Asian Stocks Decline as China Tightens Mortgage RulesJonathan Burgos and Toshiro Hasegawa
Asian stocks dropped, with the regional benchmark index heading for its second day of declines, after China tightened mortgage rules to cool the property market. Japanese shares pared gains as trading of Nikkei 225 Stock Average derivatives was disrupted.
China Resources Land Ltd. slumped 8.9 percent in Hong Kong, pacing declines among Chinese real-estate companies. Noble Group Ltd., Asia’s biggest commodity trader by sales, dropped 3 percent in Singapore after its equity rating was downgraded at Citigroup Inc. Mitsubishi Estate Co., Japan’s No. 1 developer by market value, rose 3.6 percent after Bank of Japan nominee Hiruhiko Kuroda said he will do whatever it takes to end deflation.
The MSCI Asia Pacific Index fell 0.8 percent to 133.59 as of 7:34 p.m. in Tokyo, with about three shares falling for every two that rose. The gauge last week capped a four-month advance, the longest such winning streak since September 2009, as central banks around the world maintained accommodative monetary policies and amid signs the U.S. economy is recovering. China called for higher down payments and interest rates for second-home mortgages in cities with “excessively fast” price gains.
“The transition from loose to normal monetary policy will be one of the issues that markets are going to have to deal with,” Daniel Farley, senior managing director at StateStreet Global Advisors, which manages an equity portfolio of $85 billion globally, said in an interview in Singapore. “That’s a great risk. Central banks haven’t gotten the timing perfect.”
China’s Shanghai Composite Index dropped 3.7 percent, the lowest close since Jan. 11. The CSI 300 Index of shares in Shanghai and Shenzhen dropped 4.6 percent, the most since November 2010.
A purchasing managers’ index released yesterday showed China’s services industries expanded at the slowest pace in five months, while a government manufacturing PMI gauge released last week missed estimates.
Chinese legislators begin an annual conference tomorrow where the government usually announces yearly economic targets. The government also called for a 20 percent tax on second-hand home sales to be strictly enforced.
“People are a little bit worried that instead of good policies we might see more of these strict policies from the National People’s Congress,” said Jackson Wong, vice president at Hong Kong-based brokerage Tanrich Securities Co. The property measures “indicate the central government is not hesitant to combat any bubbles. The main concern would be the property tax on sales, which is 20 percent. That’s a big number and would absolutely damage the overall Chinese property market.”
Hong Kong’s Hang Seng Index slipped 1.5 percent. Taiwan’s Taiex Index declined 1.2 percent, while South Korea’s Kospi Index fell 0.7 percent. Australia’s S&P/ASX 200 Index declined 1.5 percent.
Japan’s Nikkei 225 added 0.4 percent, paring a gain of as much as 1.4 percent. Shares rose earlier on Kuroda’s comments in support of easing today at his confirmation hearing at Japan’s parliament.
Trading volumes on the Japanese benchmark index were 21 percent below the 30-day average and at the lowest since Dec. 2012, according to data compiled by Bloomberg. A system error halted trading of Nikkei 225 futures and options in Osaka starting from 10:20 a.m. until 2:10 p.m. A software error caused the problem and was resolved by restarting the system, Osaka Securities Exchange Co. Managing Director Yoshinori Karino told reporters.
“This is like pouring cold water on Japan’s stock rally,” said Hidehiro Tomioka, who helps oversee $1.3 billion in Japanese equities at Manulife Asset Management (Japan) Ltd. in Tokyo. “It’s going to foster distrust among global investors.”
Shares on Asian benchmark index traded at 14.8 times estimated earnings compared with 13.7 for the Standard & Poor’s 500 Index and 12.4 for the Stoxx Europe 600, according to data compiled by Bloomberg.
Futures on the S&P 500 slipped 0.5 percent today. The benchmark index gained 0.2 percent on March 1 as better-than-estimated data on consumer confidence and manufacturing offset concerns about federal spending cuts.
Chinese developers and banks declined. China Resources Land dropped 8.9 percent to HK$20.60. China Overseas Land & Investment Ltd., the biggest Chinese real-estate company traded in Hong Kong, slipped 7.1 percent to HK$21.45. Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, slid 2.2 percent to HK$5.40. China Construction Bank Corp. fell 2.4 percent to HK$6.19.
Raw-material producers and energy companies posted the biggest decline among the 10 industry groups in the MSCI Asia Pacific Index. Crude oil and copper futures both headed for a third day of drop.
BHP Billiton Ltd., the world’s biggest mining company, slipped 2 percent to A$35.57 in Sydney. Rio Tinto Group, the second-largest, fell 3.7 percent to A$63.65. Cnooc Ltd., a Chinese offshore energy explorer, decreased 2 percent to HK$14.58 in Hong Kong.
Noble Group dropped 2.1 percent to S$1.15 in Singapore. Citigroup cut its rating to neutral from buy and lowered its share-price forecast to S$1.28 from S$1.68, citing weakening contributions from its agriculture business. The company is marketing a $1.5 billion revolving credit facility, according to three people familiar with the matter.
Japanese developers extended last week’s rally on anticipation of relaxed monetary policy. The “scale and scope” of the assets purchased by the central bank so far are not enough to achieve a 2 percent inflation target, Kuroda said today.
Mitsubishi Estate climbed 3.6 percent to 2,537 yen after Nikkei newspaper reported that Japanese REITs may raise record funds in the three months through March on expectations of further easing after the BOJ leadership change.
Mitsui Fudosan Co., Japan’s second-largest developer by market value, rose 2.4 percent to 2,492 yen. Sumitomo Realty & Development Co., gained 3.9 percent to 3,450 yen.
J Front Retailing Co., a Japanese department store operator, jumped 6.6 percent to 585 yen. Aeon Co., Japan’s largest retailer, plans to buy J Front’s supermarket unit Peacock Stores, according to a statement from J Front released after the Tokyo market closed. The sale, expected to be completed by April 1, was earlier reported by the Nikkei newspaper.