Asian stocks fell, with the regional benchmark index posting its biggest weekly loss this year, on concern slowdowns in China and Europe will weigh on the global economy, damping demand for growth-sensitive equities.
Canon Inc. (7751), a camera maker that gets 31 percent of its sales in Europe, lost 2.5 percent in Tokyo. Guangzhou R&F Properties Co. (2777), the biggest developer in the southern Chinese city, slid 5.9 percent in Hong Kong after mainland home prices posted the worst performance in a year. Taiwan Semiconductor Manufacturing Co. rose 5.3 percent to NT$85.4 in Taipei after the world’s largest contract maker of chips said it may boost capital spending to meet demand.
The MSCI Asia Pacific Index fell 1.3 percent to 126.33, the biggest weekly loss since the period ended Dec. 16. The gauge has climbed 12.5 percent this year amid optimism a U.S. economic recovery will brighten the earnings outlook for the region’s exporters. The rally boosted the value of stocks on the measure to 14.9 estimated earnings on average as of March 23, compared with 13.4 times for the Standard & Poor’s 500 Index and 11.1 times for the Stoxx Europe 600 Index.
“People are starting to realize that things are not as great as initially thought,” said Lee King Fuei, a Singapore- based fund manager at Schroders Plc, which oversees about $326 billion of assets globally. “There’s a risk of much slower growth in China should bad debts climb and banks raise capital or restrict lending.”
Japan’s Trade Surplus
Japan’s Nikkei 225 Stock Average (NKY) dropped 1.2 percent this week, snapping a six-week rally, after the nation posted an unexpected trade surplus, strengthening the yen. South Korea’s Kospi (KOSPI) Index lost 0.4 percent. Australia’s S&P/ASX 200 Index slid 0.1 percent.
Hong Kong’s Hang Seng Index declined 3 percent this week. The Shanghai Composite Index, which tracks the larger of China’s stock exchanges, lost 2.3 percent even after the central bank cut reserve requirements to more branches of Agricultural Bank of China Ltd. (1288)
Asian stocks fell after a preliminary report on March 22 showed China’s manufacturing may contract for a fifth month in March. Shares also declined after a euro-area composite index dropped in February, showing unexpected contraction in the manufacturing and services industries, London-based Markit Economics said.
Canon slid 2.5 percent to 3,870 yen. Esprit Holdings Ltd. (330), a clothier that counts Europe as its biggest market, dropped 3.2 percent to HK$16.44. Komatsu Ltd. (6301), a Japanese construction machinery maker that gets 23 percent of its sales in China, fell 3.8 percent to 2,344 yen.
Chinese developers fell in Hong Kong after new home prices fell in 27 of 70 mainland cities last month from a year earlier, the worst reading since the government began releasing individual data for cities last year.
Guangzhou R&F slipped 5.9 percent to HK$9.06. Soho China Ltd., a developer in Shanghai and Beijing, fell 3 percent to HK$5.42. Industrial & Commercial Bank of China Ltd., the world’s biggest lender by market value, dropped 4.9 percent to HK$5.02.
China’s “property market is still the biggest risk the economy is facing now and there’s lots of uncertainty to the sector,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “Earnings and the economy have yet to bottom out.”
China Shares Fall
Agricultural Bank of China slid 7.8 percent to HK$3.41 after posting lower-than-expected earnings. China Rongsheng Heavy Industries Group Holdings Ltd., the biggest shipbuilder listed in Hong Kong, declined a record 17 percent to HK$2.16 after profit tumbled 59 percent.
Of the 591 companies in the MSCI Asia Pacific Index (MXAP) that have reported earnings since Jan. 9, 349 have missed analysts’ estimates while 171 have beat estimates, according to data compiled by Bloomberg.
Among stocks that gained on the week, Taiwan Semiconductor Manufacturing rose 5.3 percent to NT$85.4 after saying it may invest more capital to meet growing demand for chips. Taiwan’s economics ministry reported export orders rebounded in February, led by demand for electronics.
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