Asian stocks outside of Japan dropped, with a regional equity gauge heading for a two-week low, as Chinese shares slumped on concern recent gains were excessive and that new share sales will divert funds from existing equities.
Guangzhou R&F Properties Co. tumbled 5.5 percent in Hong Kong as Chinese property developers retreated. Alibaba Pictures Group Ltd. sank 5.2 percent after actress Zhao Wei and her husband sold shares in the film maker. Far East Horizon Ltd. slumped 9.8 percent after KKR & Co. offered to sell some of its shares in the leasing firm at a discount. Australia & New Zealand Banking Group Ltd. jumped 2.7 percent in Sydney after the lender posted a record first-half cash profit.
The MSCI Asia Pacific excluding Japan Index fell 0.6 percent to 511.86 as of 4:05 p.m. in Hong Kong, heading for its lowest close since April 20. Markets in Japan, South Korea and Thailand are closed Tuesday for holidays. China’s Shanghai Composite Index tumbled 4.1 percent, the most since Jan. 19, to lead declines among Asian indexes. The gauge soared 112 percent over the past 12 months on optimism the government will add economic stimulus.
“Given that the Chinese market has doubled in one year, a pullback isn’t unexpected,” Nicholas Teo, an analyst at CMC Markets in Singapore, said by phone. “The IPO calendar is heating up and that’s going to pull money away from the secondary market. It’s hard to have a strong buy conviction at this stage. We are seeing some weak economic numbers and bond yields in the U.S. are starting to move up.”
Twenty-five companies are scheduled to sell initial public offering shares from Tuesday through May 11, which may freeze 2.34 trillion yuan ($376 billion), based on the median estimate of a Bloomberg survey.
China’s stocks will be hit by a 20 percent correction, Mark Mobius, who oversees about $40 billion as the executive chairman of Templeton Emerging Markets Group, said on Bloomberg Television in Hong Kong on Tuesday. The upside for shares will be limited as IPOs draw out money, he said. The China Securities Regulatory Commission said last month it would increase the pace of new share sales.
The Hang Seng China Enterprises Index on mainland stocks traded in Hong Kong dropped 2.6 percent, while the city’s benchmark Hang Seng Index slipped 1.3 percent. Taiwan’s Taiex index lost 0.3 percent. Singapore’s Straits Times Index slid 0.5 percent. New Zealand’s NZX 50 Index advanced 0.4 percent.
Australia’s S&P/ASX 200 Index closed little changed after a volatile afternoon session as the nation’s central bank cut interest rates to a fresh record low, while saying there are signs of improving household spending. The stock measure jumped as much as 1.1 percent after the decision, before reversing gains and sliding 0.4 percent. The cut was predicted by most economists surveyed by Bloomberg.
E-mini futures on the Standard & Poor’s 500 Index fell 0.2 percent on Tuesday. The underlying U.S. equity benchmark index neared a record in New York on Monday as earnings from Comcast Corp. and Berkshire Hathaway Inc. beat estimates and data showed strength in the U.S. economy.