Asian stocks fell, with the regional benchmark index heading for the lowest close in six weeks, amid concern about bad loans in China’s property sector and growing evidence that Europe’s debt crisis is infecting major economies.
China Resources Land Ltd. (1109), a state-owned developer, fell 4 percent after the government said home prices fell in 33 of 70 cities. HSBC Holdings Plc (HSBA), Europe’s biggest lender, led banks lower after Spanish bond yields rose. BHP Billiton Ltd., the Australian mining company, led a drop among shares most tied to economic cycles as oil and metal prices dropped.
The MSCI Asia Pacific Index dropped 1.7 percent to 114.24 as of 7:32 p.m. in Tokyo, set for the lowest close since Oct. 10. Almost six stocks fell for each that rose on the index. The measure has fallen 2.7 percent this week, set for a third weekly decline.
The debt level in the property sector is “certainly something Chinese authorities need to focus on, but the information I have tells me that it’s an issue that government will be able to control and they have enough ability to withstand the size of defaults,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “Europe is an ongoing concern. Global markets are very concerned about what’s happening there.”
Hong Kong’s Hang Seng Index declined 1.7 percent, while the Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, fell 1.9 percent.
The China Banking Regulatory Commission told lenders last week to step up asset sales and debt restructuring for struggling local government financing vehicles, a person with knowledge of the matter said, declining to be identified because the instructions were private. The watchdog said that some projects may run out of funds and banks should cut “high-risk” loans to developers, the person said.
China’s home prices fell in 33 of 70 cities monitored by the government in October, the worst performance since it expanded property curbs and scrapped the reporting of its national average housing data this year, the statistics bureau said on its website today.
Shares of China developers fell in Hong Kong trading. China Resources Land lost 4 percent to HK$10.70, while China Overseas Land & Investment Ltd. (688) fell 5.2 percent to HK$12.38.
China Vanke Co., China’s biggest developer, declined 2.9 percent to 7.09 yuan in the southern city of Shenzhen after the China Securities Journal said developers may cut house prices in more cities.
Futures on the Standard & Poor’s 500 Index climbed 0.4 percent today. The index dropped 1.7 percent in New York yesterday after Spanish bonds sank, sending 10-year yields to the highest since the euro was introduced, as borrowing costs climbed at a sale. Republicans and Democrats on a U.S. congressional committee hardened their positions with less than a week until the group’s deadline to propose U.S. deficit cuts.
Banks declined amid concern Europe’s crisis will hurt the global financial system. HSBC Holdings fell 1.7 percent to HK$59.25. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second- biggest lender, dropped 2.8 percent to 2,051 yen. Westpac Banking Corp. (WBC), Australia’s No. 2 lender by market value, declined 2.3 percent to A$20.37.
‘Deep in Recession’
“The fear is that Europe is deep in recession or looks like it’s going to be deep in recession,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “That will make the debt situation worse.”
Companies tied to Europe also fell. Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics that gets 21 percent of its sales in Europe, fell 1.4 percent to 1,303 yen. Hutchison Whampoa Ltd., which operates ports throughout the region, slipped 0.4 percent.
The MSCI Asia Pacific Index lost 16 percent this year through yesterday, compared with a 3.3 percent drop by the S&P 500 and a 15 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.6 times estimated earnings on average, compared with 12.3 times for the S&P 500 and 10.2 times for the Stoxx 600.
Energy, Mining Firms
Energy and mining companies fell after crude for December delivery declined as much as 81 cents to $98.01 a barrel in electronic trading on the New York Mercantile Exchange. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum declined 2.2 percent yesterday.
BHP Billiton Ltd. (BHP) lost 2.5 percent to A$36.13. Cnooc Ltd. (883), China’s offshore energy explorer, fell 2.1 percent to HK$14.82. Rio Tinto Group, the Australian mining company by sales, declined 1.5 percent to A$67.05.
Nanya Technology Corp. (2408), a Taiwanese chipmaker, gained by the daily limit in Taipei trading after the memory-chip maker sold 10.83 billion shares at NT$2.77 each in a private placement. The share rose 6.8 percent to NT$2.67.
Olympus Corp. sank 16 percent to 625 yen after the New York Times reported the company is under investigation by Japanese officials on suspicion of working with organized crime to obscure losses. The report cited a memo circulated at a meeting of the Securities and Exchange Surveillance Commission, Tokyo Prosecutors Office and the city’s police department.
A reporter received a copy of the memo from a person close to the investigation, the New York Times said.
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