Asia Stocks Drop as Shrinking Japan GDP Overshadows China

Asian stocks fell, with the regional benchmark index headed for its lowest close in a month, after Japan’s economy shrank at the fastest pace since last year’s earthquake, outweighing an acceleration in China’s exports.

Yokohama Rubber Co. sank 6.3 percent after posting earnings that missed estimates and as rubber prices fell to a two-month low after the Japan GDP report. QBE Insurance Group Ltd. (QBE) sank 8.3 percent, the most in 11 months, after Australia’s No. 1 insurer by market value said claims from U.S. super storm Sandy will dent full-year profit. Li & Fung Ltd., a supplier of clothes and toys to Wal-Mart Stores Inc., climbed 1.1 percent as China’s exports grew at the fastest rate since May.

The MSCI Asia Pacific Index (MXAP) lost 0.4 percent to 120.82 as of 7:14 p.m. in Tokyo. About two shares fell for each that rose. The gauge gained 11 percent through the end of last week from this year’s low on June 4 as central banks added stimulus to spur growth and data showed a slowdown in China may be bottoming.

“I don’t think anyone’s relying on a massive pickup in Japanese growth to drive things,” said Angus Gluskie, managing director at Sydney-based White Funds Management, which oversees more than $350 million. “If the data continues to deteriorate, it becomes another problem area and it will come on to investors’ radar screens.”

The MSCI Asia Pacific gauge traded at 13.3 times estimated earnings as of Nov. 9, compared with 13.3 for the Standard & Poor’s 500 Index and 12.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Another Recession?

Japan’s Nikkei 225 Stock Average (NKY) lost 0.9 percent as a report showed gross domestic product shrank an annualized 3.5 percent in the three months through September. The median of 23 analysts’ estimates in a Bloomberg News survey was for a 3.4 percent contraction. Economists are expecting a second straight quarter of contraction through December, meeting the technical definition of a recession.

Yokohama Rubber lost 6.3 percent to 518 yen., the biggest drop on the Nikkei 225. The company indicated third-quarter operating profit of 6.4 billion yen, less than 10.1 billion yen estimates by three analysts. Citigroup Inc. cited the quarterly results as “weak,” saying that profits probably hurt by lower shipments and higher production costs.

Australia’s S&P/ASX 200 Index (AS51) slid 0.3 percent and South Korea’s Kospi Index dropped 0.2 percent. Taiwan’s Taiex Index slipped 0.4 percent and Singapore’s Straits Times Index was little changed.

Hong Kong’s Hang Seng Index rose 0.2 percent and China’s Shanghai Composite climbed 0.5 percent, with Li & Fung advancing 1.1 percent to HK$12.52. Geely Automobile Holdings Ltd. led carmakers higher in Hong Kong, gaining 3.3 percent to HK$3.72 after Chinese passenger-vehicle sales increased in October.

Lower Volume

Equity-trading volume was lower than average. The value of shares traded on the first section of the Tokyo Stock Exchange was the lowest since Aug. 27. Volume on the Hang Seng Index was 41 percent below the 30-day average for the time of day.

China’s overseas shipments increased 11.6 percent from a year earlier, the Beijing-based customs administration said in a statement today. That compared with the 10 percent estimate in a Bloomberg News survey of economists. Imports rose 2.4 percent, level with the month before. The trade surplus widened to $32 billion, the biggest in almost four years.

New yuan loans in China fell 14 percent in October from a year earlier, Beijing-based People’s Bank of China said on its website today.

Futures on the S&P 500 gained 0.3 percent after slipping as much as 0.2 percent earlier today. The gauge posted its biggest weekly decline since June last week as President Barack Obama’s re-election set up a budget showdown with Republican lawmakers.

Lynas Fundraising

Lynas Corp. (LYC), builder of the world’s biggest rare-earth refinery in Malaysia, fell 11 percent to 72 Australian cents in Sydney after selling A$150 million ($156 million) of new shares.

QBE retreated 8.3 percent to A$11.80, the biggest drop since January. The insurer said its profit margin will drop to around 8 percent this year, down from an August forecast for better than 12 percent. Losses from Sandy total $350 million to $450 million, QBE said in a statement today.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net; Jason Clenfield in Tokyo at jclenfield@bloomberg.net

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

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