Asia Stocks Fall This Week, H-Shares Enter Bear Market

Asia’s benchmark stock index fell the past five days to the biggest two-week loss since June as Chinese shares traded in Hong Kong entered a bear market and the Federal Reserve gave a timetable for raising interest rates.

Uni-President China Holdings Ltd. (220) slumped 16 percent in Hong Kong, leading the weekly drop on Asia’s regional gauge, after the instant-noodle maker’s 2013 profit missed analyst projections. Newcrest Mining Ltd. (NCM), Australia’s No. 1 gold producer, plunged 13 percent after bullion dropped this week for the first time since January. Li & Fung Ltd., world’s biggest supplier of clothes and toys, surged 25 percent in Hong Kong after saying it will spin off a branded business.

The MSCI Asia Pacific Index fell 1.2 percent this week to 132.77, bringing its two-week drop to 4.6 percent. Information technology shares and utilities led declines. Data this week showed Japan’s trade deficit exceeded estimates in February and growth in China’s new-home prices slowed last month. The regional measure’s 6.1 percent decline this year pushed valuations on the gauge to 12.5 times estimated earnings. That compares with a multiple of about 15.9 for the Standard & Poor’s 500 Index and 14.4 for the Stoxx Europe 600 Index.

“China’s latest figures have been disappointing, people are worried about the interest-rate hike in the U.S., and they are also revising their outlook on Abenomics in Japan,” said Benjamin Tam, a Hong Kong-based portfolio manager at IG Investment Ltd., which oversees about $1.5 billion. “Markets will remain weak in the near term.”

Bear Market

The Hang Seng China Enterprises Index (HSCEI) of mainland stocks traded in Hong Kong entered a so-called bear market on March 20, after sliding 20 percent from its Dec. 2 high, amid deepening concern the world’s second-largest economy is slowing. The measure rebounded yesterday to post a 1.4 percent gain for the week, while the city’s benchmark Hang Seng Index slid 0.5 percent. China’s yuan dropped as the central bank doubled the currency’s trading limits versus the dollar.

China’s Shanghai Composite Index added 2.2 percent. Goldman Sachs Group Inc. cut its first-quarter growth outlook for China this week to 5 percent from 6.7 percent, citing disappointing trade and consumption data. The nation’s official 2014 growth target is 7.5 percent, which would be the slowest pace since 1990.

Debt Woes

Closely held developer Zhejiang Xingrun Real Estate Co. was said to have collapsed with $567 million of debt, adding to concern of strains in the nation’s real-estate sector and financial system. Zhejiang Xingrun has not declared bankruptcy and the government is trying to help solve the problem, Xu Mengting, director of the news office of the Fenghua city government, said in an interview yesterday. This comes less than two weeks after Shanghai Chaori Solar Energy Science & Technology Co. failed to repay its debt, the first onshore corporate-bond default.

Japan’s Topix index slid 1.6 percent for the week, which was shortened by a holiday yesterday. The Nikkei 225 Stock Average retreated 0.7 percent, with Tokyo Electric Power Co. and Denso Corp. leading declines, falling 8.5 percent and 7.9 percent respectively. Exporters also dropped, with Toyota Motor Corp. sliding 2.3 percent and Honda Motor Co. losing 2 percent.

South Korea’s Kospi index fell 2.8 percent, while New Zealand’s NZX 50 Index added 0.9 percent.

Australia’s S&P/ASX 200 Index advanced 0.2 percent. Singapore’s Straits Times Index rose 0.3 percent and Taiwan’s Taiex index lost 1.3 percent.

U.S. Rates

Fed Chair Janet Yellen said the U.S. central bank’s stimulus program may end this fall, with benchmark interest rates rising six months later. The Fed said on March 19 its key rate, currently near zero, would be 1 percent by the end of 2015 and 2.25 percent a year later.

Uni-President dropped 16 percent in Hong Kong after its full-year profit of 916.4 million yuan ($147 million) missed analyst estimates of 966.8 million yuan. Aeon Co. fell 6.1 percent in Tokyo this week after Japan’s biggest retailer posted profit that trailed projections.

New World Development Co. (17), a builder controlled by billionaire Cheng Yu-tung, lost 13 percent after investment banks including Credit Suisse Group AG downgraded the shares following the company’s announcement last week it was taking its property unit private for HK$18.6 billion ($2.4 billion).

Newcrest Mining slumped 13 percent in Sydney, while Zhaojin Mining Industry Co. (1818) slipped 13 percent in Hong Kong after gold prices capped the first weekly decline since Jan. 31.

Among stocks that rose, SoftBank Corp. (9984), a Japanese mobile phone carrier that owns part of Alibaba Group Holding Ltd., jumped 6.3 percent after China’s biggest e-commerce company kicked off the process for what may be the largest U.S. initial public offering in two years.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net John McCluskey, Jim McDonald

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