Asian Stocks Post Biggest Weekly Decline in Eight Months

Asian stocks fell, with the regional benchmark index posting the biggest weekly drop in seven months, as Cyprus struggled to prevent a financial collapse, stoking concern Europe’s debt crisis is intensifying.

HSBC Holdings Plc (5), Europe’s biggest lender, slid 1.9 percent in Hong Kong. BHP Billiton Ltd. (BHP), the world’s biggest mining company, lost 6 percent in Sydney as commodities fell amid concern Europe’s crisis will hinder global growth. Toyota Motor Corp. (7203), the world’s largest carmaker, lost 2.8 percent after Japan’s new central bank governor stopped short of announcing new stimulus.

The MSCI Asia Pacific Index fell 1.7 percent to 134.31 this week, the biggest weekly decline since the period ended Aug. 31, amid concern that an unprecedented levy on bank deposits in Cyprus may be a sign of deepening crisis in Europe.

“Nobody knows what’s going to happen next,” said Grace Tam, Hong Kong-based global market strategist at JPMorgan Asset Management Ltd., which oversees about $1.3 trillion globally. “Cyprus can damp market sentiment in the short term but it’s something we’ve already seen happening in Europe, so we are not fairly concerned.”

Relative Value

The MSCI Asia Pacific Index (MXAP) rallied 3.8 percent this year as improving economic data from the U.S. and speculation that Japan will deploy more stimulus countered concern China will move to cool its property market. Asia’s benchmark trades at 14.9 times average estimated earnings, compared with 14.1 for the Standard & Poor’s 500 Index (SPX) and 12.7 for the Stoxx Europe 600 Index (SXXP), according to data compiled by Bloomberg.

The Topix Index, Japan’s broadest share gauge, fell 1.2 percent this week even after reaching the highest close since October 2008 on March 21. Australia’s S&P/ASX 200 Index dropped 3 percent this week, the biggest weekly drop since May. Singapore’s Straits Times Index slid 0.8 percent. South Korea’s Kospi Index (KOSPI) declined 1.9 percent.

Hong Kong’s Hang Seng Index fell 1.9 percent. The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, rose 2.2 percent as a private survey on March 21 showed Chinese manufacturing may expand faster than estimated. India’s S&P BSE Sensex (SENSEX) dropped 3.6 percent amid concern the withdrawal of the government’s biggest partner from the ruling alliance may jeopardize economic reforms.

Cyprus Bailout

Asian stocks fell after the European Central Bank said it may cut off Cyprus banks from emergency funds as the island nation struggles to stave off financial collapse after lawmakers rejected a bank deposit levy as a condition for a euro-zone rescue. Cyprus’ attempt to secure a bailout from Russia was rebuffed yesterday.

Resource stocks and companies that do business in Europe fell. HSBC slid 1.9 percent to HK$83.10. Samsung Electronics Co. (005930), a consumer-electronics exporter, dropped 1.7 percent to 1.455 million won in Seoul.

BHP Billiton slid 6 percent to A$33.43, the biggest weekly decline since the period ended May 18. Rio Tinto Group (RIO), Australia’s second-largest miner by market value, slumped 5.5 percent to A$57.92.

BOJ Governor

Japanese shares fell after new Bank of Japan Governor Haruhiko Kuroda on March 21 failed to outline any immediate increase to stimulus in his first press conference. He restated that he will do whatever it takes to achieve a 2 percent inflation target and that he may bring forward open-ended asset purchases, though he made no concrete commitments.

Toyota dropped 2.8 percent to 4,880 yen. Nissan Motor Co. (7201), Japan’s third-largest carmaker by market value, lost 4 percent to 946 yen.

Japanese real estate stocks fell after the sector’s rating was cut at Morgan Stanley. Mitsubishi Estate Co., the nation’s biggest developer by market value, slumped 8.8 percent to 2,549 yen. Mitsui Fudosan Co., the largest property company by sales, slipped 4.7 percent to 2,596 yen.

Among shares that advanced, China Resources Power Holdings Co. jumped 16 percent to HK$23.50 in Hong Kong. The utility reported on March 18 that full-year net income rose 68 percent to HK$7.48 billion ($964 million). That compared with an HK$6.8 billion average estimate by 14 analysts surveyed by Bloomberg.

Guangzhou R&F Properties Co. jumped 13 percent to HK$13.08 in Hong Kong after the homebuilder in the Southern Chinese city posted full-year earnings that beat estimates.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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

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