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Asia Stocks Drop, Extend Global Rout, on Stimulus Concern

Asian stocks fell, extending a rout that wiped out about $400 billion from the value of global equities yesterday, amid concern that central banks from Tokyo to Washington are increasingly reluctant to add stimulus.

Toyota Motor Corp., the world’s largest carmaker, retreated 1.8 percent in Tokyo after the yen yesterday gained the most in three years. Hyundai Merchant Marine Co. (011200) plunged 15 percent in Seoul after North Korea called off talks yesterday on a joint industrial zone. Nomura Real Estate Master Fund Inc. (3285), Japan’s largest initial public offering this year, fell 6.2 percent in its debut.

The MSCI Asia Pacific Index was little changed at 131.65 as of 8:44 p.m. in Tokyo, with about two shares falling for each that advanced. Markets in China, Hong Kong, Taiwan and the Philippines were shut for holidays.

“There’s lots of confusion around the world at present about what central bank policy means for the outlook of the global economy, earnings and valuations,” Matthew Sherwood, Sydney-based head of market research at Perpetual Ltd., which manages about $25 billion, said by e-mail. “The Fed is likely to continue to be ambiguous about its next step, probably because it’s not sure. This will see markets continue to be volatile.”

The MSCI gauge fell 8.9 percent through yesterday from this year’s high on May 20 on speculation that an improving U.S. economy will lead the Federal Reserve to scale back record stimulus. In May, Fed Chairman Ben S. Bernanke said policy makers could reduce the pace of bond buying should there be sustained improvement in the U.S. economy.

Relative Value

The measure traded yesterday at 12.8 times average estimated earnings, compared with 14.8 for the Standard & Poor’s 500 Index and 12.9 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

A gauge of consumer discretionary companies in the Asia-Pacific index led gains this year as Japanese shares rallied on a weaker yen and the promise of policies to end deflation. Energy companies had the biggest declines amid concern that China’s fuel demand will drop as growth slows.

Japan’s Topix index declined 0.4 percent after dropping 1 percent yesterday, when the Bank of Japan kept its policy unchanged. Data today showed Japan machinery orders, an indicator of future capital spending, dropped 8.8 percent in April, more than the 8.1 percent decline estimated by economists in a Bloomberg survey.

Regional Gauges

Australia’s S&P/ASX 200 Index retreated 0.7 percent, led by energy and financial shares. Woodside Petroleum Ltd. (WPL), Australia’s second-biggest oil and gas producer, dropped 2 percent to A$34.67. Westpac Banking Corp. (WBC), Australia’s No. 2 lender by market value, shed 1.2 percent to A$27.47.

New Zealand’s NZX 50 Index slid 0.5 percent. South Korea’s Kospi index fell 0.6 percent. Singapore’s Straits Times Index dropped 0.6 percent. Futures on the Standard & Poor’s 500 Index gained 0.3 percent after the measure dropped 1 percent yesterday.

Japanese exporters dropped after the yen gained 2.8 percent against the dollar yesterday, the biggest rise since May 2010. Toyota fell 1.8 percent to 5,860 yen. Mazda Motor Corp. (7261), an automaker that gets 29 percent of its sales in North America, sank 2.4 percent to 369 yen.

Hyundai Merchant slumped 15 percent to 13,300 won in Seoul after the cancellation of inter-Korea talks. The discussion was expected to include reopening a resort in Mt. Geumgang run by Hyundai Asan Corp., in which Hyundai Merchant had a 66 percent stake as of March 31, and Gaesong joint factory park.

Nomura Real Estate Master Fund fell 6.2 percent to 93,800 yen in its debut in Tokyo. The investment trust run by a unit of the nation’s biggest brokerage sold 1.75 million shares in the IPO and raised 175.1 billion yen ($1.8 billion), according to a company statement.

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