Asian Stocks Drop a Second Day as Chinese Equities Fall

Asian stocks fell for a second day amid concern shares rose too fast after the regional benchmark index hit a 19-month high this week. Chinese companies tumbled in Hong Kong after the nation’s central bank chief said he’s on “high alert” for inflation.

China Overseas Land & Investment Ltd., the biggest builder traded in Hong Kong, sank 3.1 percent after a report the southern city of Shenzhen banned developers from raising new home prices. Canon Inc. (7751), the world’s largest camera maker, slipped 2.8 percent as the yen strengthened, cutting the earnings outlook for Japan’s exporters. National Australia Bank Ltd. (NAB) lost 1.9 percent as the country’s largest lender by assets announced cost cuts after full-year profit fell for the first time since 2009.

The MSCI Asia Pacific Index dropped 0.6 percent to 135.39 as of 7:42 p.m. in Tokyo, with more than two shares falling for each that rose. The gauge rallied 2.1 percent in the past three weeks amid signs the U.S. and China economies are recovering. The Shanghai Composite Index is poised for its biggest monthly decline since July after the government on March 1 imposed its toughest curbs on real-estate transactions in a year.

“There’s a slight possibility China might overdo tightening measures in the property market,” said Yoji Takeda, who oversees about $1.2 billion as Hong Kong-based head of Asian equities at RBC Investment Management (Asia) Ltd. “An asset bubble is one potential problem for China, but if they really push down property prices, that’s also bad for the economy.”

Stronger Yen

China’s monetary-policy is “no longer relaxed” and is “neutral,” Zhou Xiaochuan, head of the People’s Bank of China, said at a press conference today during the annual gathering of China’s National People’s Congress. China this year will keep stable credit growth, which must be in line with goals for gross domestic product and consumer prices, Zhou said.

The Shanghai Composite Index (SHCOMP) slid 1 percent. Hong Kong’s Hang Seng Index, the second-worst performing developed-market benchmark gauge, dropped 1.5 percent, with declines deepening after Zhou spoke. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in the former British colony plunged 2.2 percent, the most in a month.

Japan’s Nikkei 225 Stock Average slipped 0.6 percent. Exporters declined as the yen rose against most major peers after an opposition party said it wouldn’t support Kikuo Iwata, a pro-stimulus nominee for central bank deputy governor. A stronger currency reduces the value of overseas income when repatriated.

Yen Effect

Japan’s benchmark index last week erased losses from the 2008 collapse of Lehman Brothers Holdings Inc. amid speculation the government and the Bank of Japan will step up efforts to revive the world’s third-largest economy. The Nikkei 225 (NKY)’s 42 percent increase since November shrinks to 19 percent when converted into dollars, just 4 percentage points more than the Standard & Poor’s 500 Index’s return in the same period.

“The market has run very, very hard and it is due for a pullback,” Andrew Pease, Sydney-based chief investment strategist at Russell Investment Group, which manages about $160 billion, told Bloomberg Television. “You wouldn’t expect us to be back to pre-crisis levels any time soon, given that we know we’re going to get sluggish growth going forward.”

Australia’s S&P/ASX 200 Index fell 0.5 percent, while New Zealand’s NZX 50 Index dropped 0.9 percent. Singapore’s Straits Times Index lost 0.4 percent, and South Korea’s Kospi Index added 0.3 percent.

U.S. Futures

Shares on the MSCI Asia-Pacific Index (MXAP) traded yesterday at 14.9 times estimated earnings compared with 14 times for the S&P 500 and 12.7 for the Stoxx Europe 600, according to data compiled by Bloomberg.

Futures on the S&P 500 slipped 0.1 percent today. The equity gauge fell 0.2 percent yesterday, snapping a seven-day rally that drove the benchmark toward a record high.

Chinese developers fell after news site Sina.com reported Shenzhen’s land authorities won’t approve the sale of new property projects with higher prices. China Overseas Land & Investment dropped 3.1 percent to HK$21.60. Shimao Property Holdings Ltd., controlled by billionaire Hui Wingmau, fell 2.7 percent to HK$13.62. China Vanke Co., the largest mainland- listed homebuilder, dropped slipped 2.4 percent to 10.95 yuan in Shenzhen.

Keppel Corp. (KEP), the world’s biggest maker of oil platforms, fell 1.1 percent to S$11.73 in Singapore after saying a $1.2 billion conditional contract to build two semi-submersible drilling rigs for Ukraine’s Naftogaz won’t take effect.

Canon, Panasonic

Japanese exporters declined. Canon slid 2.8 percent to 3,450 yen. Panasonic Corp., Japan’s second-largest television maker, decreased 2.9 percent to to 681 yen.

Fanuc Corp. (6954), a Japanese supplier of factory automation equipment, fell 2.5 percent to 14,000 yen. A switch to focusing on the auto industry from smartphone-related machine tools could backfire on the company, Bank of America Merrill Lynch analyst Hideyuki Mizuno wrote in a report.

National Australia Bank slipped 1.9 percent to A$30.95 in Sydney. The lender said it plans to cut annual costs by A$800 million ($825 million) within five years after full-year profit fell for the first time since 2009.

Among stocks that advanced, Samsung Electronics Co., the world’s biggest maker of smartphones, rose 2.2 percent to 1.527 million won. The company will unveil its new Galaxy S4 in the U.S. tomorrow as it challenges Apple Inc. in the iPhone maker’s biggest market.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

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

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