Asia Stocks Decline on Europe, China Manufacturing Survey
Asian stocks fell, with the regional benchmark index dropping for a second day, as European leaders meeting in Brussels clashed over how to fight the region’s debt crisis and a survey showed China’s manufacturing may shrink for a seventh month.
Nintendo Co., a maker of video-game consoles that depends on Europe for a third of its sales, fell 1.7 percent in Osaka. Citic Pacific Ltd., a Hong Kong-based steelmaker with operations in iron-ore mining and property development in China, slid 1.4 percent on concern China needs to do more to support growth. Shopping center developer Renhe Commercial Holdings Co. plunged 21 percent in Hong Kong after Mizuho Securities Co. it’s target prices.
The MSCI Asia Pacific Index lost 0.1 percent to 111.93 as of 7:01 p.m. in Tokyo with five of its 10 industry groups dropping. About as many shares gained as fell on the measure after it swung between gains and losses at least 12 times.
The gauge has dropped 13 percent from this year’s high on Feb. 29 amid investor concerns that Greece may abandon the euro and put other debt-stricken nations such as Italy and Spain at risk. Greece is scheduled to hold a second election on June 17 following an inconclusive ballot this month.
“The market is right now confused and obviously worried about whether Greece will end up leaving the euro or not,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “The market is pretty convinced Greece will leave at some stage, but the big difference is if their exit will be orderly or disorderly, and an orderly exit has already been priced into the market.”
Japan’s Nikkei 225 Stock Average gained 0.1 percent with volume 5.7 percent above the 30-day average. Australia’s S&P/ASX 200 dropped 0.3 percent, while South Korea’s Kospi Index gained 0.3 percent.
Hong Kong’s Hang Seng Index fell 0.6 percent, while the Hang Seng China Enterprises Index of mainland stocks dropped 0.3 percent. The Shanghai Composite Index, which tracks the larger of China’s stock exchanges, lost 0.5 percent.
The Standard & Poor’s 500 Index (SPXL1) added 0.2 percent in New York yesterday. Futures on the gauge gained 0.3 percent today as European leaders debated joint bond sales to contain the debt crisis at a European Union summit in Brussels. They also called on Greece to stick with austerity measures needed to stay in the euro.
Exporters to Europe fell. Nintendo lost 1.7 percent to 8,950 yen in Osaka. Canon Inc. (7751), the world’s biggest camera maker that gets 31 percent of its revenue in Europe, slid 2.2 percent to 3,160 yen in Tokyo.
China’s manufacturing may shrink for a seventh month in May, a private survey showed, reinforcing the need for stimulus as Premier Wen Jiabao accelerates a shift in policy to support growth. The 48.7 preliminary reading for a purchasing managers’ index released by HSBC Holdings Plc and Markit Economics today compares with a final 49.3 for April.
The Chinese government yesterday signaled a commitment to boosting the economy, saying it must use policy tools for “stable and relatively fast economic growth.” The statement builds on Premier Wen’s comments on May 20 pledging a bigger focus on growth.
“They need to do more to keep the economy from going into a hard-landing scenario,” said Daniel So, a strategist at Sun Hung Kai Securities in Hong Kong. “China is already behind the curve with its monetary policy. They have to add before it is too late, given that the external market is very fragile and the European debt crisis is looming.” He spoke in a Bloomberg TV interview with Rishaad Salamat.
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Citic Pacific fell 1.4 percent to HK$11.06 in Hong Kong, while Anhui Conch Cement Co. (914) gained 2.7 percent to HK$22.50.
Renhe Commercial Holdings Co. plunged 21 percent to 39.5 Hong Kong cents after Mizuho Securities analyst Alan Jin cut the target price and reiterated its “underperform” investment rating.
Stocks in the MSCI Asia Pacific Index are valued at 1.2 times book value, compared with 2.08 times for the S&P 500 and 1.31 times for the Stoxx Europe 600, according to data compiled by Bloomberg.
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