Asian Stocks Fall as China Sinks Deeper Into Bear Market

Photographer: Tomohiro Ohsumi/Bloomberg

A customer watches share prices on an electronic stock board at a security firm in Shanghai, China. Close

A customer watches share prices on an electronic stock board at a security firm in Shanghai, China.

Close
Open
Photographer: Tomohiro Ohsumi/Bloomberg

A customer watches share prices on an electronic stock board at a security firm in Shanghai, China.

Asian stocks fell as a gauge of the biggest Chinese shares traded in the mainland sank deeper into a bear market amid concern a cash crunch will curb growth in the world’s second-largest economy.

Jiangxi Copper Co. (358), China’s biggest producer of the metal, dropped 4.6 percent in Hong Kong. Newcrest Mining Ltd. fell 2.4 percent after Australia’s No. 1 gold producer cut jobs at its Lihir mine in Papua New Guinea. Guangzhou Shipyard International Co., a unit of China’s largest shipbuilder, plunged 17 percent after announcing plans to sell shares and buy a shipyard.

The MSCI Asia Pacific Index fell 0.4 percent to 125.3 as of 8:05 p.m. in Tokyo, reversing gains of 0.5 percent. Almost two shares fell for each that rose on the measure. The gauge dropped 13 percent from this year’s high on May 20 through yesterday after Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank may start dialing down stimulus, and as money-market rates in China surged to records.

“Global markets are taking off risk and will continue to be jittery until interbank rates in China stabilize,” said Ichiro Yamada, general manager of equities who helps oversee the equivalent of $3 billion at Fukoku Mutual Life Insurance in Tokyo. “Japanese shares are falling along with other markets, but it’s also the most resilient market because it benefits from a stronger dollar.”

Cash Crunch

China’s CSI 300 Index, representing the biggest companies in the Shanghai and Shenzhen stock exchange, dropped 0.3 percent, extending losses for fifth day. The measure has fallen 22 percent from this year’s high, surpassing the 20 percent threshold that some investors consider as a bear market. The benchmark Shanghai Composite Index (SHCOMP) slid 0.2 percent, paring losses of as much as 5.8 percent earlier.

The overnight interbank interest rates fell for a third day, the longest run of declines in a month, as the central bank refrained from selling bills amid the worst cash crunch in at least a decade. Liquidity risks in China’s financial markets are controllable and seasonal forces affecting interest rates will fade, Ling Tao, deputy director of the Shanghai branch of the People’s Bank of China, said at a briefing today.

Hong Kong’s Hang Seng Index gained 0.2 percent after falling as much as 2 percent. The Hang Seng China Enterprises Index (HSCEI) fell 0.8 percent, taking its slide from a Feb. 1 high to 27 percent.

Japan’s Topix index slid 1 percent, while the benchmark Nikkei 225 Stock Average lost 0.7 percent.

South Korea’s Kospi index dropped 1 percent and Taiwan’s Taiex Index retreated 1.2 percent. Australia’s S&P/ASX 200 Index slipped 0.3 percent and New Zealand’s NZX 50 Index decreased 1.1 percent. Singapore’s Straits Times Index rose 0.5 percent.

Relative Value

Shares on the Asia-Pacific gauge traded at 12.2 times estimated earnings yesterday, compared with multiples of 14.2 for the Standard & Poor’s 500 Index and 12.2 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the S&P 500 Index added 0.6 percent today. The gauge yesterday dropped 1.2 percent to its lowest level since April 22. The measure briefly slipped below a 2007 closing high of 1,565.15, a level that marked recovery of all losses from the financial crisis.

Raw-material producers led declines among the MSCI Asia Pacific Index’s 10 industry groups. Jiangxi Copper dropped 4.6 percent to HK$13.02. BHP Billiton Ltd. (BHP), the world’s biggest miner, fell 1.7 percent to A$30.81 in Sydney.

Newcrest Mining slipped 2.4 percent to A$9.30, the lowest close since September 2003. The company said it will cut about 150 jobs at its Lihir mine as it reorganizes its operations in response to the plunge in gold prices.

Glencore Drops

Glencore Xstrata Plc (805), the world’s largest exporter of power-station coal, sank 3.1 percent to HK$33.15 in Hong Kong, the lowest close since its May 2011 listing. The company is proposing to scale down operations at its Ravensworth mine in Australia amid difficult market conditions, Tony Galvin, general manager at the mine, said in an e-mailed statement.

Guangzhou Shipyard slumped 18 percent to HK$5.87 in Hong Kong. The company said yesterday it plans to sell as much as 2.5 billion yuan ($407 million) of new shares and buy a shipyard part-owned by parent China State Shipbuilding Corp.

ANA Holdings Inc., operator of the world’s largest fleet of Boeing Co. 787s, slid 2 percent to 197 yen in Tokyo after agreeing to dissolve a low-cost carrier venture with Malaysia’s AsiaAsia Bhd. amid disputes over operating the company. AirAsia, Asia’s biggest budget airline, lost 1 percent to 3.03 ringgit in Kuala Lumpur.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.