Asian Stocks Fall, led by Banks, Mining Shares; Japanese Exporters Advance

Asian stocks fell for a second day as declines among banks and mining companies overshadowed speculation Japan will take more steps to weaken the yen.

China Construction Bank Corp. slid 2 percent in Shanghai on concern Chinese lenders will have to boost their capital adequacy ratios. BHP Billiton Ltd., the world’s largest mining company, lost 1.8 percent in Sydney after commodity prices declined. Toyota Motor Corp., the world’s largest automaker, advanced 1.7 percent in Tokyo as Prime Minister Naoto Kan pledged “decisive measures” on the yen following intervention yesterday in the currency market.

More than two stocks fell for each one that advanced in the MSCI Asia Pacific Index, which lost 0.7 percent to 123.14 as of 7:34 p.m. in Tokyo. Japan’s Nikkei 225 Stock Average declined 0.1 percent, erasing a 1.1 percent climb, even after Kan said his government won’t tolerate “rapid movements” of the yen.

“There’s still a great deal of uncertainty,” said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. “The jury’s out as to whether the yen measures being put in place are successful or not. Anyone looking at a possible investment in China may sit on the sidelines a bit longer as various measures are implemented.”

China’s Shanghai Composite Index slumped 1.9 percent, the most since Aug. 25. Hong Kong’s Hang Seng Index dropped 0.2 percent. Australia’s S&P/ASX 200 Index sank 1.2 percent. South Korea’s Kospi index declined 0.7 percent.

Futures on the Standard & Poor’s 500 Index lost 0.2 percent. The index rose 0.4 percent yesterday in New York.

Banking Regulators

In Shanghai, China Construction Bank declined 2 percent to 4.52 yuan, while Bank of Communications Co. slumped 2.8 percent to 5.60 yuan. Chinese banking regulators may require the nation’s biggest lenders to boost their capital adequacy ratios to as high as 15 percent by the end of 2012, according to a person with knowledge of the matter.

“Meeting a target of 15 percent of the capital adequacy ratio would be tough for banks,” said Zhang Qi, an analyst at Haitong Securities Co. in Shanghai. “Banks would need to either cut their lending by a large margin or turn to share sales to meet the requirement. Both would be negative.”

A gauge of raw-material producers in the MSCI Asia Pacific Index fell 1.5 percent, the most of 10 industries after the London Metal Exchange Index of six metals including copper and zinc fell 0.4 percent yesterday. Crude oil in New York sank 1 percent yesterday and lost 1.3 percent today.

Cnooc, Inpex

BHP lost 1.8 percent to A$38.75 in Sydney, the biggest drag on the MSCI Asia Pacific Index. Posco, the world’s third-biggest steelmaker, fell 2.3 percent to 512,000 won in Seoul.

Cnooc Ltd., China’s largest offshore oil explorer, slipped 1.1 percent to HK$14.60 in Hong Kong. Inpex Corp., Japan’s biggest energy explorer, declined 3.8 percent to 396,000 yen in Tokyo. The company was downgraded to “neutral” from “buy” at UBS AG.

A gauge of consumer discretionary stocks in the MSCI Asia Pacific Index, which includes Japanese electronics companies and automakers, rose 0.3 percent even as the yen pared yesterday’s losses today.

Japan’s government intervened yesterday to weaken the yen when it reached its highest level versus the dollar since 1995. A stronger currency hurts the value of overseas income at Japanese companies when repatriated.

Toyota, which receives about 72 percent of its sales outside of Japan, gained 1.7 percent to 3,060 yen. Honda Motor Co., Japan’s second-largest carmaker, increased 0.5 percent to 2,960 yen. Sony Corp. rose 1.7 percent to 2,641 yen.

Utilities Decline

“We appreciate the intervention taken by the government and the Bank of Japan,” Mami Imada, a spokeswoman for Sony, said in an e-mailed statement. “Nevertheless, we expect them to continue taking appropriate measures.”

Utility companies posted the second-biggest decline on the MSCI Asia Pacific Index after raw-material producers, as investors sold shares of Japanese companies whose earnings are reliant on the domestic economy.

Tokyo Electric Power Co., Japan’s largest power utility, slid 2 percent to 2,369 yen. Tokyo Gas Co., which also gets 100 percent of its sales in Japan, fell 1.8 percent to 392 yen.

“The intervention was a surprise and well timed, so investors are putting money on exporters,” said Naoki Fujiwara, a fund manager in Tokyo who helps oversee about $6 billion at Shinkin Asset Management Co. “Companies that depend on internal demand are out of the loop.”

Housing Concerns

The MSCI Asia Pacific Index has lost 4.6 percent from its high this year on April 15 as the yen’s advance and disappointing U.S. data stoked global growth concerns. Stocks in the gauge are valued at an average 14.1 times estimated profit, more than the MSCI World Index’s 13.3 times.

James Hardie Industries SE, the biggest seller of home siding in the U.S., dropped 5.9 percent to A$5.59 in Australia after Credit Suisse Group AG said in a report today that macroeconomic data pointing to continued weakness in the U.S. housing market indicate “more negatives, than positives” in the short term. The stock posted the second-biggest decline on the MSCI Asia Pacific Index today.

Boral Ltd., Australia’s largest seller of building materials, slumped 4.7 percent to A$4.69. The company gets about 13 percent of its sales from the U.S.

U.S. home prices may have another three years to go before prices bottom because as many as 12 million more properties from defaults or foreclosures may be added to the market, according to analysts from Moody’s Analytics Inc., Fannie Mae, Morgan Stanley and Barclays Plc. U.S. initial jobless claims and producer price index reports are due later today.

“There’s not going to be a double-dip recession in the United States but we’re going to see a fairy tepid recovery,” said Pengana’s Schroeders. “The aftershocks of the global financial crisis are real and we need to see long-term strategic restructuring of some economies to accommodate what’s happened.”

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net.

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