Most Asian Stocks Decline After Bernanke's Testimony Fuels Growth Concerns
July 22 (Bloomberg) -- Aaron Fischer, an analyst at CLSA Ltd., talks with Bloomberg's Linzie Janis about the outlook for Hong Kong's casino stocks. Macau casino gambling revenue may rise 72 percent this month from a year earlier as gamblers who wagered on the World Cup soccer tournament return to betting on card games in the Chinese city, according to CLSA. (Source: Bloomberg)
Most Asian stocks fell, dragging the MSCI Asia Pacific Index lower for the first time in three days, after Federal Reserve Chairman Ben S. Bernanke said the U.S. economic outlook remains “unusually uncertain.”
Samsung Electronics Co., Asia’s biggest maker of computer chips, flat screens and mobile phones, dropped 1.1 percent in Seoul. Canon Inc., a camera maker that gets about 27 percent of its revenue in the Americas, decreased 0.8 percent in Tokyo. Commonwealth Bank of Australia led declines among finance companies on concern results from European banks’ stress tests will reveal loan losses. Sun Hung Kai Properties Ltd., Hong Kong’s biggest developer, climbed 1.1 percent on speculation that prices of luxury homes will gain.
The MSCI Asia Pacific Index fell 0.1 percent to 115.55 as of 5:34 p.m. in Tokyo, with about three stocks declining for every two that advanced. The gauge has slumped 10 percent from this year’s high on April 15 as Europe’s debt crisis and China’s steps to curb property prices fueled concern that global economic growth will slow.
“People in the market are anxious about the future of the global economy, making them unwilling to take on risk,” said Hisakazu Amano, who helps oversee about $18 billion in Tokyo at T&D Asset Management Co. “Liquidity is drying up, making prices more volatile and adding to investors’ sense of insecurity.”
Japan’s Nikkei 225 Stock Average lost 0.6 percent, while Australia’s S&P/ASX 200 Index slid 0.9 percent. New Zealand’s NZX 50 Index sank 0.7 percent. South Korea’s Kospi declined 0.8 percent. The Shanghai Composite Index advanced 1.1 percent as brokerage upgrades boosted property companies and steelmakers.
Further Action
Futures on the Standard & Poor’s 500 Index rose 0.5 percent. The index dropped 1.3 percent yesterday after Bernanke told the Senate Banking Committee that Fed officials “recognize that the economic outlook remains unusually uncertain.”
“We will continue to carefully assess ongoing financial and economic developments, and we remain prepared to take further policy actions as needed,” Bernanke said in his testimony.
Samsung Electronics retreated 1.1 percent to 808,000 won in Seoul and Canon declined 0.8 percent to 3,330 yen. Sharp Corp., Japan’s largest maker of liquid-crystal displays, sank 2.1 percent to 937 yen. Honda Motor Co., which generates 42 percent of its sales in North America, slid 0.5 percent to 2,586 yen.
“Bernanke’s comments reinforced concerns the U.S. economy is slowing,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees about $104 billion. “Today’s trading reflects investors’ disappointment.”
U.S. Economy
Economic data from the U.S. this month have fueled concerns the world’s biggest economy is stalling. Sales at U.S. retailers declined in June for a second month, the Commerce Department reported on July 14. Home-builder confidence dropped this month to the lowest level since April 2009, National Association of Home Builders/Wells Fargo data on July 19 showed.
The MSCI Asia Pacific Index has declined about 4 percent this year, cutting the average price of stocks in the gauge to 14 times estimated earnings, near the lowest level since December 2008. That compares with 13 times for the S&P 500 Index and 11.5 times for the Stoxx Europe 600 Index.
Financial companies were the second-biggest drag on the MSCI Asia Pacific Index before the release of European bank stress-test results tomorrow. European Union regulators are examining the strength of 91 banks to determine if they can survive potential losses from both a recession and a decline in the value of government debt.
Stress Tests
Commonwealth Bank, Australia’s largest lender, sank 2.4 percent to A$49.92, while Westpac Banking Corp. fell 1.6 percent to A$22.15 in Sydney.
European lenders must disclose their gross and net exposure to central and local governments in 30 countries in the region, including Greece, Spain, Ireland, Italy and Portugal, according to a confidential draft template obtained by Bloomberg News.
“Given the uncertainty surrounding the release of the European bank stress tests, it’s reasonable to suggest we’re seeing some risk mitigation ahead of the release,” said Tim Schroeders, who helps manage about $1.1 billion at Pengana Capital Ltd. in Melbourne.
A measure of utilities in the MSCI Asia Pacific Index advanced 0.7 percent, the most of the broader gauge’s 10 industry groups. Some investors sought haven in companies whose earnings are perceived to be sheltered from the economic cycle, said Daiwa Asset’s Nagano.
Utilities Advance
Korea Electric Power Corp., South Korea’s largest utility, rose 0.6 percent to 32,100 won. The National Pension Service won approval to increase its stake in the company to as much as 5 percent, the nation’s Financial Services Commission said. The stock pared an earlier gain of 2.2 percent after Korea Electric posted a quarterly loss that exceeded analyst estimates.
Tokyo Electric Power Co., Asia’s largest utility, gained 1 percent to 2,431 yen. Tokyo Gas Co., Japan’s largest natural-gas distributor, increased 0.3 percent to 397 yen.
In Hong Kong, the city’s developers gained on speculation that prices of luxury homes may gain, overshadowing concerns about China’s moves to cool its real-estate market.
Sun Hung Kai Properties climbed 1.1 percent to HK$112.80. Henderson Land Development Co., a developer controlled by Hong Kong’s second-richest man, rose 1.3 percent to HK$47.10.
The value of Hong Kong luxury homes may gain 10 percent in the second half as the outcome of next week’s auction of a building site in the Peak area could bolster investor sentiment, Jones Lang LaSalle Inc. said yesterday.
SK Energy, Shionogi
In Shenzhen, China Vanke Co. rose 2.6 percent to 7.95 yuan after the country’s biggest listed property developer was rated “buy” in new coverage by Citigroup Inc. The brokerage said the “restructured, refocused” company is already delivering “notably improved” growth momentum. Poly Real Estate Group Co. rose 4.5 percent to 12.35 yuan.
SK Energy Co. soared 7.2 percent to 126,500 won in Seoul after announcing that it will supply electric-car batteries to Hyundai Motor Co. and Kia Motors Corp.
In Tokyo, drugmaker Shionogi & Co. jumped 3.8 percent to 1,790 yen after venture Shionogi-ViiV Healthcare LLCS said it will move an experimental HIV drug into the last stage of clinical testing following promising results.
To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net.
Rate These Stories
Rate this Page