S. health-care reforms. CSL tumbled 7.3 percent on April 23 when it last traded, after larger rival Baxter International Inc. cut its 2010 earnings forecast.
Among stocks that gained, IHI Corp., Japan’s second-largest maker of heavy machinery, climbed 9.9 percent to 189 yen in Tokyo. The company said in a preliminary earnings statement its full-year net income was 17 billion yen ($180 million), compared with its forecast of 7 billion yen.
To contact the reporter for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net
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