Most Asian shares fell, with the regional benchmark index headed for its biggest two-day decline in a month, after Spain struggled to sell bonds, renewing concern Europe won’t be able to contain its debt crisis.
Hutchison Whampoa Ltd. (13) and other companies that do business in Europe slid after demand fell at a Spanish government bond auction, sparking concern about the region’s sovereign-debt crisis. Industrial & Commercial Bank of China Ltd. (3988) dropped 2 percent after Premier Wen Jiabao said China needs to break the “monopoly” of a few big lenders. Soho China Ltd. rose 2.7 percent, leading gains among mainland developers after Credit Agricole SA said China is “almost guaranteed” to ease monetary policy further this month.
The MSCI Asia Pacific Index dropped 0.1 percent to 125.44 as of 7:46 p.m. in Tokyo after losing as much as 1.2 percent. More than two shares fell for each that rose on the measure, which yesterday slid 1.5 percent, the most since Dec. 19, after the U.S. Federal Reserve signaled it may not offer more stimulus.
“Expectations for China’s additional easing are causing short-covering,” said Yutaka Miura, a senior technical analyst at Mizuho Securities Co. “It’s not that a real solution has been brought to Europe’s crisis. That’s why Spain’s debt sale is reviving concern.”
The MSCI Asia Pacific Index has risen about 10 percent this year amid signs the U.S. economy is recovering. Gains slowed after China last month cut its target for economic growth as it seeks to cool the property market and become less dependent on exports.
Japan’s Nikkei 225 Stock Average pared a loss to 0.5 percent after the rejection of a Bank of Japan nominee came as a victory for lawmakers pressing for more monetary easing.
South Korea’s Kospi Index rose 0.5 percent after the government said foreign direct investment into the nation increased 17 percent in the first quarter. Australia’s S&P/ASX 200 fell 0.3 percent.
Hong Kong’s Hang Seng Index retreated 1 percent, with trading volume 10 percent below the 30-day average. Markets in the city were closed yesterday for a holiday and will also be shut tomorrow. India and the Philippines are having holidays today.
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, rose 1.7 percent after the government said it will more than double the amount foreigners can invest in equities, bonds and bank deposits.
A measure of volatility on the Hang Seng index rose 7.9 percent to 19.89, indicating traders expect a swing of 5.7 percent on the gauge over the next 30 days. Readings for the Nikkei 225 and core stocks on South Korea’s benchmark dropped.
Spain Debt Sale
Futures on the Standard & Poor’s 500 Index (SPXL1) advanced 0.1 percent today. The gauge sank 1 percent in New York yesterday after a measure of conditions at U.S. service companies showed slowing growth.
In Europe, Spain struggled to borrow in financial markets yesterday, selling 2.6 billion euros ($3.4 billion) of bonds at an auction, an amount that was near the bottom of a range set by the Treasury for the sale. European Central Bank President Mario Draghi said the region’s economic outlook is “subject to downside risks.”
“Investors realize those economies are heading into a significant recession,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages about $150 billion. “Gains from here are going to be hard work.”
Companies that do business in Europe slid. Hutchison Whampoa lost 2.6 percent to HK$76.10. Cosco Pacific Ltd. (1199), which operates container facilities at Greece’s Piraeus port, slid 1.4 percent to HK$11.42 in Hong Kong. Nissan Motor Co., a carmaker that gets almost a fifth of its revenue from Europe, lost 1 percent to 869 yen.
Stocks in the Asia-Pacific index, which includes companies from emerging markets, are valued at 1.4 times book value, compared with 2.3 times for the S&P 500 and 1.4 times for the Stoxx 600, according to Bloomberg data. A number below 1 means companies can be bought for less than value of their assets.
Stocks pared losses amid speculation China may relax some of its measures aimed at damping inflation.
The country is “almost guaranteed” to either cut interest rates or reserve requirement ratios in April, Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole, said in a Bloomberg television interview yesterday. The strategist cited comments made by Premier Wen Jiabao on April 3 that he plans to release fine-tuning measures “soon.”
China also accelerated the opening of its capital markets by more than doubling the amount foreigners can invest in stocks, bonds and bank deposits. Offshore investors will also be allowed to pump an extra 50 billion yuan ($7.9 billion) of local currency into the country, up from 20 billion yuan, according to a statement on April 3.
Mainland developers gained in Hong Kong. Soho China rose 2.7 percent to HK$5.79, and China Overseas Land & Investment Ltd. advanced 0.8 percent to HK$15.96. Agile Property Holdings (3383) Ltd. rose 2.1 percent to HK$9.87.
The country’s big banks fell after Wen pledged to break the “monopoly” enjoyed by the largest institutions who are able to make easy profits because it’s hard to borrow money elsewhere. ICBC, as the world’s No. 1 lender by market value is also known, dropped 1.6 percent to HK$5.03. Bank of China Ltd., the No. 4 Chinese lender by value, fell 1.6 percent to HK$3.15.
In Seoul, NHN Corp., operator of South Korea’s largest Internet search engine, gained 8.1 percent to 274,000 won after Daewoo Securities Co. increased its share-price estimate to 340,000 won from 300,000 won, citing a stronger outlook for mobile-advertising sales and growing popularity of NHN’s messaging service.
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