Asian Stocks Decline on Europe Economic Slowdown Concern
Asian stocks fell, with the regional benchmark index heading for its first decline in in seven days as a deepening economic slump in Europe outweighed expectations the region’s central bank will ease rates today.
Nippon Sheet Glass Co. (5202), which counts Europe as its biggest market, fell 1.2 percent in Tokyo. Aquarius Platinum Ltd. tumbled 8.2 percent in Sydney after the world’s fourth-largest producer of the precious metal said output will fall. Li Ning Co. surged 7.3 percent after founder and Olympic gold medalist Li Ning stepped in as chief executive officer and TPG Capital pledged to boost investment in the sportswear retailer if needed.
The MSCI Asia Pacific Index lost 0.1 percent to 119.13 as of 5:13 p.m. in Tokyo, with almost five shares falling for every four that rose. The gauge climbed yesterday to its highest level since May 10 after euro-zone leaders last week agreed to relax conditions for rescuing lenders, easing concern about the region’s debt crisis.
“The market remains skeptical that policy measures in Europe will be in place in a timely fashion,” said Tim Schroeders, a portfolio manager who helps oversee $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Significant details still need to be addressed, but for the time being the initiatives to tackle the debt crisis have broadened.”
Japan’s Nikkei 225 Stock Average (NKY) lost 0.3 percent. The gauge earlier gained as much as 0.3 percent earlier after Bank of Japan Governor Masaaki Shirakawa said he will continue to do his utmost to support growth.
Australia’s S&P/ASX 200 Index fell 0.1 percent. China’s Shanghai Composite Index slid 1.2 percent and Hong Kong’s Hang Seng Index rose 0.5 percent. South Korea’s Kospi Index gained 0.1 percent.
The Philippine Stock Exchange Index added 0.3 percent after Standard & Poor’s raised the Southeast Asian nation’s long-term foreign-currency-denominated debt rating by one level to BB+, the highest ranking since 2003 by S&P.
Futures on the Standard & Poor’s 500 Index were little changed. U.S. markets were closed yesterday for a holiday. American employers were expected to have increased payrolls by 90,000 workers in June after a 69,000 gain in May, according to the median forecast of 59 economists surveyed by Bloomberg News ahead of Labor Department figures due tomorrow.
Companies that do business in Europe declined as a report by Markit Economics showed Germany’s services industry Purchasing Managers Index dropped to 49.9 last month from 51.8 in May. A reading below 50 indicates a contraction. A separate survey by Markit and the Chartered Institute of Purchasing and Supply showed a U.K. gauge of services activity fell to 51.3 in June from 53.3 in May, missing economists’ estimates.
Nippon Sheet Glass fell 1.2 percent to 83 yen in Tokyo. Shimano Inc. (7309), a bicycle parts maker that gets 36 percent of sales from Europe, slid 1.5 percent to 5,180 yen. Esprit Holdings Ltd. (330), a clothier that counts Europe as its largest market lost 0.6 percent to HK$10.04 in Hong Kong.
Factory orders in Germany, the euro zone’s biggest economy, probably declined 6 percent in May from a year earlier, according to the median estimate of economists in a Bloomberg survey before a report today. They fell 3.8 percent in April.
ECB officials are expected to lower their benchmark interest rate by a quarter point to a record-low 0.75 percent today, according to the median forecast of economists surveyed by Bloomberg. The Bank of England today will raise its target for bond purchases, according to another Bloomberg News survey.
Aquarius, Flight Centre
The MSCI Asia Pacific Index (MXAP) gained 4.7 percent this year through yesterday, compared with a 9.3 percent advance by the S&P 500 and a 5.2 percent increase by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12 times estimated earnings on average, compared with 13.1 times for the S&P 500 and 10.8 times for the Stoxx 600.
Aquarius Platinum sank 8.2 percent to 72.5 Australian cents in Sydney. The company said it will cut production of the precious metal by 21 percent in the 12 months starting from July 1 as it seeks to conserve cash amid weakening prices.
Among stocks that advanced, Flight Centre Ltd. jumped 6.3 percent to A$20.49 in Sydney, the most since January 2010. The travel agency said today full-year pre-tax profit may rise to the upper end of its forecast.
Li Ning surged 7.3 percent to HK$5.03. The company said its founder and gymnast Li will help run the company while it searches for a new CEO to replace Zhang Zhi Yong. Kim Jin Goon, a partner at shareholder TPG Capital who has been appointed executive vice chairman, said TPG may invest more if the company needs more capital.
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