China Stocks Lead Asia Lower as Foreign Investment Drops

Asian stocks fell for a fourth day, led by the biggest drop in almost a month for Chinese shares, after foreign direct investment in the world’s second-largest economy unexpectedly declined.

Industrial & Commercial Bank of China Ltd. retreated 1.3 percent in Shanghai and SoftBank Corp. (9984) fell 2.5 percent in Tokyo, with financial and telecommunications companies posting the largest declines of the regional index’s 10 industry groups. New World China Land Ltd. plunged 17 percent in Hong Kong after a $2.4 billion plan by New World Development Ltd. to privatize the China property business collapsed.

The MSCI Asia Pacific Index (MXAP) declined less than 0.1 percent to 143.66 at 6:33 p.m. in Hong Kong. The Shanghai Composite Index dropped 0.9 percent, its largest retreat since May 19.

“The slowdown in China is the one thing that could really disrupt these markets,” Leonard Tannenbaum, chief executive officer of Fifth Street Management LLC, said in a Bloomberg TV interview from Tokyo. “Money is very tight, the banks continue to tighten and that’s going to slow the growth rate.”

The Asia-Pacific measure last week touched the highest level since June 2008 amid improving U.S. economic data and indications Chinese growth is stabilizing. Federal Reserve policy makers start a two-day policy meeting today after data yesterday showed American manufacturing is expanding.

Regional Gauges

Hong Kong’s Hang Seng Index slid 0.4 percent. Non-financial foreign direct investment in China fell 6.7 percent to $8.6 billion in May from a year earlier, the Ministry of Commerce said today. The median forecast in a Bloomberg survey had called for a 3.2 percent gain.

Singapore’s Straits Times Index declined 0.5 percent and Australia’s S&P/ASX 200 Index fell 0.2 percent. Japan’s Topix index rose 0.3 percent as the yen weakened to 101.98 per dollar, with gains limited as Softbank declined 2.5 percent to 7,483 yen. South Korea’s Kospi index and Taiwan’s Taiex index both rose 0.4 percent. New Zealand’s NZX 50 Index advanced 0.3 percent, while India’s S&P BSE Sensex climbed 1.3 percent.

Alibaba Group Holding Ltd., a Chinese e-commerce company planning to list in New York, said in a revision to its initial public offering prospectus that revenue growth slowed to 39 percent in the fourth quarter, from 71 percent in the same period a year earlier. Operating margins also narrowed to 45 percent from 51 percent in the prior year, the filing showed.

Fed Stimulus

The Fed will this week reduce its stimulatory asset-purchase program by $10 billion for a fifth straight month, to $35 billion, according to the median of 43 economists’ estimates compiled by Bloomberg. Analysts predict data today will show U.S. consumer-price growth held at 2 percent in May from a year earlier, while the number of new homes started probably dropped to a 1.03 million annualized rate from 1.07 million in April.

The International Monetary Fund yesterday cut its economic growth forecast for the U.S. in 2014. The IMF now sees expansion of 2 percent, down from an April estimate of 2.8 percent, while it left its 2015 prediction unchanged at 3 percent. The lender said it doesn’t expect the U.S. will see full employment until the end of 2017, amid low inflation.

Asian shares dropped the past three days amid concern escalating violence in Iraq would push oil prices higher.

Iraq Violence

In Iraq, Kurdish troops are defending the fourth-largest oilfield against Islamist militants. The U.S. is considering sending special forces, according to an Associated Press report citing unidentified officials. West Texas Intermediate jumped 4.1 percent last week.

Financial firms slid today. ICBC retreated 1.3 percent to 3.73 yuan. Mitsubishi UFJ Financial Group Inc. fell 0.8 percent to 609 yen.

New World China Land slumped 17 percent to HK$5.30. New World Development Co., controlled by the family of Hong Kong billionaire Cheng Yu-tung, proposed in March to buy shares of the China unit for HK$6.80 each, a 32 percent premium to the last price before the offer.

Konica Minolta Inc. gained 6.2 percent to 930 yen, its biggest rally since January, after JPMorgan Chase & Co. raised its rating on the Japanese office-equipment maker to overweight from neutral, meaning investors should buy the shares.

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

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

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