Asia Stocks Decline as China Inflation Boosts Rates Speculation
Asian stocks fell, dragging the regional index toward its first loss in four weeks, after China reported that inflation in the world’s second-largest economy increased faster than estimated, increasing speculation that the government will need to do more to contain growth.
China Resources Land Ltd. (1109), a state-controlled developer, slid 2 percent in Hong Kong. Belle International Holdings Ltd. (1880), China’s largest retailer of women’s shoes, sank 1 percent. Fanuc Corp. (6954), the robot maker which counts Asia including China as its biggest market for sales, dropped 1.1 percent. Infosys Technologies Ltd. (INFO), India’s second-largest software exporter, tumbled 9.6 percent in Mumbai after posting profit that missed estimates. BHP Billiton Ltd. (BHP), the No. 1 mining company, slid 1 percent after metal prices declined for a fourth day.
“China’s economic growth remains robust,” said Benjamin Tam, a portfolio manager at IG Investment Ltd., which oversees about $1.98 billion. “The government may continue to step up tightening measures in the second quarter. The overall market will remain optimistic because of the stronger growth, but there could be some concerns on the rate hike.”
The MSCI Asia Pacific Index fell 0.5 percent to 135.75 as of 8:17 p.m. in Tokyo. About twice as many shares declined as advanced. The measure is headed for a 0.6 percent decline this week, after rising for the past three weeks as Japanese companies resumed production after last month’s earthquake, and as an improving U.S. economy bolstered optimism the global recovery can be sustained.
Benchmark Indices
Futures on the Standard & Poor’s 500 Index slipped 0.1 percent today. In New York, the index rose less than 0.1 percent yesterday, as the U.S. House of Representatives approved a spending bill to avert a government shutdown.
Japan’s Nikkei 225 (NKY) Stock Average fell 0.7 percent. Australia’s S&P/ASX 200 Index fell 0.7 percent and New Zealand’s NZX 50 Index slipped 0.1 percent. South Korea’s Kospi index was little changed.
The Bombay Stock Exchange Sensitive Index, or Sensex, lost 1.6 percent after the commerce ministry said wholesale inflation rose 8.98 percent in March from a year earlier, more than estimated.
Hong Kong’s Hang Seng Index was little changed after rising 0.9 percent and falling 0.5 percent. China’s Shanghai Stock Exchange Composite Index climbed 0.3 percent, erasing a loss of 0.7 percent. The central bank has raised the reserve-requirement ratio for lenders nine times since the start of 2010 and borrowing costs four times.
China Economy
Belle International fell 1 percent to HK$15.48, posting the second-biggest drop on the Hang Seng index. (HSI) China Resources Land, a state-controlled developer, fell 2 percent to HK$14.60.
Fanuc, Japan’s No. 1 maker of industrial robots, slipped 1.1 percent to 13,150 yen in Tokyo, the heaviest drag on the Nikkei 225. Komatsu Ltd. (6301), a machinery maker which counts China as its biggest market, fell 1.5 percent to 2,785 yen.
China’s economy grew a more-than-estimated 9.7 percent in the first quarter and the rate of inflation accelerated to 5.4 percent in March from a year earlier, the fastest pace since 2008. That exceeded the estimate of a 9.4 percent increase in gross domestic product and price increases at a rate of 5.2 percent, according to the median estimate in a Bloomberg News survey of 25 economists. That compared with 4.9 percent inflation in January and February.
The Biggest Concern
“Inflation is still the biggest concern and it looks like it will be at a high level throughout the year,” said Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co.
The MSCI Asia Pacific Index lost 0.9 percent this year through yesterday, compared with gains of 4.5 percent by the S&P 500 and 0.4 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.2 times estimated earnings on average, compared with 13.5 times for the S&P 500 and 11.2 times for the Stoxx 600.
Infosys Technologies tumbled 9.6 percent to 2,989.5 rupees in Mumbai, the steepest decline since May 2009. It was the biggest drag on the MSCI Asia Pacific Index.
Net income rose to 18.2 billion rupees ($410 million) in the three months ended March 31 from 16 billion rupees a year earlier, Bangalore-based Infosys said today. That compared with the 18.9 billion rupee average of 27 analyst estimates compiled by Bloomberg.
BHP fell 1 percent to A$47.53, the second-biggest drag on the MSCI Asia Pacific Index. Rio Tinto Group, the world’s second-largest mining company by sales, dropped 1.1 percent to A$84.15. Mitsubishi Corp. (8058), Japan’s largest commodities trader, dropped 2 percent to 2,187 yen.
The London Metal Exchange Index of prices for six industrial metals including aluminum fell 0.8 percent yesterday, its fourth straight day of declines. Copper rebounded today from its longest slump in three months.
Newcrest Mining Ltd. (NCM), Australia’s biggest gold producer, advanced 1.5 percent to A$41.30, the biggest support on the MSCI Asia Pacific Index. Gold climbed to a record as concern about rising inflation and an extended decline in the U.S. dollar bolstered the allure of precious metals as a store of value.
To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net.
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
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