Asian Stocks Fall as Bird Flu Concerns Trump Japan Plan

Asian stocks fell this week as a fatal bird flu outbreak in China outweighed a surge in Japanese shares (TPX) sparked by unprecedented stimulus from the Bank of Japan’s new leadership.

Air China Ltd., Asia’s biggest carrier by market value, plunged 12 percent, amid concern a strain of bird flu that has killed six people in China may become an epidemic. Toyota Motor Corp., the world’s largest carmaker, jumped 4.7 percent as the yen fell against all its major peers. Shinsei Bank Ltd. (8303) surged 19 percent as investors bet that more monetary easing from the BOJ will boost loan demand and asset prices.

The MSCI Asia Pacific Index fell 1.5 percent to 133.49 this week, erasing last week’s gain. Shares jumped in Japan after the BOJ said it will double the monetary base by the end of 2014 in its biggest round of quantitative easing.

“We are pretty much in a panic mode from a possible epidemic from the new bird flu in China.” said Jackson Wong, vice president at Hong Kong-based brokerage Tanrich Securities Co. “When you look at the Japanese stimulus program it will only help Japan for the time being, especially short term.”

The MSCI Asia Pacific Index (MXAP) has added about 3.6 percent this year, less than half the gains on the Standard & Poor’s 500 Index, amid concern China will move to cool its property market. Asia’s benchmark trades at 13.4 times average estimated earnings, compared with multiples of 14 for the S&P 500 and 12.3 for the Stoxx Europe 600 Index (SXXP), according to data compiled by Bloomberg.

‘Whatever It Takes’

Japan’s Nikkei 225 Stock Average (NKY), the best performing major equity gauge this year, finished the week at highest level since Sept. 1, 2008, adding 3.5 percent. The measure has rallied 48 percent since mid-November amid bets policy makers would make good on new BOJ Governor Haruhiko Kuroda’s pledge to do “whatever it takes” to beat deflation.

Taiwan’s Taiex Index rose 0.3 percent, its second consecutive weekly advance.

Every other major market in Asia fell. Australia’s S&P/ASX 200 Index (AS51) dropped 1.5 percent this week, its fourth straight weekly decline. Singapore’s Straits Times Index slid 0.3 percent.

South Korea’s Kospi Index declined 3.9 percent as North Korea moved a missile to its eastern coast, possibly for training and test-firing, and warned it’s poised to conduct a “smaller, lighter and diversified nuclear strike.”

Hong Kong’s Hang Seng Index (HSI) dropped 2.6 percent to its lowest level since November as China yesterday reported six deaths from a new strain of bird flu. The Shanghai Composite Index, which was closed the last two days, fell 0.5 percent on the week.

Shanghai closed several live poultry trading markets and began culling all birds in a market where a pigeon sample was found contaminated with the H7N9 bird influenza virus, according to the local government’s website. The city, China’s financial hub, has reported four of the six H7N9 deaths.

Air China

Air China fell 12 percent to HK$6.05. China Southern Airlines Co. (1055), Asia’s biggest carrier by passenger numbers, retreated 13 percent to HK$3.87. Chinese and Hong Kong developers also fell on the news with China Resources Land Ltd., sliding 3.2 percent to HK$21.00.

An expansion of monetary easing at the Bank of Japan may trigger “an avalanche” in the yen as Japanese put money elsewhere in anticipation of sustained currency depreciation, billionaire investor George Soros said in an interview with CNBC on April 5.

Toyota jumped 4.7 percent to 5,090 yen this week in Tokyo. Mazda Motor Corp. rose 6.1 percent to 298 yen. Nissan Motor Co. added 7 percent to 968 yen.

Shinsei Bank surged 19 percent to 253 yen. Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender, advanced 8.8 percent to 607 yen. Mitsui Fudosan Co., Japan’s largest property company by revenue, surged 25 percent to 3,310 yen.

To contact the reporter on this story: Eleni Himaras in Hong Kong at ehimaras@bloomberg.net

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

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