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Asian Stocks Fall Most in Three Months, Pacing U.S. Rout

Asian stocks fell, with the regional benchmark index posting its biggest loss in more than three months, as it paced the largest drop in U.S. stocks since November amid concern over valuations.

Great Wall Motor Co., China’s No. 1 maker of sport utility vehicles, plunged 12 percent in Hong Kong after delaying the introduction of its Haval H8 model for three months to address technical deficiencies. Honda Motor Co. (7267), a Japanese carmaker that gets 47 percent of sales in North America, lost 3.5 percent. Dainippon Sumitomo Pharma Co. fell 7.7 percent in Tokyo, leading declines on the Topix (TPX) index, which slumped the most in five months.

The MSCI Asia Pacific Index lost 1.5 percent to 138.65 as of 7:40 p.m. in Tokyo, the biggest loss since Sept. 30. All 10 industry groups on the gauge fell, with more than three stocks dropping for each that rose.

“Investors are starting to ask the question that strategists and analysts have been asking since October: Has the optimism that drove 2013 translated into earnings?” Evan Lucas, Melbourne-based market strategist at IG Ltd., said in an e-mail. “The reaction from Wall Street overnight suggests some are finally asking this question for real.”

The Standard & Poor’s 500 Index lost 1.3 percent yesterday, the biggest loss since Nov. 7. Japan’s Topix index slumped 2.3 percent today, the most since Aug. 7, with Honda losing 3.5 percent to 4,115 yen. Japan’s current-account deficit widened to a record in November as imports climbed, data showed today. The yen snapped a three-day gain after touching a three-week high against the dollar yesterday.

Regional Gauges

Australia’s S&P/ASX 200 Index fell 1.5 percent, while New Zealand’s NZX 50 Index slid 0.7 percent. South Korea’s Kospi index lost 0.1 percent. Singapore’s Straits Times Index dropped 0.4 percent and Taiwan’s Taiex index declined 0.2 percent.

Hong Kong’s Hang Seng Index (HSI) retreated 0.4 percent and the Hang Seng China Enterprises Index of mainland shares traded in the city fell 0.3 percent. China’s Shanghai Composite Index rose 0.9 percent.

Thailand’s SET Index added 1 percent while anti-government protesters pledged to maintain a blockade of central Bangkok until Prime Minister Yingluck Shinawatra agrees to quit, rejecting an offer to discuss a postponement of elections scheduled for Feb. 2.

U.S. Futures

Futures on the S&P 500 were little changed today. The equities gauge has dropped 1.6 percent in 2014, the worst start to a year since 2009, according to data compiled by Bloomberg.

U.S. stocks extended losses yesterday after Federal Reserve Bank of Atlanta President Dennis Lockhart said the U.S. economy is on “solid footing” and he would support continued cuts to stimulus. Lockhart doesn’t vote on policy in 2014. The Fed, which next meets Jan. 28-29, last month announced a reduction in its monthly bond-buying program, citing a recovery in the labor market.

The Asia-Pacific gauge traded at 13 times estimated earnings, compared with 15.4 for the S&P 500 and 13.8 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg. The MSCI Asia Pacific gauge rose for 11 consecutive days through Dec. 31, while the S&P 500 ended last year at a record high, having climbed 30 percent for its biggest annual rally since 1997.

“Shares rallied toward the end of last year without much of a correction and that makes me think the upside momentum for markets is limited this year,” said Kenichi Kubo, a senior fund manager at Tokio Marine Asset Management Co., which oversees about 5 trillion yen ($48 billion). “Judging from valuations, markets will struggle to rise further.”

Great Wall

Great Wall Motor tumbled 12 percent to HK$34.45. The company said it delayed the debut of its Haval H8 model for three months to fix eight deficiencies ranging from insensitive door stoppers to low steering resistance.

Dainippon Sumitomo Pharma tumbled 7.7 percent to 1,760 yen after the head of its New York-based partner Intercept Pharmaceuticals Inc. said he may need the help of a larger drugmaker to bring a liver-disease treatment to market.

Pacific Century Premium Developments Ltd., the property unit of billionaire Richard Li’s PCCW Ltd., surged 25 percent to HK$3.83 after saying it’s in advanced talks to sell an office, retail and residential complex in Beijing.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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