Most Asian Stocks Fall on China Rate Concerns; Jiangxi Gains

Asia Stocks Fluctuate Ahead China Inflation Numbers Report
The MSCI Asia Pacific Index was little changed at 137.88 as of 10:20 a.m. in Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg

Most Asian stocks fell, with the regional benchmark index reversing an earlier gain, as Chinese banks led declines on renewed concern the nation will raise interest rates, hampering the global economic recovery.

China Construction Bank Corp. lost 1.6 percent in Hong Kong on concern China will raise interest rates after the nation’s inflation rate exceeded the government’s target for a fourth month. China Minsheng Banking Corp., a commercial bank operator, dropped 0.8 percent in Shanghai. Jiangxi Copper Co. jumped 3.2 percent in Shanghai as the price of copper climbed to a record high.

The Chinese government “will still need to continue monetary tightening throughout the year which will drag on stocks,” said Zhang Ling, general manager at Shanghai River Fund Management Co.

The MSCI Asia Pacific Index was little changed 137.92 as of 7:39 p.m. in Tokyo, after gaining as much as 0.4 percent and falling 0.2 percent. Almost eight stocks fell for every seven that rose. The benchmark gauge last week sank 2.7 percent after China raised borrowing costs and anti-government protests intensified in Egypt, eventually forcing President Hosni Mubarak to resign.

Hong Kong’s Hang Seng Index lost 1 percent, while China’s Shanghai Composite Index was unchanged. Japan’s Nikkei Stock Average gained 0.2 percent. Australia’s S&P/ASX 200 Index slid 0.1 percent.

China Financials Gain

Futures on the Standard & Poor’s 500 Index were little changed today. The index rose 0.2 percent yesterday in New York, buoyed by optimism about a new government in Egypt and a jump in exports in China.

Financial shares posted the biggest decline among the 10 industry groups on the MSCI Asia Pacific index.

China Construction Bank dropped 1.6 percent to HK$6.58 in Hong Kong. New World Development Co., which gets about 35 percent of its revenue from China, slid 1.1 percent to HK$13.84. China Overseas Land & Investment Ltd., controlled by the nation’s construction ministry, declined 1.9 percent to HK$13.26. China Minsheng Banking lost 0.8 percent to 5.18 yuan in Shanghai.

China’s consumer prices rose 4.9 percent last month from a year earlier, the statistics bureau said in a statement on its website today. That compared with a 4.6 percent gain in December and the median forecast of 5.4 percent in a Bloomberg News survey of 27 economists. A separate central bank report showed banks signed 1.04 trillion yuan ($158 billion) in new loans, less than forecast while still the third-highest January total.

China Tightening

China’s central bank raised borrowing costs for a third time in four months last week. The country may increase interest rates again in the first quarter because of pressure from rising consumer prices, the State Information Center said in a research report published in the China Securities Journal newspaper. China has raised the reserve ratio requirements for major banks seven times since January last year.

“We probably will get another reserve-requirement-ratio hike by the end of this month or early next month, but in terms of the frequency of tightening, it’s going to be much less than in the past three months,” Mingchun Sun, chief economist at Daiwa Capital Markets, said in a Bloomberg Television interview.

The MSCI Asia Pacific Index increased 0.2 percent through yesterday in 2011, compared with gains of 5.9 percent by the S&P 500 and 4.8 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 14 times estimated earnings on average, compared with 13.8 times for the S&P 500 and 11.4 times for the Stoxx 600.

Among other stocks that gained today, material shares posted the biggest gain among the MSCI Index’s industry groups.

Copper Reaches Record

Jiangxi Copper, the largest producer of the metal, jumped 3.2 percent to 42.34 yuan in Shanghai. Sumitomo Metal Mining Co. jumped 3 percent to 1,526 yen. Mitsubishi Corp., Japan’s largest commodities trader, rose 1.7 percent to 2,391 yen. BHP Billiton Ltd., the world’s biggest mining company, increased 0.2 percent to A$47.36 in Sydney.

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum climbed 1.8 percent yesterday, the most this month. Copper for delivery in three months increased to a record in London yesterday after a report showed that imports of the metal rose in January in China, the world’s largest copper consumer.

Copper prices are rising because “there’s strong demand for infrastructure development in emerging nations, especially in China, so related companies will get a boost,” said Mitsushige Akino, who oversees about $450 million in Tokyo at Ichiyoshi Investment Management Co.

Japan Economic Outlook

In Japan, shares also gained after the nation’s central bank raised its assessment of the economy for the first time in nine months.

Toyota Motor Corp., the world’s biggest carmaker, climbed 1 percent to 3,910 yen, the biggest single positive support for the MSCI Asia Pacific Index. Honda Motor Co., Japan’s third-largest carmaker, rose 1.2 percent to 3,685 yen. NTT DoCoMo Inc., Japan’s largest mobile-phone operator, advanced 1.5 percent to 154,200 yen.

“Data released since the start of the year have clearly indicated the economy is rebounding,” Chotaro Morita, chief strategist at Barclays Capital Japan Ltd. in Tokyo, said before the BOJ’s announcement. “It’s natural BOJ officials would reveal their confidence.”

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