Asia Stocks Retreat as Oil Seen Curbing Optimism After Greece Bailout Deal

Asian stocks fell, with the regional benchmark index retreating from a six-month high, as higher oil prices threatened to curb spending and accelerate inflation, tempering optimism after Euro-area finance ministers agreed to a bailout for Greece.

Korean Air Lines (003490) Co. fell 6.4 percent after being cut to “sell” by Deutsche Bank AG amid weak cargo markets and rising fuel costs. Mazda Motor Corp. (7261), Japan’s least profitable major automaker, slumped 9.9 percent on a report it plans to raise capital. National Australia Bank Ltd., the nation’s No. 4 lender by market value, rose 1 percent after the Reserve Bank of Australia said it kept interest rates unchanged as European risks abated and can ease monetary policy if conditions worsen.

The MSCI Asia Pacific Index retreated 0.4 percent to 127.57 as of 7:41 p.m. in Tokyo, with five stocks falling for every four that rose. The gauge yesterday closed at its highest level since Aug. 4, and moved within 1 percent of completing a 20 percent advance from its October low and entering a so-called bull market.

The Euro-area agreement “is positive news for the market, as it eases one of its concerns,” said Ayako Sera, a market strategist in Tokyo at Sumitomo Trust & Banking Co., which manages the equivalent of $298 billion. “But the market has been rising on the hopes of the agreement, so when the fact comes out the focus will turn to whether Greece will be able to actually implement its deficit cut promises. The market will be dominated by uncertainties going forward.”

Asia Earnings Slide

Of 473 companies in the Asia-Pacific gauge that have reported net income since Jan. 9, more than half have fallen short of analysts’ estimates and profit has fallen 59 percent on average, according to data compiled by Bloomberg. That compares with the U.S., where net income has grown an average of 5.1 percent for Standard & Poor’s 500 Index (SPX) companies that have reported, the data show.

Japan’s Nikkei 225 Stock Average (NKY) fell 0.2 percent. South Korea’s Kospi Index was little changed after rising as much as 0.3 percent. Australia’s S&P/ASX 200 Index increased 0.8 percent, reversing an earlier decline as the Reserve Bank of Australia released minutes of a Feb. 7 meeting that said risks of an “extremely bad outcome” from Europe have “diminished somewhat.”

National Australia Bank rose 1 percent to A$23.40 in Sydney, while Commonwealth Bank of Australia, the nation’s biggest by market value, gained 0.8 percent to A$49.47.

Euro-area finance ministers reached agreement on a second bailout package for Greece, wringing concessions from private investors and tapping into European Central Bank profits to stave off a default next month. The leaders awarded 130 billion euros ($173 billion) in aid, engineered a central bank profits transfer and coaxed investor representatives into providing more debt relief in an exchange offer meant to tide Greece past a March bond redemption.

China Policy Stance

Oil traded near the highest price in nine months on speculation that the deal in Europe will boost demand as increasing tensions between Iran and the West put pressure on supply. Oil futures for March delivery, which expire today, advanced as much as $2.20 to $105.44, the highest intraday price since May 5 on the New York Mercantile Exchange.

China Petroleum & Chemical Corp., Asia’s biggest oil refiner, slid 1 percent to HK$8.76 in Hong Kong on concern higher oil prices will hurt profit margins. Geely Automobile Holdings Ltd. (175), the unit of the Chinese automaker that owns Volvo Cars Corp., slumped 5 percent to HK$3.05.

Korean Air Lines sank 6.4 percent to 53,000 won after Deutsche Bank cut its rating to “sell” from “hold.” The company probably won’t have “stellar earnings” this year and the shares are expensive, analyst Joe Liew said in a note dated yesterday.

Hong Kong’s Hang Seng Index (HSI) rose 0.3 percent, led by Chinese retailers, shippers and property companies, and China’s Shanghai Composite Index gained 0.8 percent.

“If crude oil surges, that’ll add more imported inflation to China and limit China’s ability to boost economic growth,” said Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co. “Policy easing is still under way, but at a very slow pace.”

Control Property Loans

Separately, Shang Fulin, chairman of the China Banking Regulatory Commission, said preventing systemic and financial risks is an urgent task, according to statement posted on the regulator’s website today. The watchdog needs to “steadily” resolve risks associated with local government financing vehicles and control property loan risk, the statement said.

The MSCI Asia Pacific Index (MXAP) gained 12 percent this year through Feb. 20, compared with an 8.2 percent advance by the S&P 500 and a 9.7 percent increase by the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 14.6 times estimated earnings on average at the last close, compared with 13.1 times for the S&P 500 and 11 times for the Stoxx 600.

Panasonic Corp. (6752), a Japanese electronics company, dropped 1.9 percent to 710 yen in Tokyo after saying it plans to re- enter the European mobile-device market with a smartphone in April.

Mazda slumped 9.9 percent to 145 yen after NHK reported the company may be preparing for a 100 billion yen ($1.25 billion) share sale.

Among stocks that rose, OneSteel Ltd. (OST) surged the most in almost three years in Sydney as Australia’s second-biggest steelmaker said it’s switching focus to iron ore away from its loss-making steel unit. The shares rose 12 percent to 82 Australian cents, the biggest jump since April 2009.

To contact the reporters on this story: Nick Gentle in Hong Kong at ngentle2@bloomberg.net; Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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