Asian Stocks Fall to One-Month Low as Chinese Shares Extend Rout

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Asian stocks fell, with the regional benchmark heading for a one-month low, amid concern U.S. growth is weakening. Chinese equities neared a correction after Morgan Stanley downgraded the shares for the first time in seven years.

Nissan Motor Co., a carmaker that gets about 43 percent of revenue in North America, slipped 1.6 percent as shares resumed trading in Tokyo after holidays. Origin Energy Ltd. dropped 2.7 percent in Sydney as the group led regional declines after a rally in oil shares stalled on prospects for more output. Evergrande Real Estate Group Ltd. tumbled 8.2 percent in Hong Kong after Standard & Poor’s cut its credit rating on the Chinese developer on concern about heightened refinancing risk.

The MSCI Asia Pacific Index slid 1.2 percent to 150.51 as of 4:04 p.m. in Hong Kong. The regional measure is heading for a second weekly retreat, after reaching a seven-year high last month, with Chinese shares slumping on concern recent gains have been excessive. The Standard & Poor’s 500 Index fell 0.5 percent on Wednesday as weaker-than-estimated U.S. data added to concern about slowing growth, while yields on 10-year U.S. Treasuries climbed to a two-month high.

“The U.S. economy was expected to bottom out in March and recover in the second quarter, but so far the figures for April have been poor,” said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo. “Sentiment could sour even more depending on the April payrolls report. Risk-off moves could intensify if the U.S. economic situation is deemed weak.”

Overheated Valuation

More than $2 trillion has been wiped from global equity and debt markets in less than two weeks amid speculation over U.S. interest rates and concern China’s share market is overheated. Federal Reserve Chair Janet Yellen said Wednesday that she sees potential danger in the rich valuations of both debt and stocks.

The S&P 500 traded at 17.6 times estimated earnings on Wednesday, compared with 14.5 times for the MSCI Asia Pacific Index and 17.3 times for the Shanghai Composite Index, data compiled by Bloomberg show.

The Shanghai Composite Index dropped 2.8 percent on Thursday, taking its loss from the April 27 peak to 9.2 percent, near the 10 percent decline traders consider a correction. Morgan Stanley downgraded Chinese stocks to equalweight on Thursday, citing the weakest corporate profits since 2009.

“China is no longer going to outperform other emerging markets,” Jonathan Garner, the chief Asia and emerging market strategist at Morgan Stanley, said in a phone interview Thursday. “We’d like to recommend taking some profits.”

Regional Gauges

Japan’s Topix index lost 0.7 percent. The Hang Seng China Enterprise Index of mainland stocks traded in Hong Kong slid 1.6 percent, while the city’s benchmark Hang Seng Index sank 1.3 percent. South Korea’s Kospi index fell 0.7 percent. Taiwan’s Taiex index declined 1.2 percent. Singapore’s Straits Times Index fell 0.9 percent. New Zealand’s NZX 50 Index declined 0.6 percent.

Australia’s S&P/ASX 200 Index decreased 0.8 percent after sliding 2.3 percent on Wednesday, the biggest drop in two years. National Australia Bank Ltd. was halted from trade as the lender announced plans to raise about A$5.5 billion ($4.4 billion) with a rights issue.

E-mini futures on the S&P 500 lost 0.2 percent today. Reports Wednesday showed productivity dropped in the first quarter and companies added the fewest number of workers in more than a year last month.

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