Asian Stocks Outside Japan Fall to One-Month Low on China Slump

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Asian stocks outside of Japan dropped for a second day, with the regional gauge heading for an almost one-month low, as Chinese equities slid with Australian banks.

Shimao Property Holdings Ltd. sank 2 percent in Hong Kong, pacing declines among Chinese developers, after the homebuilder reported lower sales for April. Commonwealth Bank of Australia tumbled 5.9 percent, its biggest drop since 2009, after reporting quarterly profit that was unchanged from a year earlier on higher expenses and bad-debt charges. Noble Group Ltd. slipped 3.9 percent in Singapore after the commodity trader reported a 30 percent slump in first-quarter net income and its investment vehicle Harbour Energy Ltd. partnered with Alfa SAB to make an offer for Pacific Rubiales Energy Corp.

The MSCI Asia Pacific excluding Japan Index decreased 1 percent to 507.87 as of 4:33 p.m. in Hong Kong, heading for its lowest close since April 9. The Shanghai Composite Index dropped 1.6 percent, taking its two-day loss to 5.6 percent amid concern gains have been excessive and a string of initial public offerings will divert funds aways from existing shares.

“Investors are just taking profits, using the IPOs as an excuse to take some money off the table,” Bernard Aw, a market strategist at IG Ltd. in Singapore, said by phone. “We’ve had a pretty strong bull run in China and we’ll probably see a modest correction in the short term. Longer-term, I still see some upside. The government is likely to support the economy through fiscal and monetary stimulus and that will also support the stock market.”

China’s bull market turned 883 days old on Tuesday, topping China’s previous record by 56 days, after a 119 percent surge in the Shanghai Composite Index since December 2012. Mainland 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.

China IPOs

The China Securities Regulatory Commission said last month it would increase the pace of new share sales. Twenty-five Chinese companies are scheduled to sell initial public offering shares from Tuesday through May 11, which may freeze 2.34 trillion yuan ($377 billion), based on the median estimate of a Bloomberg survey.

The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong slipped 0.6 percent, erasing gains of as much as 2.2 percent. The city’s benchmark Hang Seng Index declined 0.4 percent.

South Korea’s Kospi index dropped 1.3 percent as it resumed trading following a holiday. Taiwan’s Taiex index was little changed. Singapore’s Straits Times Index and New Zealand’s NZX 50 Index each fell 0.4 percent. Australia’s S&P/ASX 200 Index slumped 2.3 percent. Japanese markets are closed for a third day of holidays.

U.S. Futures

E-mini futures on the Standard & Poor’s 500 Index gained 0.2 percent. The U.S. equity benchmark index slumped 1.2 percent on Tuesday as mixed data added to U.S. economic growth concerns.

Data on Tuesday showed the U.S. trade deficit widened in March to the highest level in more than six years, fueled by a record surge in imports as commercial activity resumed at West Coast ports following a resolution of labor disputes. A separate report showed service industries such as real-estate firms and restaurants unexpectedly grew at a faster pace in April as the biggest part of the U.S. economy picked up.

Global equities are heading for their second week of losses amid heightened concern over whether Greece can meet its obligation to pay about $1.1 billion due to the International Monetary Fund by May 12. The Stoxx Europe 600 Index fell 1.5 percent on Tuesday.

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