Asian Stocks Drop After Japan’s Tankan Misses Estimates

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Photographer: Tomohiro Ohsumi/Bloomberg

Pedestrians are reflected in a window in front of an electronic stock board outside a securities firm in Tokyo.

Asian stocks fell, with Japan’s Topix Index falling the most since March 2011, after a survey of sentiment among the country’s largest manufacturers missed estimates and an official gauge of China’s factory output expanded at a slower-than-expected pace.

Mazda Motor Corp. (7261), the Japanese automaker that led gains on the Nikkei 225 Stock Average since mid-November, lost 4.3 percent as the yen strengthened against all its major peers. Nomura Holdings Inc. slid 4.3 percent after Japan’s No. 1 brokerage was sued by a trust over an alleged breach of contract involving $1.14 billion of mortgage-backed securities. Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co., China’s largest producer of rare-earth minerals, slid 2.6 percent after reporting a slump in earnings

The MSCI Asia Pacific Index (MXAP) lost 1.2 percent to 133.97 as of 7:29 p.m. in Tokyo, with more than three shares falling for each that rose. The gauge has rallied in the past five months amid signs the U.S. economy is recovering and speculation Japan will introduce aggressive measures to stimulate the world’s third-largest economy.

“We need to see the economy showing signs of improvement and inflation numbers picking up in Japan,” Vasu Menon, head of content and research at OCBC Bank Ltd. in Singapore, told Bloomberg Television. “We’ve seen too many flashes in the pan in Japan. Rethoric is not enough. We need to see concrete action. We need to see economic numbers react to that action. China is recovering but the recovery is going to be a modest one.”

Japan’s Topix

Japan’s Topix declined 3.3 percent, the most since March 15, 2011, as the Bank of Japan’s quarterly Tankan survey showed confidence among big Japanese manufacturers improved less than economists estimated. Japan’s broadest share gauge gained 36 percent since mid-November amid speculation Shinzo Abe’s new government will take steps to pull the economy out of deflation.

The cost of bearish options on the Nikkei 225 traded near an eight-month high as investors bought protection against declines amid concern the Bank of Japan will fail to deliver stimulus at this week’s meeting. The Nikkei 225 fell 2.1 percent today.

China’s Shanghai Composite Index slipped 0.1 percent. The official Purchasing Managers’ Index was 50.9 in March, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing.

While the reading was the highest in 11 months, it fell short of the 51.2 median estimate of 26 analysts surveyed by Bloomberg News. A separate gauge from HSBC Holdings Plc and Markit Economics rose to 51.6 in March from 50.4. Readings above 50 indicate expansion.

South Korea’s Kospi Index (KOSPI) slid 0.4 percent, while Taiwan’s Taiex Index lost 0.2 percent. Singapore’s Straits Times Index was little changed. Markets in Hong Kong, Australia and New Zealand are closed today for a holiday.

U.S. Futures

The MSCI Asia Pacific Index rose 4.8 percent this year through March 29 amid a rally in Japanese shares. The Asian benchmark index traded at 14.9 times estimated earnings on average, compared with 14.2 for the Standard & Poor’s 500 Index and 12.6 times for the Stoxx Europe 600 Index.

Futures on the S&P 500 lost 0.1 percent today. The gauge rose to a record on March 28 as data bolstered confidence in the world’s largest economy. U.S. markets were closed on March 29. The Institute for Supply Management factory index will come in at 54 for March, little changed from February’s 54.2, which was the highest since June 2011, economists estimated before data today.

Manufacturers declined today. Mazda dropped 4.3 percent to 269 yen in Tokyo. Komatsu Ltd. (6301), a Japanese maker of construction equipment that gets about 14 percent of sales from China, slid 1.8 percent to 2,208 yen. Samsung Electronics Co., which counts China as its largest market, lost 1 percent to 1.512 million won in Seoul.

Panasonic, Nomura

Panasonic Corp., the Japanese unprofitable electronics maker, dropped 3.4 percent to 632 yen after the Wall Street Journal reported a unit that makes entertainment and communications systems for airlines is under a bribery investigation by U.S. regulators.

Nomura, the best performing stock in the Topix Core 30 Index since Japanese shares started rallying in November, sank 4.3 percent to 552 yen. HSBC Bank USA, National Association, acting as trustee, sued the Japanese brokerage in state Supreme Court in Manhattan, accusing Nomura Credit & Capital Inc. of failing to comply with obligations associated with 5,292 residential mortgages it purchased and sold to the trust.

Inner Mongolia Baotou Steel fell 2.6 percent to 29.05 yuan in Shanghai after the supplier of raw material used in electronics production reported a 57 percent slump in full-year earnings to 1.51 billion yuan ($243 million.)

SMRT Corp. fell 2.5 percent to S$1.54 in Singapore, its lowest close since May 2009, after the city’s biggest commuter train operator predicted a fourth-quarter loss.

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