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Asian Stocks Snap Two-Day Rally on Greece, Japan Exports

Pedestrians are reflected on an electronic stock board outside a securities firm in Tokyo, Japan. Photographer: Tomohiro Ohsumi/Bloomberg
Pedestrians are reflected on an electronic stock board outside a securities firm in Tokyo, Japan. Photographer: Tomohiro Ohsumi/Bloomberg

May 23 (Bloomberg) -- Asian stocks fell, dragging the regional benchmark index to a five-month low, as concerns mounted Europe’s debt crisis is worsening and the Bank of Japan refrained from deploying further monetary stimulus, dimming the outlook for exporters.

Cosco Pacific Ltd., which operates container facilities at Greece’s Piraeus port, fell 4 percent in Hong Kong. Mitsui & Co., a Japanese trading company, slid 1.6 percent after the nation’s trade data missed estimates. Quanta Computer Inc. led computer makers lower in Taiwan, dropping 4.2 percent, after bellwether Dell Inc. forecast slower sales. Shanghai Pharmaceuticals Holding Co. slumped 24 percent in Hong Kong on a report regulators are investigating the drugmaker for suspected financial fraud.

The MSCI Asia Pacific Index fell 1.6 percent to 111.91, the lowest level since Dec. 20, as of 7:37 p.m. in Tokyo. Six stocks declined for each one that gained. All 10 industry groups on the measure slid. The gauge has dropped 13 percent from this year’s high on Feb. 29 as political gridlock in Greece following an inconclusive ballot this month revived concerns the nation will abandon bailout conditions and exit the euro zone. Greece is scheduled to have a second election on June 17.

“If Greece does get out of the euro, then that will be a significant event for the market,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages about $150 billion. The market wants to see “a political resolution out of Europe that will either prevent Greece from exiting or, if they do exit, will put in place a strong firewall to prevent contagion effects from going to other countries.”

BOJ on Hold

Japan’s Nikkei 225 Stock Average fell 2 percent, extending losses as the yen rose after the Bank of Japan refrained from further monetary easing today. Trading volume was 13 percent above the 30-day average. The central bank last month increased its asset-purchase program and extended the maximum maturity of government debt it buys in the program to three years from two.

“No action was the consensus this time, yet still I heard some people expected something out of the BOJ,” said Masaaki Kanno, chief economist at JPMorgan Securities Japan Co. in Tokyo and a former BOJ official. “If the European situation gets worse, buying longer-term debt won’t be enough. They may have to move in June depending on circumstances.”

Hong Kong’s Hang Seng Index dropped 1.3 percent. The Shanghai Composite Index, which tracks the larger of China’s stock exchanges, lost 0.4 percent.

Australia’s S&P/ASX 200 fell 1.3 percent. South Korea’s Kospi Index lost 1.1 percent and Taiwan’s Taiex Index dropped 1.8 percent. Singapore’s Straits Times Index slid 1.5 percent.

Cosco, Nintendo

The Standard & Poor’s 500 Index added 0.1 percent in New York yesterday. Futures on the index lost 0.8 percent today as European Union leaders prepared to meet in Brussels to discuss how to revive growth in the region.

Companies that do business in Europe fell. Cosco Pacific lost 4 percent to HK$9.09 in Hong Kong. Nintendo Co., a maker of video-game players that depends on Europe for a third of its sales, fell 2.3 percent to 9,100 yen in Osaka.

Stocks also fell as Japan’s finance ministry reported exports rose a less-than-estimated 7.9 percent in April from a year earlier, while imports gained 8 percent, widening the trade deficit to 520.3 billion yen ($6.5 billion). Mitsui & Co. slid 1.6 percent to 1,124 yen, and Mitsubishi Corp., a Japanese trading company, dropped 1.7 percent to 1,552 yen.

Fitch Ratings cut Japan’s foreign-currency rating by two levels to A+ yesterday with a negative outlook.

China Expectations

Asian equities rose yesterday for a second day on speculation China and Europe will do more to drive growth. Premier Wen Jiabao said over the weekend that China will focus more on spurring the economy. The nation’s central bank may cut interest rates if data for May indicate its economic slowdown is accelerating, China Securities Journal reported, citing unidentified people.

“We are seeing a change in rhetoric,” said Russell Investment’s Pease. “The Chinese government sees the economy continuing to weaken much more through the June quarter, and they are prepared to step in with more stimulus measures.”

Computer makers slid in Taiwan after Dell forecast lower-than-estimated second-quarter revenue, citing competition and demand challenges. Quanta Computer declined 4.2 percent to NT$77.80 in Taipei. Asustek Computer lost 5.3 percent to NT$283.50, and Compal Electronics Inc. dropped 2.5 percent to NT$31.20.

Among other stocks that fell, Shanghai Pharmaceuticals plunged 24 percent to HK$9.11 in Hong Kong after the 21st Century Business Herald reported the China Securities Regulatory Commission and the Hong Kong Stock Exchange are investigating the company for suspected financial fraud.

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

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

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