Asian Stocks Fall on Australia Banks; Japan Shares Climb

Asian stocks declined, extending losses from the biggest decline in a year and a half, as Australian banks fell. Japan shares rose on a volatile day of trading after the biggest rout since the March 2011 earthquake.

Commonwealth Bank of Australia, the country’s largest lender, fell 1.4 percent, as Australian shares posted the largest weekly drop in a year. Lenovo Group Ltd., a computer maker with $3 billion in cash reserves, added 3.8 percent in Hong Kong after saying it sees no limit to the size of acquisitions to bolster its smartphone and tablet businesses. Tokyo Electric Power Co. led Japanese utilities to the biggest advance on Japan’s Topix Index, which climbed from a plunge that yesterday erased $314 billion from the market value of the nation’s stocks.

The MSCI Asia Pacific Index slid 0.3 percent to 138.22 as of 5:14 p.m. in Tokyo after erasing a 0.9 percent gain, heading for a 3 percent decline this week, the most since May 2012.

Japan’s Topix gained 0.5 percent after trading in a range of more than 6.5 percentage points. The Nikkei 225 Stock Average pared a decline of as much as 3.5 percent to close 0.9 percent higher. The Nikkei Volatility Index touched a two-year high, extending yesterday’s 58 percent jump, before retreating.

“The market is going up and down like a roller coaster,” said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo, which oversees the equivalent of $147 billion. “The fundamentals haven’t changed, but more and more investors are trading on momentum. It will probably calm down in a week.”

The MSCI Asia Pacific Index, the benchmark regional equities gauge, gained 7.2 percent this year through yesterday. The measure traded at 13.7 times average estimated earnings, compared with 15 for the Standard & Poor’s 500 Index and 13.4 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

U.S. Futures

Futures on the S&P 500 Index slid 0.1 percent. The gauge yesterday fell 0.3 percent, the first back-to-back drop in a month, as preliminary data showing a contraction in Chinese manufacturing outweighed American housing and employment data and investors digested Federal Reserve stimulus comments.

Australia’s S&P/ASX 200 Index fell 1.6 percent, extending this week’s drop to 3.8 percent, as banks declined and Morgan Stanley cut its recommendation on the country’s shares.

New Zealand’s NZX 50 Index dropped 1.4 percent. Hong Kong’s Hang Seng Index slid 0.2 percent, Shanghai’s Composite Index rose 0.6 percent and South Korea’s Kospi Index added 0.2 percent. Taiwan’s Taiex Index fell 0.3 percent. Markets in Singapore, Thailand, Malaysia and Sri Lanka are shut today for holidays.

Australia Banks

Commonwealth Bank of Australia fell 1.4 percent to A$68.77, extending this week’s decline to 6.1 percent. Westpac Banking Corp. lost 2 percent to A$29.32. The S&P/ASX 200 Finance Index lost 5.5 percent this week, the most in a year. Telstra Corp. sank 1.6 percent to A$4.87, taking its two-day loss to 5.3 percent.

“The market run has been so skewed toward high-yielding stocks and financials in Australia, and now with worries about China, foreign investors are withdrawing,” Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages $126 billion, said by phone. “Australian shares will underperform this year. There are lots of reasons for profit taking right now. In Japan, there are still lots of challenges and structural changes that need to take place.”

Morgan Stanley downgraded its recommendation on Australian equities to equal weight from overweight, citing less attractive valuations and a worsening earnings outlook.

Echo Entertainment Group Ltd. fell 12 percent to a record low A$3.03 in Sydney after rival Crown Ltd. sold its 10 percent stake in Echo.

Lenovo Plan

Lenovo added 3.8 percent to HK$7.66 in Hong Kong. The PC maker is most interested in adding assets to bolster its growing business for smartphones and tablets, and hardware such as servers and storage for business computing, Chief Financial Officer Wong Wai Ming said in a phone interview yesterday.

The Chicago Mercantile Exchange Inc. is raising the margin requirements in Japanese stock futures after yesterday’s plunge. The initial margin for Nikkei 225 futures will rise 33 percent to $3,300 per contract at the close of trading today, Chicago-based CME Group Inc. said in a statement. Initial margin is the minimum amount of cash or eligible securities investors must deposit to cover the risk of default.

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