Asian Stocks Fall on Resource Producers, China ServicesAdam Haigh
Asian stocks dropped for the first time in six days as resource companies retreated after metals prices slid overnight and an official report showed China’s services industry expanded at a slower pace.
BHP Billiton Ltd., the world’s largest mining company, sank 3.2 percent. Tokyo Electric Power Co. led declines on the Asia-Pacific equity benchmark after the Japanese utility soared 19 percent yesterday. Suntory Beverage & Food Ltd. gained 1.5 percent on its debut in Tokyo after raising almost $4 billion in Asia’s largest public offering this year. Nikkei 225 Stock Average futures dropped as Portugal’s government bond yields surged on political infighting that threaten austerity plans.
The MSCI Asia Pacific Index lost 1.1 percent to 130.12 as of 6:11 p.m. in Hong Kong, with all 10 industry groups declining. Investors are waiting on U.S. jobs figures for signs the Federal Reserve may start tapering record stimulus as China’s economy slows and Europe’s debt crisis lingers.
“Economic growth is slowing in China and is holding the market back,” Stephen Corry, a Hong Kong-based chief investment strategist at LGT Group, a private banking and asset-management group that oversees about $107 billion, said in a phone interview. “It’s difficult to see much upside. GDP growth will struggle to meet the government’s 7.5 percent target for 2013. Valuations are rock bottom but that’s not a good enough indication to purchase.”
The benchmark MSCI Asia Pacific Index retreated 8.9 percent through yesterday from an almost five-year high on May 20. That gauge yesterday traded at 12.7 times average estimated earnings, compared with 14.6 for the Standard & Poor’s 500 Index and 12.7 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Japan’s Topix index gained 0.2 percent after swinging betweens gains and losses during the trading day, and the Nikkei 225 Stock Average slid 0.3 percent. Tokyo Electric Power dropped 10 percent to 559 yen as a gauge of utilities led declines among the Topix’s 33 industry groups.
Nikkei futures dropped as much as 2.8 percent in Chicago as the yen surged after Portugal’s borrowing costs exceeded 8 percent for the first time this year. Two coalition ministers quit, stoking concern the government will struggle to cut spending further to meet bailout conditions.
Hong Kong’s Hang Seng Index lost 2.5 percent for its worst start to a month since October 2011, while the Shanghai Composite retreated 0.6 percent.
South Korea’s Kospi index fell 1.6 percent. Australia’s S&P/ASX 200 Index dropped 1.9 percent, and New Zealand’s NZX 50 Index slid 0.2 percent. Taiwan’s Taiex Index declined 1.3 percent. Singapore’s Straits Times Index slipped 1.4 percent.
Futures on the S&P 500 lost 0.6 percent after falling 0.1 percent yesterday. A report today from the ADP Research Institute may indicate U.S. companies increased employment. A Labor Department report due June 5 is expected to show 165,000 jobs were added in June. The Fed said last month it may start paring record asset purchases this year if the economy performs in line with estimates.
“There is an increasing divergence between economic fundamentals, which still show a lot of weaknesses, compared to the monetary stimulus which makes you want to go and buy equities,” Komal Sri Kumar, president of Sri-Kumar Global Strategies Inc., told Bloomberg TV from Los Angeles. “At some point in time the divergence becomes excessive, and the market starts to correct. It’s hard to give the timing but the more you run up the greater the fall needs to be to compensate.”
Raw-material producers led declines on the regional equities gauge after the London Metal Exchange LMEX Index dropped 0.4 percent yesterday. BHP Billiton sank 3.2 percent to A$31.05. Rio Tinto Group lost 3 percent to A$51.50. Jiangxi Copper Co. slipped 4.5 percent to HK$12.36.
Adding to signs of a slowdown, China’s non-manufacturing purchasing manager’s index fell to 53.9 in June from 54.3 in May, according to data released by the Beijing-based National Bureau of Statistics and Federation of Logistics & Purchasing. A reading above 50 indicates growth.
The conditions exist for China to realize its economic targets for this year and for sustainable, healthy development, Premier Li said in a meeting with leaders from central and eastern Europe, according to a China Central Television report yesterday.
The comments come after Goldman Sachs Group Inc., China International Capital Corp., Barclays Plc and HSBC Holdings Plc pared their growth projections this year to 7.4 percent, below the government’s 7.5 percent goal.
All developers listed on the Hang Seng Index declined after home sales plunged last month, an official report showed. Sun Hung Kai Properties Ltd., the city’s biggest property company by market value, decreased 2.3 percent to HK$97.70. Cheung Kong Holdings Ltd., controlled by Asia’s richest man, lost 2.1 percent to HK$102.2.
Suntory advanced 1.5 percent to 3,145 yen as the seller of Orangina soda began trading. The company last week priced its initial public offering near the low end of the projected range.