Most Asia Ex-Japan Stocks Slide on Europe, Growth Concern

Most Asian stocks outside Japan fell after weaker German business confidence stoked concern that Europe’s debt crisis is causing a broader economic slowdown. Japanese shares rose ahead of a deadline for dividend payments.

BHP Billiton Ltd. (BHP), the world’s No. 1 mining company, slipped 0.5 percent in Sydney on concern weaker global growth will curb demand for raw materials. LG Electronics Inc., a South Korean maker of mobile phones, dropped 5.4 percent after KTB Securities lowered its estimate for the company’s profit outlook. Komatsu Ltd. (6301), the world’s second-biggest construction- equipment maker, lost 1 percent in Tokyo as competitor Caterpillar Inc. cut its 2015 profit forecast.

The MSCI Asia Pacific excluding Japan Index fell 0.2 percent to 438.30 as of 6:40 p.m. in Hong Kong after rising 0.1 percent. About seven stocks climbed for every five that retreated. A measure that includes Japanese stocks climbed 0.1 percent, and is within 1 percent of a four-month high hit on Sept. 19.

“We expect the euro zone to muddle through its tortuous crisis-management process for a very long time,” said Benjamin Yeo, Singapore-based head of investment strategy at Barclays Plc’s wealth-management unit, which handles about $285 billion. “The region’s headwinds will remain a strong headwind for the global economy.”

The MSCI Asia Pacific Index climbed 5 percent this quarter through yesterday as central banks from Europe, the U.S., Japan and China took action to stimulate economic growth.

Futures on the Standard & Poor’s 500 Index were little changed after rising as much as 0.3 percent today. The measure yesterday fell for a third day, its longest decline in seven weeks, as European leaders clashed on ways to stem the region’s debt crisis and data from China and Germany signaled the global economic slowdown is deepening.

Annual Gain

The MSCI Asia Pacific Index (MXAP) has climbed 8.1 percent this year compared with a 16 percent gain on the S&P 500 Index and a 12 percent jump on the Stoxx Europe 600 Index. The Asian benchmark traded at 12.7 times estimated earnings compared with 14.1 for the S&P 500 and 12.1 for the Stoxx Europe 600.

Hong Kong’s Hang Seng Index was little changed, rising less than 1 percent. Australia’s S&P/ASX 200 Index retreated 0.3 percent and South Korea’s Kospi Index fell 0.6 percent.

China’s Shanghai Composite Index slid 0.2 percent. Securities firms gained after regulators sped up approvals for foreign investors to buy domestic stocks.

Japan’s Nikkei 225 Stock Average gained 0.3 percent and the broader Topix Index climbed 0.5 percent as investors bought ahead of a deadline for dividend payments. More than 900 companies in the Topix will trade without the right to a dividend tomorrow.

Business Confidence

Exporters to Europe declined in Japan and Hong Kong. Brother Industries Ltd. (6448), a Japanese office-equipment maker that gets almost 30 percent of sales from Europe, fell 1 percent to 778 yen. Li & Fung Ltd. (494), a supplier of toys and clothes that gets about a fifth of its revenue from Europe, lost 0.8 percent to HK$11.98. LG, which gets about 78 percent of sales from exports, fell 5.4 percent to 69,800 won.

Germany’s Ifo institute in Munich yesterday said its business climate index dropped for a fifth straight month.

Germany’s governing coalition showed growing exasperation with Spain, with a senior ally of Chancellor Angela Merkel saying Spanish Prime Minister Mariano Rajoy must stop prevaricating and decide whether Spain needs a full rescue from its debt. Meister’s comments underscore Europe’s crisis-fighting stalemate amid discord over a banking union, Greece’s ongoing debate on how to meet bailout commitments and foot-dragging by Spain on possible aid.

Machinery Makers

BHP skipped 0.5 percent to A$33.25. Rio Tinto Group (RIO), the world’s third-largest mining company, slipped 1.8 percent to A$53.97. Korea Zinc Co., retreated 3.2 percent to 460,000 won in Seoul.

Telecom Corp. of New Zealand gained 1.9 percent to NZ$2.39. Singapore Telecommunications Ltd. advanced 0.3 percent to S$3.33. Telecommunication shares posted the largest gains among the 10 industry groups on the MSCI Asia Pacific index.

Komatsu Ltd. retreated 1 percent to 1,551 yen and Hitachi Construction Machinery Ltd. (6305) slid 1 percent to 1,287 yen. Caterpillar, the world’s biggest construction and mining equipment maker, cut its profit forecast and said a global recession remains possible.

LG Display Ltd. (034220) fell 2.8 percent to 28,250 won in Seoul, leading declines among suppliers to Apple Inc. (AAPL), after the smartphone and computer maker reported debut sales for the iPhone 5 that fell short of some analysts’ estimates.

Trading volume on Japan’s Nikkei 225 was 12 percent above its 30-day average, according to data compiled by Bloomberg.

The Topix fell 14 percent from a high for the year on March 27 through yesterday. The decline drove the dividend yield for the gauge to 2.5 percent, more than three times the rate of the benchmark 10-year government bond. The Standard & Poor’s 500 Index yields just 1.16 times the government 10-year note, while Germany’s DAX offers 2.24 times and Australia’s S&P/ASX 200 pays 1.54 times.

To contact the reporter on this story: 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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