Most Asian Stocks Decline on Cyprus Concern, China Curbs
Most Asian stocks dropped on concern Cyprus’s bank-restructuring plan will be used for other European nations, imperiling depositors and bondholders, and on a report China is stepping up property curbs.
Konica Minolta Holdings Inc. (4902), a lensmaker that gets 28 percent of sales from Europe, sank 6 percent in Tokyo. Country Garden Holdings Co., the Chinese developer controlled by billionaire Yang Huiyan, fell 1.7 percent on a report that banks have started to control the scale of loans for mainland real estate developments. Hong Kong’s Hang Seng Index (HSI) rallied, led by exporters, in the final hour of trading as European stocks opened higher.
The MSCI Asia Pacific Index was little changed 135.55 as of 7:08 p.m. in Tokyo, with five companies falling for every four that rose. Japanese shares pared losses earlier as new Bank of Japan Governor Haruhiko Kuroda said he’ll consider extending bond maturities.
“Cyprus doesn’t help in the sense that reminds us the EU leadership is basically improvising from solution to solution,” said Mikio Kumada, a Hong Kong-based global strategist for LGT Capital Management, which oversees more than $25 billion. “The Chinese government doesn’t have a lot of room to relax because if it does now, it will just create a bigger mess for itself. It’s stuck in that sense.”
The MSCI Asia Pacific Index gained 4.9 percent this year through yesterday on improving economic data from the U.S. and speculation that Japan will deploy more stimulus.
The Asian benchmark traded at 15 times estimated earnings on average, compared with 14 times for the Standard & Poor’s 500 Index and 12.6 times for the Stoxx Europe 600 Index.
Japan’s Topix Index slid 0.3 percent, paring declines as Kuroda told lawmakers he’ll consider buying more government bonds with longer maturities and vowed to consider scrapping a self-imposed rule limiting the scale of asset buying. The Nikkei 225 Stock Average slipped 0.6 percent.
Australia’s S&P/ASX 200 fell 0.8 percent. China’s Shanghai Composite Index dropped 1.3 percent. Hong Kong’s Hang Seng Index rose 0.3 percent, erasing earlier losses of as much 0.7 percent.
South Korea’s Kospi Index advanced 0.3 as data showed the nation’s economy expanded less than previously estimated in the fourth quarter, underscoring the case for stimulus by the new government. Singapore’s Straits Times Index gained 0.6 percent, the most since March 6.
Asian shares rose yesterday as Cyprus, the euro-area’s third-smallest economy, agreed the terms for a 10 billion-euro ($13 billion) bailout. Cypriot President Nicos Anastasiades agreed to shut the country’s second-largest bank, and will tax deposits of more than 100,000 euros.
Futures on the S&P 500 (SPXL1) rose 0.3 percent today. The index fell 0.3 percent in New York yesterday, reversing earlier gains, as Reuters reported that Dutch Finance Minister Jeroen Dijsselbloem said the Cyprus bailout should be viewed as a template for solving banking problems in the euro region.
“Equity markets have had a very strong run, reflecting the improved economic conditions and earnings, but those gains will need to be consolidated,” said Prasad Patkar, portfolio manager who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “Cyprus was the catalyst for that consolidation to commence.”
Companies that do business in Europe fell, Konica Minolta sank 6 percent 705 yen in Tokyo. Sony Corp. (6758), a Japanese exporter of consumer electronics that gets a fifth of its revenue in Europe, dropped 2.7 percent to 1,666 yen. HSBC Holdings Plc (5), Europe’s biggest lender, lost 0.5 percent to HK$82.90 after retreating as much as 1.6 percent.
Mainland developers fell after China Securities Journal reported that many banks have begun to control the scale of loans for real estate development to coordinate with new property curbs.
Country Garden slipped 1.7 percent to HK$3.99. Agile Property Holdings Ltd. (3383), a Chinese developer partly owned by JPMorgan Chase & Co., dropped 1.5 percent to HK$9.03. Guangzhou R&F Properties Co. fell 0.8 percent to HK$12.68.
Uni-President China Holdings Ltd. slumped 15 percent to HK$8.59, the most since October 2008 and the biggest decline on the MSCI Asia Pacific Index. The unit of Taiwan’s largest food processor reported a fiscal-year net profit of 856 million yuan ($138 million), compared with an estimate of 903 million yuan profit.
Exporters to the U.S. advanced ahead of a report that’s expected to show orders for durable goods rebounded last month. Li & Fung Ltd. (494), the supplier of toys and clothes to retailers including Wal-Mart Stores Inc., rose 1.3 percent to HK$10.94 in Hong Kong. Yue Yuen Industrial (Holdings) Ltd., a maker of shoes for Nike Inc. and Adidas AG, climbed 2.6 percent to HK$25.35. LG Display Co., the world’s second-biggest maker of flat panels, added 1.3 percent to 32,000 won in Seoul.
Softbank Corp., Japan’s third-largest wireless carrier, added 2.5 percent to 3,975 yen after saying it will spend as much as 25 billion yen ($266 million) to raise its stake in Gungho Online Entertainment Inc. to tap demand for mobile games. Gungho fell 4.6 percent to 4.15 million yen in Osaka.
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