Most Asia Stocks Drop as Europe Woes Temper China Survey
Most Asian stocks fell after a private survey showed China’s manufacturing may contract at a slower pace this month and Moody’s Investors Service cut the credit outlook for Germany. Declines deepened after reports on French manufacturing and business confidence missed estimates.
Nintendo Co., a maker of video-game players that depends on Europe for 34 percent of its sales, dropped 2.1 percent. Cnooc Ltd. fell 4 percent in Hong Kong after China’s largest offshore energy explorer agreed to pay $15.1 billion in cash to acquire Canada’s Nexen Inc. China Railway Construction Corp. Ltd., builder of more than half of the nation’s rail links since 1949, gained 3.8 percent in Hong Kong after signing new contracts.
The MSCI Asia Pacific Index fell 0.1 percent to 114.11 as of 7:06 p.m. in Tokyo, with about 11 stocks retreating for every eight that rose. The gauge fell 2.8 percent in the past two days, the most since June 4. Hong Kong’s market opening was delayed due to a typhoon.
“The numbers are getting better,” said Cedric Ma, a Hong Kong-based senior investment strategist at Convoy Asset Management Ltd., which oversees the equivalent of $260 million. “China is taking a more aggressive expansionary approach in the second quarter. Some of the effects will be shown in the third quarter, when we will see some signs of stabilization in China.”
The MSCI Asia Pacific Index fell 11 percent from this year’s high on Feb. 29 through yesterday amid concern China’s economy is slowing and Europe’s sovereign-debt crisis will worsen. The regional benchmark index traded at 11.6 times estimated earnings as of yesterday, compared with 13.1 for the Standard & Poor’s 500 Index (SPXL1) and 10.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Japan’s Nikkei 225 Stock Average fell 0.2 percent as the yen rose against most of its major counterparts even after policy makers said they were watching its appreciation. South Korea’s Kospi Index (KOSPI) added 0.3 percent, and Australia’s S&P/ASX 200 Index (AS51) gained 0.1 percent. China’s Shanghai Composite Index rose 0.2 percent.
The HSI Volatility Index (VHSI) climbed 2.3 percent to 22.7, indicating options traders expect a swing of 6.5 percent in the benchmark over the next 30 days. Gauges of anticipated price movements for Japan’s Nikkei 225 and Korea’s Kospi 200 Index were little changed after pacing Hong Kong’s more-than-20 percent rise yesterday.
Futures on the Standard & Poor’s 500 Index fell 0.1 percent after rising as much as 0.1 percent today. The index fell 0.9 percent in New York yesterday as 10-year bond yields in Spain and Italy surged, stoking fears the debt crisis will spread.
After the U.S. market closed, Moody’s said it cut Germany, the Netherlands’ and Luxembourg’s Aaa credit rating outlooks to negative, citing “rising uncertainty” about Europe’s debt crisis. Risks that Greece may exit the 17-nation euro currency and “increasing likelihood” of collective support for European countries such as Spain and Italy were among reasons for the change, Moody’s said yesterday.
“It’s going to take a lot longer to solve Europe,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “Equity markets are in a hurry for a resolution, and I don’t think policy makers, politicians and central banks in Europe can meet that expectation in a realistic way.”
Exporters to Europe dropped. Nintendo declined 2.1 percent to 8,280 yen. Konica Minolta Holdings Inc. (4902), a Japanese maker of photo films that gets 28 percent of its sales in Europe, slid 0.7 percent to 534 yen.
Shares of Cnooc fell 4 percent to HK$14.82 in Hong Kong after announcing it will by Nexen in the biggest overseas takeover by a Chinese company. China Petroleum & Chemical Corp., the Hong Kong listed unit of the coutnry’s biggest refiner, fell 0.6 percent to HK$6.84 after its parent agreed to spend $1.5 billion for a 49 percent stake in Talisman Energy Inc.’s U.K. unit.
China’s manufacturing may contract at a slower pace in July as the government’s stimulus starts to reverse the economy’s slowdown. The 49.5 preliminary reading for a purchasing managers’ index released by HSBC Holdings Plc and Markit Economics today compares with a final 48.2 for June. A number above 50 indicates expansion.
China Railway Construction gained 3.8 percent to HK$6.80 after signing 20 billion yuan in new contracts. China Merchants Holdings International Co., which operates container and cargo terminals, advanced 1.5 percent to HK$24.15.
Among other stocks that gained, Hindustan Unilever Ltd. headed for a record in Mumbai after the unit of the world’s second-largest consumer goods company reported profit doubled on a one-time gain. The shares rose 7.5 percent to 476.2 rupees, the highest since at least 1997, and the biggest gain on the Asia-Pacific index. Volume was more than seven times the five- day average, according to data compiled by Bloomberg.
SK Telecom Co., the biggest South Korean wireless operator, surged 6 percent to 141,000 won in Seoul after the company’s decision to eliminate some handset subsidies prompted speculation profit will increase. The company was the second- best performer on the MSCI Asia Pacific Index today.
Among the 1,007 companies listed on the MSCI Asia Pacific Index, 148 are scheduled to report earnings this week, according to data compiled by Bloomberg. Earnings have missed analyst estimates for 53 percent of the 68 companies listed on the index that have reported quarterly results this month, according to data compiled by Bloomberg.
Billabong International Ltd. surged 20 percent to A$1.315 in Sydney after the surfwear maker got an offer from TPG Capital with an indicative price at A$1.45 per share.
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