Asian Stocks Drop on China Growth, Europe Crisis Concern

Asian stocks fell, with the regional benchmark index headed for its biggest monthly drop since the 2008 financial crisis, as China damped optimism for large-scale stimulus, adding to global growth concerns after Spain’s credit rating was downgraded.

Samsung Electronics Co. (005930), an exporter of consumer electronics that gets 47 percent of its sales in Europe and China, lost 1 percent in Seoul. Industrial & Commercial Bank of China Ltd. slid 1.7 percent. Renesas Electronics Corp. (6723), the world’s biggest maker of microcontrollers for cars, surged 27 percent in Tokyo after short-selling of its shares was restricted.

The MSCI Asia Pacific Index declined 0.7 percent to 112.90 as of 7:35 p.m. in Tokyo with about two shares dropping for each that rose. The gauge has lost 9.9 percent this month amid signs of a deeper slowdown in China and as European leaders pressure Greece to observe bailout terms before June elections.

“Over the past 12 months, the Western world has been trying to find holes in the China growth story,” said Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees about $8 billion. “Investors are still not convinced about the debt crisis in Europe and that’s being reflected in higher bond yields in Spain and Italy. I think that’s the most significant risk from a global investor view point.”

Japan’s Nikkei 225 Stock Average lost 0.3 percent with volume 4.7 percent below the 30-day average, and Australia’s S&P/ASX 200 fell 0.5 percent. Taiwan’s Taiex Index (TWSE) slid 1.1 percent. Hong Kong’s Hang Seng Index lost 1.9 percent. The Shanghai Composite Index fell 0.2 percent.

Futures on the Standard & Poor’s 500 Index fell 0.8 percent today. The gauge advanced 1.1 percent in New York yesterday, trimming this month’s slump to 4.7 percent.

Chinese Banks Decline

China lenders dropped in Hong Kong on a report the nation has no plan to introduce stimulus measures on the scale deployed during the global financial crisis to counter this year’s economic slowdown, the official Xinhua News Agency said yesterday without attributing the information.

“The Chinese authorities do see downside risk to growth this year,” said Dwyfor Evans, a Hong-Kong based macro strategist at State Street Global Markets, part of State Street Corp., which has $1.9 trillion under management. “They will continue addressing the slowdown, but it’s hard to assess if it will be enough,” he said in a telephone interview from Melbourne.

Banks Drop

Industrial & Commercial Bank of China slid 1.7 percent to HK$4.65. Bank of Communications Co. Ltd., a Chinese provider of commercial banking services, lost 1.4 percent to HK$5.07 in Hong Kong.

Agricultural Bank of China Ltd. slid 4 percent to HK$3.12 in Hong Kong after Caixin.com reported that the lender’s vice president, Yang Kun, is under investigation by the Chinese Communist Party’s Central Commission. The report cited unidentified people.

Recent declines in equities dragged down the average price of stocks on the MSCI Asia Pacific Index to 11.7 times estimated earnings yesterday, compared with a multiple of 12.7 for the S&P 500 and 10.1 for the Stoxx Europe 600 Index.

Asian shares also fell after Spain’s sovereign-credit rating was cut by Egan-Jones Ratings Co. to B from BB- on the country’s deteriorating economic outlook. Bank of Spain Governor Miguel Angel Fernandez Ordonez resigned a month early amid criticism over the May 9 nationalization of Bankia group, Spain’s third-biggest lender.

Samsung Declines

Samsung Electronics dropped 1 percent to 1,226,000 won in Seoul. Nippon Sheet Glass Co. (5202), a Japanese glassmaker that gets 39 percent of its sales in Europe, lost 3.6 percent to 81 yen.

Among other stocks that fell, Aozora Bank Ltd. lost the most in more than a year after a report it withdrew plans to announce a public-fund repayment proposal next month. The Japanese lender, controlled by Cerberus Capital Management LP, dropped 7.1 percent to 171 yen in Tokyo.

Renesas Electronics surged 27 percent to 260 yen after climbing by the daily limit of 80 yen. Japan Securities Finance Co., Japan’s biggest provider of loans for margin transactions, restricted short-selling of the stock from today after shares slumped 27 percent over the past two days. The company is said to be planning to raise 100 billion yen ($1.26 billion).

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net

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

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