Asian Stocks Outside Japan Fall on China Policy Concern

Asian stocks outside Japan declined, led by material producers and developers, on concern policy makers in China will step up efforts to cool the property market and as Hong Kong banks raised mortgage rates.

BHP Billiton Ltd. (BHP), the world’s biggest mining company, slid 2.3 percent in Sydney as commodity prices fluctuated. Country Garden Holdings Co., the Chinese developer controlled by billionaire Yang Huiyan, declined 2.9 percent. Japan’s Nikkei 255 Stock Average, the best performing developed-market benchmark gauge this year, rose after the lower house of Japanese Parliament endorsed Prime Minister Shinzo Abe’s nominees for the central bank leadership.

The MSCI Asia Pacific Excluding Japan Index (MXAP) dropped 0.3 percent to 476.1 as of 6:17 p.m. Hong Kong time, with about four shares falling for every three that rose. The gauge is heading for its third day of decline after data on the weekend showed inflation rose at the fastest pace in 10 months and People’s Bank of China Governor Zhou Xiaochuan said monetary policy is “no longer relaxed.”

“Asian equities continue to underperform partly because of concerns over tightening measures in China,” said John Woods, a Hong Kong-based Asian strategist at Citigroup’s private bank. “This consolidation has further to run. We’re still positive on the global economy so we’re looking at this leg down as an opportunity to build risk.”

Australia’s S&P/ASX 200 Index declined 1.2 percent even as the country’s employers increased payrolls in February by the most in almost 13 years. Taiwan’s Taiex Index lost 0.6 percent. The Philippine Stock Exchange Index sank 1.2 percent, while the Jakarta Composite Index dropped 1 percent.

Abe’s Rally

The MSCI Asia Pacific Index, which includes companies from Japan, slid 0.1 percent to 135.14. The Nikkei 255 jumped 1.2 percent, rising for the first time in three days. The lower house of Parliament today approved Haruhiko Kuroda for governor and Kikuo Iwata and Hiroshi Nakaso for deputy governor posts. Prime Minister Abe now needs to get his nominations through a vote tomorrow in the upper house, where his Liberal Democratic Party lacks a majority.

The Japanese benchmark gauge has rallied for the past seven months amid speculation more would be done to boost the world’s third-biggest economy. Net equity purchases by foreign investors in Japan reached 1.12 trillion ($11.7 billion) last week, the highest since March 2004, according to data tracked by Bloomberg.

Hong Kong’s Hang Seng Index (HSI) gained 0.3 percent, erasing a drop of as much as 1.1 percent, as a rally in Chinese railway and utility companies in the final hour of trading countered declines among developers. The Hang Seng China Enterprises Index (HSCEI) of mainland shares rose 0.6 percent, reversing earlier losses of as much as 1.3 percent. The Shanghai Composite Index added 0.3 percent, after earlier falling 0.5 percent.

Chinese President

China’s national legislature named Xi Jinping as the country’s president, replacing Hu Jintao in the country’s most rapid formal transfer of power in more than a generation.

New Zealand’s NZX 50 Index advanced 0.9 percent to an all- time high after central bank governor Graeme Wheeler pledged to keep borrowing costs at a record low until next year. South Korea’s Kospi Index added 0.1 percent, erasing earlier losses of 1.1 percent.

India’s S&P BSE Sensex Index climbed 1.1 percent, poised for its first gain this week, as a slowdown in non-food inflation signaled the central bank may have room to cut rates. The Reserve Bank of India will lower the repurchase rate by 25 basis points to 7.5 percent on March 19, according to 15 of 16 economists in a Bloomberg News survey.

Shares on the MSCI Asia Pacific Index traded yesterday at 14.7 times estimated earnings compared with 14 times for the Standard & Poor’s 500 Index and 12.7 for the Stoxx Europe 600, according to data compiled by Bloomberg.

Miners Drop

Futures on the S&P 500 added 0.1 percent. The Dow Jones Industrial Average extended its longest rally since 1996 yesterday after U.S. retail sales climbed twice as much as forecast in February.

A gauge of raw-material producers posted the biggest decline among the 10 industry groups in the Asia-Pacific gauge, according to data compiled by Bloomberg. Lead, copper, iron ore and zinc dropped amid concern heightened property curbs in China will reduce demand.

BHP fell 2.3 percent to A$35.09 in Sydney. Rio Tinto Group (RIO), the world’s second-largest mining company, slipped 2.3 percent to A$60.70. Fortescue Metals Group Ltd., Australia’s third- biggest iron ore producer, sank 6.2 percent to A$3.99.

Chinese developers dropped after the China Securities Journal reported Beijing will strengthen a review of homebuyer qualifications. Country Garden declined 2.9 percent to HK$3.63. Agile Property Holdings Ltd. (3383) dropped 2.3 percent to HK$9.06. Shimao Property Holdings Ltd., controlled by billionaire Hui Wingmau, slid 1.3 percent to HK$13.44.

Mortgage Rates

Real estate companies in Hong Kong also decreased after HSBC Holdings Plc and Standard Chartered Plc raised Hong Kong mortgage rates for the first time since 2011.

Sun Hung Kai Properties Ltd., the city’s biggest developer, sank 3.3 percent to HK$107.90. Henderson Land Development Co., controlled by the city’s second-richest man Lee Shau-kee, slipped 3.3 percent to HK$49.55. Hang Lung Properties Ltd., dropped 2 percent to HK$29.75.

ASM Pacific Technology Ltd. slumped 11 percent to HK$85.85 after parent ASM International NV sold an 11.9 percent in the Hong Kong-based semiconductor-manufacturing equipment supplier for HK$4.27 billion ($550 million).

Railway Stocks

Among stocks that advanced. CSR Corp. (1766), China’s biggest trainmaker by market value, rose 2.7 percent to HK$5.66. China Railway Construction Corp., climbed 3 percent to HK$7.52. The shares have fallen the past three days after the government announced on March 10 plans to restructure the Ministry of Railways.

Such a restructuring should generate greater efficiencies for the railway industry, resulting in 1.11 trillion yuan ($179 billion) in additional government spending, according to Barclays Plc.

China Resources Gas Group Ltd. (1193), a supplier of piped natural gas and petroleum products, jumped 5.3 percent to HK$19.48 after reporting full-year net income increased 38 percent from a year earlier to HK$1.65 billion.

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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