Asian Stocks Outside Japan Drop as China CPI Accelerates

Asian stocks dropped, with a regional gauge that excludes Japan heading for its first decline in three days, amid overheating signs as China’s inflation accelerated. Japanese shares rallied after the Cabinet approved stimulus measures.

Agile Property Holdings Ltd. led Chinese developers lower, falling 3.1 percent in Hong Kong. Sydney Airport slid 5.5 percent after Morgan Stanley said the operator of Australia’s biggest airstrip may sell shares. Sharp Corp. jumped 13 percent in Tokyo after the Mainichi newspaper reported the television maker will record an operating profit. Sony Corp. and Canon Inc. both gained more than 1 percent as a weaker yen boosted the earnings outlook for Japanese exporters.

The MSCI Asia Pacific Excluding Japan Index slipped 0.3 percent to 476.07 as of 7:22 p.m. Tokyo time. The gauge’s 14-day relative strength index, which tracks trading momentum, reached 71.8 yesterday. Some investors view a reading above 70 as a sign the market has risen too quickly. The 14-day RSI for the MSCI Asia Pacific Index, which includes Japan, stayed above 70 this week after capping a seven-week rally last week as U.S. Congress approved a budget deal.

“The market looks overbought in the short term but I don’t think its going to collapse,” said Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management Ltd., which oversees about $50 billion globally. “Economic data has been quite supportive. We’re looking at a mild recovery for the Chinese economy and it looks like China’s inflation rate has bottomed.”

China Inflation

China’s Shanghai Composite Index dropped 1.8 percent as the nation’s inflation accelerated faster than estimated, limiting room for easing. Consumer prices rose 2.5 percent in December from a year earlier, the National Bureau of Statistics said today in Beijing. That compares with the 2.3 percent median estimate of 42 analysts surveyed by Bloomberg News and a 2 percent pace in November.

Hong Kong’s Hang Seng Index fell 0.4 percent, while Australia’s S&P/ASX 200 Index lost 0.3 percent. South Korea’s Kospi Index dropped 0.5 percent after the nation’s central bank left its key rate unchanged as expected.

The benchmark MSCI Asia Pacific, which headed for a weekly advance of less than 0.1 percent, climbed to its highest level since August 2011 yesterday as China’s exports beat forecasts. Shares on the gauge traded at 14.2 times estimated earnings, compared with 13.3 times for the Standard & Poor’s 500 Index and 12 times for the Europe Stoxx 600 Index.

Japan’s Nikkei 225 Stock Average advanced 1.4 percent, posting its ninth week of gains and the longest winning streak since December 1988, as the yen fell and Prime Minister Shinzo Abe announced a 10.3 trillion yen ($116 billion) stimulus package to help accelerate a recovery from a recession.

Weaker Yen

The yen touched 89.35 versus the dollar, the weakest level since June 2010, on speculation the Bank of Japan will cooperate with Abe’s government to ramp up monetary easing. Japan’s currency extended declines after the nation posted wider-than-expected current account and trade deficits.

“There is significant scope for the equity market to outperform in 2013 if Abe’s promised reforms are undertaken,” said Sean Darby, chief global equity strategist at Jefferies Group Inc. in Hong Kong. “A weaker yen would be beneficial for export-led sectors such as the automobile, electronics and machinery sectors.”

Futures on the S&P 500 slipped 0.1 percent. The gauge yesterday advanced to the highest level in five years, led by a rally in financial shares.

China Property Shares

Chinese developers fell in Hong Kong. Agile Property, whose chairman was charged this week with indecent assault, dropped 3.1 percent to HK$11.24. China Overseas Land & Investment Ltd., the biggest Chinese developer listed in the city, lost 1 percent to HK$24.60. Guangzhou R&F Properties Co. declined 3 percent to HK$14.10.

Genting Malaysia Bhd., owner of the Resorts World Casino New York City, slipped 3.2 percent to 4.63 ringgit in Kuala Lumpur after Citigroup Inc. said plans by New York to expand casino gambling in the state may hurt the Southeast Asian gaming company.

Sydney Airport sank 5.5 percent to A$3.08 after Morgan Stanley said it may have to sell shares to help finance about A$3.6 billion ($3.8 billion) of spending needs.

United Breweries Ltd. decreased 4.6 percent to 817 rupees in Mumbai after the Economic Times reported the Securities & Exchange Board of India may ask Diageo Plc, the maker of Johnnie Walker Scotch, to rework its proposed $2 billion acquisition of a 53.4 percent stake in the Indian distiller.

Sharp Profit

Sharp, Japan’s biggest maker of liquid-crystal displays, climbed 13 percent to 330 yen on a Mainichi report that the company expects its first operating profit in five quarters, without saying where it got the information. Sharp boosted sales in each of the four months from a year earlier on recovering demand for televisions.

Japanese stocks advanced on a weaker yen. Sony, the nation’s biggest exporter of consumer electronics, climbed 1.6 percent to 983 yen. Canon, which generates about 80 percent of its sales from overseas, gained 2.3 percent to 3,370 yen.

Infosys Ltd. soared 17 percent to 2,705 rupees in Mumbai for the biggest advance on the MSCI Asia Pacific. India’s second-largest software exporter raised its full-year sales forecast about 3 percent to 407.5 billion rupees ($7.5 billion) as it reported better-than-expected profit for the third quarter.

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