Asian Stocks Snap Two-Day Gain as Italy Elections Spur Concern

By Yoshiaki Nohara & Adam Haigh

Asian stocks fell, with the regional benchmark index poised to close lower for the first time in three days, on concern Italy’s elections may reignite Europe’s debt crisis.

Sony Corp. (6758), a Japanese consumer electronics maker that gets a fifth of its revenue in Europe, lost 3.5 percent. Hanwha Life Insurance Co. plunged 9.8 percent in Seoul after Hanwha Chemical Corp. sold its shares. Global Logistic Properties Ltd. slumped 6.9 percent inSingapore after Government of Singapore Investment Corp. said it is selling a stake in the biggest owner of industrial properties in Japan.

The MSCI Asia Pacific Index fell 0.4 to 133.71 as of 1:24 p.m. in Tokyo with more than four shares dropping for each that increased. The gauge has climbed 0.4 percent this month, headed for a fourth month of gains, the longest such streak since September 2009.

“Uncertainty about the Italian election result has sparked fears that they may abandon their austerity drive, possibly sparking another bout of volatility in Europe,” said Matthew Sherwood, head of investment market research in Sydney at Perpetual Investments, which manages about $25 billion. This may “make governing and implementing much-needed economic reforms almost impossible.”

Futures on the Standard & Poor’s 500 Index (SPXL1) fell 0.1 percent today after the gauge declined 1.8 percent, the biggest drop since November, in New York yesterday as early results suggested Italy’s election would result in a hung parliament, leading to another vote.

Japan Stimulus

The MSCI Asia Pacific Index gained 10 percent from the end of October through yesterday as Japanese shares rallied on speculation the new government led by Prime Minister Shinzo Abe will press for more stimulus to beat deflation. Asia’s benchmark traded at 14.8 times estimated earnings compared with 13.5 for the Standard & Poor’s 500 Index and 12.4 for the Stoxx Europe 600, according to data compiled by Bloomberg.

Japan’s Nikkei 225 Stock Average dropped 2.3 percent. Australia’s S&P/ASX 200 Index slid 0.9 percent and New Zealand’s NZX 50 added 0.3 percent. South Korea’s Kospi (KOSPI) Index fell 0.7 percent.

Hong Kong’s Hang Seng Index dropped 0.8 percent and China’s Shanghai Composite Index rose 0.4 percent. Taiwan’s Taiex Index (TWSE) slid 0.5 percent, while Singapore’s Straits Times Index fell 0.6 percent.

‘Risk Positions’

“Many investors are starting to rewind their risk positions,” said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “The Italian elections are causing uncertainty about its political stability, but this time the Euro-region does have a safety net with their unlimited bond-purchase plan.”

Italy may be left with a hung parliament after partial election results suggested former Prime Minister Silvio Berlusconi may have built a blocking minority in the Senate to deny victory to Pier Luigi Bersani.

Bersani, who led in opinion polls throughout the two-month race, campaigned to maintain the budget rigor of outgoing Prime Minister Mario Monti. Prime ministers require control of both houses of parliament.

Companies that do business in Europe dropped. Sony fell 3.5 percent to 1,293 yen. HSBC Holdings Plc (5), Europe’s biggest lender, fell 0.9 percent to HK$84.50 in Hong Kong. Esprit Holdings Ltd. (330), a clothier that depends on Europe for 79 percent of its sales, declined 1.6 percent to HK$10.16.

Hanwha Life Insurance plunged 9.8 percent to 7,190 won in Seoul, heading for the largest drop since at least 2010. Hanwha Chemical Corp. sold 17 million shares of the life insurance company for 7,200 won each, said Park Jeong Hwan, who heads the finance team at Hanwha Chemical. That’s lower than the share’s closing price of at 7,970 won yesterday.

Global Logistic

Global Logistic Properties slumped 6.9 percent to S$2.56, poised for the biggest loss since October 2011. Government of Singapore Investment, Singapore’s sovereign wealth fund and GLP’s biggest shareholder with a 49 percent stake, is raising S$1.5 billion ($1.2 billion) by offering 595.7 million shares at S$2.60 apiece, according to a term sheet obtained by Bloomberg News.

Japan Tobacco Inc. dropped 1.2 percent to 2,867 yen after the government said it will sell a stake in the cigarette maker for about $10.3 billion to help cover reconstruction costs of the 2011 earthquake in the nation’s largest share offering in three years.

QBE Insurance Group Ltd. (QBE) fell 1.5 percent to A$12.83 in Sydney after Australia’s biggest insurer said its profit missed forecasts as it wrote down the value of its U.S. units and lowered its dividend payout.

Casino shares gained in Hong Kong after brokerages raised estimates for Macau gambling revenue. SJM Holdings Ltd., a casino operator founded by tycoon Stanley Ho, rose 3.5 percent to HK$20.40. Wynn Macau Ltd. added 1.2 percent to HK$20.65.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net

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

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