Asian Stocks Outside Japan Drop on China, Fed Tightening Concern

Asian stocks outside Japan fell this week, with a gauge of Hong Kong-listed Chinese companies erasing its gain for the year, amid concern the world’s two largest economies may tighten monetary policy.

Guangzhou R&F Properties Ltd., a builder in the southern Chinese city, dropped as China stepped up property curbs. Man Wah Holdings Ltd., a sofa maker that relies on the U.S. for more than half its sales, slid 4.9 percent as the Federal Reserve debated the duration of record stimulus. Bridgestone Corp., a tire maker that gets most of its revenue outside Japan, surged 13 percent in Tokyo, after Group of 20 finance chiefs signaled Japan has scope to keep stimulating its stagnant economy.

The MSCI Asia Pacific excluding Japan declined 0.6 percent to 478.96 this week as some markets reopened from the Lunar New Year holiday, paring the previous week’s 1.2 percent gain and trimming its advance for the month to 0.2 percent. The MSCI Asia Pacific Index, which includes Japanese shares, jumped 0.5 percent to 133.57.

“In general, the big picture is much better than last year,” said Grace Tam, Hong Kong-based global market strategist at JPMorgan Asset Management Ltd., which oversees about $1.3 trillion globally. “In the medium term, we are still pretty positive on equities because monetary policies are pretty easy around the world.”

The MSCI Asia Pacific Index gained about 3.2 percent this year through Feb. 22 amid signs China’s economy is recovering and as Japanese stocks surged on speculation Prime Minister Shinzo Abe will pursue more aggressive stimulus policies.

Relative Value

Stocks on Asia’s benchmark index were valued at about 14.8 times estimated earnings on average, compared with about 13.6 times for the Standard & Poor’s 500 Index and 12.2 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

China’s Shanghai Composite Index slumped 4.9 percent, the steepest weekly retreat in five months, while Hong Kong’s Hang Seng China Enterprises Index dropped 4.5 percent, wiping out its gain for the year.

Hong Kong’s Hang Seng Index tumbled 2.8 percent, with measures of property developers and banks having the biggest declines.

Japan’s Nikkei 225 Stock Average gained 1.9 percent this week and the broader Topix Index jumped 2.2 percent. The yen weakened against the dollar at the start of the week after the G-20 stepped back from censuring Japan over its currency policy. A weaker yen boosts overseas income at Japanese companies when converted into their home currency.

Australia’s S&P/ASX 200 Index slipped 0.3 percent this week, while Taiwan’s Taiex Index retreated 0.7 percent.

Samsung Increase

South Korea’s Kospi Index climbed 1.9 percent after central bank Governor Kim Choong Soo said the improved global outlook raises the odds that South Korea will beat growth targets. Samsung Electronics Co., the nation’s biggest exporter of consumer electronics and the most heavily weighted stock on the measure, rose 2.1 percent to 1.53 million won.

The S&P 500 Index fell 0.3 percent this week. The Federal Open Market Committee was divided about the strategy behind a program of buying bonds, known as quantitative easing, until there is “substantial” improvement in a U.S. labor market, minutes of it Jan. 29-30 meeting showed.

Chinese developers declined after Premier Wen Jiabao called for local authorities to “decisively” curb real-estate speculation and take steps to rein in the property market.

Guangzhou R&F Properties slid 4.7 percent to HK$12.72 while Country Garden Holdings Co., a based in China’s southern province of Guangdong, lost 4 percent to HK$3.83.

Belle Plunge

Belle International Holdings Ltd., China’s biggest footwear retailer, slumped 19 percent to HK$14.46 in Hong Kong after saying 2012 profit is likely to be at the lower end of analyst estimates. It was the biggest decline on the MSCI Asia Pacific Index.

Measures of energy and material companies had the biggest drops among the 10 industry groups in the MSCI Asia Pacific excluding Japan Index after metal and oil prices declined. Oil for April delivery slid 2.8 percent this week in New York.

BHP Billiton Ltd., Australia’s biggest oil producer, dropped 4.5 percent to A$36.87 this week in Sydney. Rio Tinto Group, the second-largest mining company, retreated 4.9 percent to A$66.72. China Shenhua Energy Co., China’s No. 1 producer of the fuel, decreased 6.5 percent to HK$28.80.

Currency Comment

Japanese shares rallied after G-20 finance ministers and central bankers ended talks in Moscow on Feb. 16 pledging not to “target our exchange rates for competitive purposes,” without singling out Japan. The yen has tumbled almost 14 percent against the dollar in three months.

Shares rose even after data showed the nation’s trade deficit swelled to a record 1.63 trillion yen ($17.4 billion) on energy imports and a weaker yen.

Bridgestone Corp., the world’s biggest tire maker, surged 13 percent to 2,805 yen after saying profit will rise 37 percent this year. Canon Inc. gained 1.5 percent to 3,315 yen this week in Tokyo, while Nintendo Co., the world’s largest maker of game consoles, rose 5.4 percent to 8,930 yen in Osaka.

Japanese power providers rallied after the Nikkei newspaper reported Prime Minister Abe will inform U.S. President Barack Obama during their Feb. 22 meeting that Japan will reconsider the previous government’s commitment to abandon nuclear power.

Tokyo Electric Power Co., owner of the reactors at the center of the 2011 nuclear disaster, jumped 6.8 percent to 205 yen. Shikoku Electric Power Co., which expects to restart a reactor at its nuclear plant in July, climbed 8 percent to 1,134 yen.

AU Optronics Corp., a display maker, surged 15 percent to NT$13 in Taipei, resuming trading from a holiday, after its January sales rose 32 percent from a year earlier.

The Taiwanese company had the biggest advance on the Asia-Pacific measure after Philippine fast-food chain Jollibee Foods Corp., which jumped 15 percent after reporting a 15 percent gain in net income in 2012.

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