Asian Stocks Decline as Signs of China Slowdown Mount

Asian stocks dropped this week, with Japan’s Topix index falling the most in a month during trading shortened due to holidays, as a private survey showed Chinese manufacturing contracted a fourth month.

China Resources Land Ltd. lost 9.8 percent as developers retreated in Hong Kong. Great Wall Motor Co. slumped 23 percent as China’s biggest maker of sport-utility vehicles suspended sales of its new flagship Haval H8 after quality complaints. Rakuten Inc. dropped 9.9 percent in Tokyo after the online retailer’s earnings missed estimates and U.S. tech shares slumped. Envestra Ltd. surged 16 percent as billionaire Li Ka-shing’s Cheung Kong Group made a cash bid that values the Australian natural-gas distributor at A$2.4 billion ($2.3 billion).

The MSCI Asia Pacific Index retreated 0.4 percent to end the week at 137.91. Japan and Hong Kong, the world’s second- and third-largest equity markets, posted the biggest declines this year among 24 developed markets tracked by Bloomberg.

“We’ve seen an ongoing trend of mixed economic data, with China still looking pretty challenging in terms of the loss of momentum there,” said Mark Lister, Wellington-based head of private wealth research at Craigs Investment Partners Ltd., which has about $7.4 billion under management. “We’ve become a little more cautious over the past few weeks.”

China Manufacturing

A private HSBC Holdings Plc and Markit Economics survey showing Chinese factory activity contracted outweighed an unexpected gain in exports and imports for the world’s second-biggest economy last month. Data yesterday showed inflation accelerated at the slowest pace in 18 months. Hong Kong’s Hang Seng Index fell 1.8 percent this week and the Shanghai Composite Index slid 0.8 percent, capping a fourth week of declines.

Developers led the slide in Hong Kong. China Resources Land slumped 9.8 percent to HK$14.30. China Overseas Land & Investment Ltd. retreated 4.6 percent to HK$18.04.

Japan’s Topix index fell 1.4 percent this week, extending this year’s slump to 11 percent, as investors weighed whether Prime Minister Shinzo Abe and the Bank of Japan can foster a sustained economic recovery. Trading this week was shortened two days by the Golden Week holidays.

Australia’s S&P/ASX 200 Index added less than 0.1 percent. The central bank held its benchmark interest rate at a record-low 2.5 percent, as forecast by all 33 economists surveyed by Bloomberg. New Zealand’s NZX 50 Index dropped 1.5 percent, its largest such decline this year.

Taiwan’s Taiex index added 0.3 percent, while Singapore’s Straits Times Index was little changed. South Korea’s Kospi index lost 0.2 percent on the week.

Tech Rout

The Bloomberg Asia Pacific Internet Index fell 4.2 percent this week to a five-month low. Technology shares slumped around the world this week, with Twitter Inc. dropping 18 percent amid concern that user growth is slowing and valuations have become excessive.

Rakuten lost 9.9 percent to 1,228 yen in Tokyo. Tencent Holdings Ltd., Asia’s biggest Internet company, slid 3.4 percent to HK$478.80 in Hong Kong.

Great Wall tumbled 23 percent to HK$27.25 in Hong Kong. The company, led by billionaire Chairman Wei Jianjun, said yesterday it suspended H8 sales after reports of “knocking noises” when the SUV was driven at high speeds. Great Wall will hold off until it is able to ensure the vehicle is of a “premium standard,” it said, without specifying a date.

Casino shares slumped in Hong Kong. Macau police made arrests tied to the use of a card-swiping device from China UnionPay Co. amid concern illict funds are being funneled from the mainland to casinos. The crackdown is aimed at stopping gamblers from illegally using the devices in casino resorts to get cash for chips without buying anything, police said in an e-mailed statement.

MGM, Galaxy

MGM China Holdings Ltd. slid 6 percent on the week to HK$25.65. Galaxy Entertainment Group Ltd. dropped 6.7 percent to HK$58.50. After rallying an average 217 percent in the last two years, shares of the six biggest casino operators had tumbled 20 percent in 2014 through May 8.

The MSCI Asia Pacific Index traded yesterday at 12.6 times estimated earnings compared with 15.9 for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg. Among companies on the Asian gauge that reported results since April 1 and for which Bloomberg had estimates, 51 percent beat projections for profit.

Among shares that rose, Amorepacific Corp. climbed 5.2 percent to 1.410 million won in Seoul as the skin-care company’s profit topped analyst estimates. Leighton Holdings Ltd. added 4.7 percent to A$20.05 after Australia’s largest builder reported a 24 percent surge in first-quarter net income.

Envestra Bid

Envestra surged 16 percent to A$1.335. A group including Cheung Kong Infrastructure Holdings Ltd., the second-largest stakeholder in Envestra, offered A$1.32 a share. That compares with the APA Group stock offer worth A$1.31 a share. APA is the biggest holder of Envestra shares with 33 percent, according to data compiled by Bloomberg. Envestra has 23,000 kilometers (14,000 miles) of pipelines that supply gas to customers, mostly in the Victoria and South Australia states.

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