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Asia Stocks Fall on U.S., China Economic Data, Spain Risk

Asian stocks fell after reports on China’s manufacturing and the U.S. economy missed estimates, and as Spain denied it is in talks about a bailout as its bond yields approach a level that prompted rescues in other nations.

Sony Corp. (6758), a Japanese exporter of consumer electronics that gets 37 percent of its sales in the U.S. and Europe, fell 3.5 percent in Tokyo. Agricultural Bank of China Ltd., the country’s third-biggest lender by market value, declined 1.3 percent in Hong Kong. BHP Billiton Ltd. (BHP), Australia’s No. 1 mining company and oil producer, lost 0.8 percent in Sydney after metal and crude prices dropped.

The MSCI Asia Pacific Index slid 1.2 percent to 111.27 as of 8:03 p.m. in Tokyo, with more than three stocks falling for each that rose. The gauge is headed for its lowest close since Dec. 20. It’s poised for a 0.4 percent drop for the week, its fifth straight week of declines and the longest losing streak since June 2011.

“Everyone is taking a wait-and-see approach, waiting for the outcome of the euro zone,” said Pauline Dan, Hong Kong- based chief investment officer at Samsung Asset Management Co., which manages $100 billion. The most bearish factor is the possibility of the “euro zone crumbling, pulling global economies into recession.” If China’s “economy continues to decelerate, that would be a risk. For long-term investors, valuation is very decent right now, so if you have an investment horizon beyond one year it’s definitely a good time to pick up stocks.”

Monthly Loss

The MSCI Asia Pacific Index tumbled 10 percent in May, the biggest monthly loss since October 2008, when global markets tumbled in the wake of the collapse of Lehman Brother Holdings Inc. The Standard and Poor’s 500 Index fell 6.3 percent for the month, while Stoxx Europe 600 Index lost 6.8 percent. Stocks in the Asian benchmark were valued at 11.5 times estimated earnings on average through yesterday, compared with 12.5 times for the S&P 500 and 9.9 times for the Stoxx 600.

Hong Kong’s Hang Seng Index (HSI) rose 0.1 percent, while China’s Shanghai Composite Index advanced 0.1 percent. Australia’s S&P/ASX 200 Index declined 0.3 percent and South Korea’s Kospi Index slid 0.5 percent.

Japan’s Nikkei 225 Stock Average fell 1.2 percent. The Topix Index fell 1.5 percent to complete a ninth week of declines, it’s longest such streak since 1975.

Utilities dropped after the nation’s government proposed to spin off power networks to increase competition. The proposal may reduce electricity prices and attract more participants in a market that’s been monopolized by regional utilities.

Shikoku Electric Power Co. dropped 5.9 percent to 1,732 yen, while Kansai Electric Power Co. (9503), which supplies the Osaka region, declined 4.5 percent to 1,083 yen.

Spain Debt

Futures on the Standard & Poor’s 500 Index (SPXL1) slid 1.2 percent today. The index fell 0.2 percent in New York yesterday, when data showed the U.S. economy grew more slowly in the first quarter than previously estimated and business activity expanded in May at the weakest pace since September 2009. The number of Americans applying for unemployment benefits rose. A Labor Department report due today is projected to show nonfarm payrolls gained by 150,000 workers in May while the unemployment rate held at 8.1 percent.

The International Monetary Fund said it is not preparing financial aid for Spain and the country denied it is in talks about a bailout. The nation’s 10-year debt yields were 6.56 percent, near the 7 percent level that prompted bailouts in Greece, Ireland and Portugal.

Sony fell 3.5 percent to 1,013 yen, while Billabong International Ltd. (BBG), a surfwear company that counts the Americas as its biggest market, retreated 3.4 percent to A$1.855 in Sydney.

China Manufacturing

China’s Purchasing Managers’ Index, a measure of manufacturing, expanded at a slower pace for the first time in six months, falling to 50.4 points in May from 53.3 in April, China’s statistics bureau and logistics federation said today. It’s the weakest reading since December and compares with the 52 median forecast in a Bloomberg News survey of 27 economists. A reading above 50 indicates expansion. A separate gauge from HSBC Holdings Plc and Markit Economics showed a seventh straight contraction.

Agricultural Bank slumped 1.3 percent to HK$3.10 in Hong Kong, while Komatsu Ltd. (6301), a Japanese construction machinery maker that gets about 12 percent of sales from China, slumped 4.3 percent to 1,798 yen.

“The global economy, centered in the U.S. and China, is facing stronger headwinds than expected, and recovery expectations are tapering off a bit,” said Kiyoshi Ishigane, a Tokyo-based senior strategist at Mitsubishi UFJ Asset Management Co., which oversees the equivalent of $70 billion.

Commodities Drop

Oil and metal shares declined after crude for July delivery fell 1.5 percent in New York yesterday, while the London Metal Exchange Index of prices for six industrial metals including copper and aluminum lost 0.7 percent.

BHP declined 0.8 percent to A$31.73 in Sydney. Aluminum Corp. of China Ltd., the nation’s No. 1 supplier of the light metal, slid 4.5 percent to HK$3.21

DeNA Co. (2432), a Japanese social media site operator, slumped 9.4 percent to 1,482 yen. The company’s rating was cut to neutral from buy at Ichiyoshi Research Institute Inc. citing possible slowdown in its earnings after Japan’s regulator said it plans to ban one of the sales methods used by online social- gaming operators in the country.

Gree Inc. (3632), a Japanese social networking site, tumbled 10 percent to 1,126 yen. DeNA and Gree had the biggest declines in the MSCI Asia Pacific Index. (MXAP)

To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net.

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

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