Asian Stocks Fall From 18-Month High on Fed Minutes, China Curbs

By Yoshiaki Nohara 

Asian stocks fell, with the regional benchmark index retreating from an 18-month high, on concern the Federal Reserve may scale back U.S. economic stimulus and China will step up property curbs.

James Hardie Industries SE, a building-materials supplier that gets 67 percent of its sales from the U.S., dropped 2.6 percent in Sydney. Guangzhou R&F Properties Co. lost 2.1 percent in Hong Kong, pacing declines among Chinese developers. Belle International Holdings Ltd. sank 15 percent in Hong Kong after the retailer of women’s shoes said its profit will be at the lower end of analysts’ estimates.

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Pedestrians holding umbrellas look at an electronic stock board outside a securities firm in Tokyo. Photographer: Junko Kimura/Bloomberg

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Feb. 19 (Bloomberg) -- Joseph Tanious, a New York-based global market strategist for JPMorgan Funds, talks about the outlook for global stocks and investment strategy. He speaks with Deirdre Bolton, Dominic Chu and Alix Steel on Bloomberg Television's "In the Loop." (Source: Bloomberg)

The MSCI Asia Pacific Index dropped 1.5 percent to 133.17 as of 1:24 p.m. in Tokyo. About seven stocks fell for every two that rose on the measure, which closed yesterday at the highest level since August 2011.

“The Fed now is getting very nervous about the continuation of its quantitative easing program,” said Matthew Sherwood, head of investment market research in Sydney at Perpetual Investments, which manages about $25 billion. “If they say they have to wind it down before the labor market stabilizes, that would take one of the key supports away from the market.”

The MSCI Asia Pacific Index advanced 11 percent from the start of November through yesterday, led by Japanese shares as Prime Minister Shinzo Abe pledged to beat deflation and pressed the central bank to ease monetary policy. Asia’s benchmark traded at 14.9 times estimated earnings as of yesterday compared with 13.7 for the Standard & Poor’s 500 Index (SPX) and 12.5 for the Stoxx Europe 600 Index (SXXP), according to data compiled by Bloomberg.

Nikkei, Kospi

Japan’s Nikkei 225 Stock Average (NKY) fell 1.2 percent. South Korea’s Kospi (KOSPI) Index lost 0.6 percent after yesterday rising the most since September. Australia’s S&P/ASX 200 Index dropped 2.1 percent, headed for its biggest loss since May.

Hong Kong’s Hang Seng Index declined 1.8 percent, while China’s Shanghai Composite Index lost 2.7 percent, poised for the biggest drop since June. Taiwan’s Taiex Index (TWSE) slid 0.7 percent and Singapore’s Straits Times Index dropped 0.5 percent. New Zealand’s NZX 50 Index fell 1 percent.

Futures on the S&P 500 Index (SPXL1) slipped 0.1 percent today. The index fell 1.2 percent in New York yesterday, the biggest drop since November, as minutes of the Federal Open Market Committee’s Jan. 29-30 meeting showed policy makers were divided about the strategy behind Chairman Ben S. Bernanke’s program of buying bonds, known as quantitative easing, until there is “substantial” improvement in a U.S. labor market.

Stimulus Debate

Some said an earlier end to purchases might be needed, and others warned against a premature withdrawal of stimulus. Several policy makers said the central bank should be ready to vary the pace of its $85 billion in monthly bond purchases.

Companies that do business in the U.S. fell. James Hardie lost 2.6 percent to A$9.46 in Sydney. Yue Yuen Industrial Holdings Ltd., which makes shoes for Nike Inc., dropped 2 percent to HK$27.05 in Hong Kong.

Chinese developers fell 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 2.1 percent to HK$12.42. Country Garden Holdings Co. (2007) lost 1.3 percent to HK$3.84.

Property Curbs

“They are trying to control the property market and that is not a good thing for the short term, but it’s something China has to go through,” said Mikio Kumada, a Hong Kong-based global strategist for LGT Capital Partners, which oversees more than $20 billion.

Suppliers for Apple Inc. fell as Foxconn Technology Group, the manufacturer of products including the iPhone, froze hiring in China. Foxconn Technology Co. slid 1.4 percent to NT$84.40 in Taipei. Hon Hai Precision Industry Co., which assembles Apple products, dropped 1.7 percent NT$83.4. Taiyo Yuden Co., a Japanese electronic-component maker that supplies Apple Inc., slid 3.5 percent to 999 yen on concern demand for the iPhone is falling.

Of the 347 companies on the MSCI Asia Pacific Index that have reported quarterly earnings and for which Bloomberg has estimates, 50 percent exceeded profit expectations.

Belle International plunged 15 percent to HK$15.60, the biggest decliner on the MSCI Asia Pacific Index, after saying its 2012 profit will be at the lower end of analysts’ estimates ranging from 4.29 billion yuan ($687 million) to 4.85 billion yuan. Its rating was downgraded to fully-valued from hold at DBS Vickers Hong Kong Ltd.

Origin Energy Ltd. slumped 8.3 percent to A$11.35 in Sydney after Australia’s biggest electricity retailer cut its profit forecast and reported a cost increase at its A$25 billion ($26 billion) gas project.

Among stocks that gained, GS Yuasa Corp., which makes batteries for Boeing Co., jumped 5.8 percent to 345 yen in Tokyo on optimism the plane manufacturer is preparing fixes for battery problems that grounded the 787 Dreamliner. The stock was the biggest gainer on the MSCI measure.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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