Asia Stocks Fall After China Sparks Global Growth Concern

Photographer: Tomohiro Ohsumi/Bloomberg

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A pedestrian walks past an electronic stock board outside a security firm in Tokyo.

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Photographer: Tomohiro Ohsumi/Bloomberg

A pedestrian walks past an electronic stock board outside a security firm in Tokyo.

Asian stocks fell, dragging the regional benchmark equities gauge lower for a second day, led by raw-material producers amid concern slower growth in China will curb the global economic recovery.

Glencore International Plc (805), the world’s biggest publicly traded commodities supplier, dropped 3.6 percent in Hong Kong. Daphne International Holdings Ltd. slumped 8.1 percent after the Chinese shoemaker reported first-quarter sales declined. Softbank Corp. sank 6.8 percent after Dish Network Corp. topped the Japanese wireless carrier’s bid for control of Sprint Nextel Corp., the No. 3 mobile-phone company in the U.S.

The MSCI Asia Pacific Index slid 0.4 percent to 136.43 as of 7:43 p.m. in Tokyo, paring an earlier loss of as much as 1 percent. About five shares fell for every four that rose. The gauge retreated yesterday from the highest level in 20 months after reports showed Chinese growth and industrial production expanded less than economists estimated and gold plunged the most since 1983.

“The Chinese economy is heading toward slower growth than what we’ve seen in the past decade, which means it’s a lot less investment-intensive with less demand for commodities,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages $126 billion. “We’ve reduced our equity exposure in the short-term as economic data show signs of softening. The market needs to correct at least 10 percent.”

Japan’s Nikkei 225 Stock Average (NKY) lost 0.4 percent. Australia’s S&P/ASX 200 Index (AS51) fell 0.3 percent and New Zealand’s NZX 50 Index retreated 0.6 percent. Hong Kong’s Hang Seng Index slipped 0.5 percent after falling as much as 1.4 percent. China’s Shanghai Composite Index gained 0.6 percent, reversing losses of as much as 0.7 percent. South Korea’s Kospi Index added 0.1 percent.

Relative Value

Futures on the S&P 500 Index gained 0.5 percent. The gauge dropped 2.3 percent yesterday, the biggest decline since November, after the China gross domestic product report. U.S. stocks extended losses as explosions rocked the finish-line area of the Boston Marathon. Almost all of the drop came before the incident. Three people were killed and at least 128 hospitalized, police said.

The MSCI Asia Pacific Index (MXAP) gained 5.9 percent this year through yesterday amid signs the U.S. economy is recovering and as Japanese equities rallied on speculation the Bank of Japan will step up efforts to stimulate its economy. Shares on the gauge traded at 13.9 times average estimated earnings compared with 14 for the Standard & Poor’s 500 Index and 12.5 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Indiscriminate Sell-off

“Brace yourselves today,” said Evan Lucas, a market strategist at IG Markets Ltd., a provider of trading services in Melbourne. “The sell-off will be sharp and indiscriminate, loss will be across the board, not even the defensives will escape the flight to safety today.”

Only three of the 10 industry groups in the MSCI Asia Pacific Index advanced. Raw-material producers and energy companies posted the biggest decline amid concern demand from China, the world’s biggest consumer of metals and fuel, will drop as economic growth slows.

Glencore dropped 3.6 percent to HK$38.70 in Hong Kong. Cnooc Ltd., China’s No. 1 offshore oil producer, slipped 1.9 percent to HK$13.48. Newcrest Mining Ltd., Australia’s largest gold producer, sank 5.1 percent to A$17 in Sydney.

Calibre Group Ltd. (CGH), which provides engineering services to mining and infrastructure companies, slipped 1.2 percent to an all-time low of A$0.415, extending its decline for a sixth day. The company last week lowered its full-year net profit forecast after clients delayed a number of projects on softening demand for iron ore and coal.

Softbank, Sharp

Softbank, Japan’s third-largest mobile-phone company, declined 6.8 percent to 4,365 yen in Tokyo. Dish Network offered $25.5 billion for control of Sprint, sparking concerns the Japanese wireless carrier may raise its own bid.

Sharp Corp., the maker of Aquos liquid-crystal display televisions, slid 3.2 percent to 358 yen. The company canceled a plan to sell its TV factory in Mexico after failing to agree on terms of the deal with Hon Hai Precision Industry Co., the Nikkan Kogyo reported, without saying where it got the information.

Daphne (210) slipped 8.1 percent to HK$8.72, the second-biggest decliner on the MSCI Asia Pacific Index. The company said first- quarter same-store sales dropped 2.5 percent from a year earlier after rising 2 percent in the previous three months.

Ascendas Real Estate Investment Trust (AREIT), a Singapore-based industrial landlord, dropped 4.2 percent to S$2.74, heading for its biggest decline since September 2010. Credit Suisse Group AG cut its rating on the stock to underperform from neutral, citing a more challenging operating environment. Deutsche Bank AG lowered its rating to hold from buy.

New Drug

Among stocks that rose, Shionogi & Co., the Japanese maker of the Crestor cholesterol pill, jumped 5.5 percent to 2,147 yen. Bank of America Corp.’s Merill Lynch recommended investors buy the stock, saying Osphena, a new drug for treating post- menopausal women suffering from painful sex, will boost the company’s earnings.

Celltrion Inc., the maker of Abatacept used in treating arthritis, climbed 5.1 percent to 49,800 won in Seoul. Chairman Seo Jung-Jin plans to sell his stake in the South Korean drug maker to a multi-national pharmaceutical company, Celltrion said in a statement today.  

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net

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

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