Asian stocks fell as speculation heightened Greece may exit from the single European currency, countering China’s efforts to shore up economic growth by cutting the level of cash banks must set aside as reserves.
Nippon Sheet Glass Co. (6954), a glassmaker that counts Europe as its No. 1 market, slid 3 percent in Tokyo. China Longyuan Power Group Corp. (916), a wind-farm operator, sank 11 percent in Hong Kong after saying it plans to issue new shares. NCSoft Corp., an online-game maker, dropped 12 percent before the release of a new game by its rival.
“Investors find it hard to move with uncertainty over Europe, especially Greece,” said Takuya Yamada, a Tokyo-based senior portfolio manager at ITC Investment Partners Corp., which oversees about $750 million. “China’s reserve ratio cut is a plus for investor mindsets, but the market isn’t reacting much because its impact on the economy is limited.”
The MSCI Asia Pacific Index (MXAP) slid 0.7 percent to 117.83 as of 7:16 p.m. in Tokyo, after rising as much as 0.2 percent. About two stocks fell for each that rose on the measure, which dropped 4.4 percent last week, its biggest such decline in five months, as inconclusive elections in Greece stoked concern that efforts to halt Europe’s debt crisis will fail.
Hong Kong’s Hang Seng Index slipped 1.2 percent, sliding through the final two hours of trading after rising as much as 0.4 percent. China’s Shanghai Composite Index declined 0.6 percent.
The Asian regional index rose 4.2 percent this year through May 11, compared with a 7.6 percent gain by the S&P 500 and a 3 percent advance by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.2 times estimated earnings on average, compared with a multiple of 12.9 for the S&P 500 and 10.5 times for the Stoxx 600.
Greece’s political deadlock looked set to continue for a second week as President Karolos Papoulias failed to secure agreement on a unity government.
Meetings brokered by Papoulias are set to continue today after Syriza, the largest anti-bailout party, rejected a unity government following last week’s inconclusive elections.
Greece’s withdrawal from the euro “is not necessarily fatal, but it is not attractive,” European Central Bank Governing Council member Patrick Honohan said on May 12.
Nippon Sheet Glass slid 3 percent to 96 yen and Nissan Motor Co. (7201), which depends on Europe for about 16 percent of its sales, fell 2 percent to 788 yen in Tokyo. Cosco Pacific Ltd. (1199), which operates a port in Greece, slipped 5.5 percent to HK$9.83 in Hong Kong.
U.S. Futures Drop
Futures on the Standard & Poor’s 500 Index fell 1 percent today, extending declines as the yield on 10-year Spanish debt rose to 6.2 percent for the first time since Dec. 1. The S&P 500 slid 0.3 percent in New York May 11, declining for a second week.
China Longyuan Power tumbled 11 percent to HK$5.21 in Hong Kong, the second-biggest drop in the MSCI Asia Pacific Index, after saying it plans to issue no more than 1.36 billion new H- shares, representing as much as 50 percent of total issued shares.
NCsoft dropped 12 percent to 246,500 won in Seoul. Its rival Blizzard Entertainment plans to release its Diablo III game tomorrow.
The People’s Bank of China said May 12 that it is cutting the amount of cash that banks must set aside as reserves for the third time in six months, pumping money into the financial system to support lending after data showed a slowdown in economic growth is deepening. Reserve ratios will fall 50 basis points, effective May 18.
“Where China sits is problematic at this stage,” said Tim Schroeders, who helps manage about $1 billion in equities at Pengana Capital Ltd. in Melbourne. “There’s going to be a camp that says the cut in the banks’ reserve ratio is going to buoy the economy and some investors saying the aggressive nature of the move highlights growth is slowing more quickly than policy makers would like.”
Among stocks that rose, NGK Insulators Ltd. (5333), a ceramic maker, jumped 8.1 percent to 963 yen in Tokyo after the Nikkei newspaper said the company plans to resume sodium-battery production as early as July.
Guangzhou Pharmaceutical Co., a medicine maker, surged 15 percent to HK$11.88 in Hong Kong after saying its parent won trademark arbitration. The stock has risen more than 50 percent this month.
Celltrion Inc. (068270), a biopharmaceutical company, surged for a second day in Seoul, climbing 7 percent to 46,550 won in Seoul, the biggest two-day advance since November 2008, after saying the company will issue as many as 57.8 million bonus shares to shareholders.
Westgold Resources Ltd. (WGR), an Australian goldminer, surged 17 percent to 17.5 Australian cents in Sydney after saying it will merge with a tin and nickel miner Metals X Ltd., which dropped 8.1 percent to 17 Australian cents.
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