Asian Stocks Drop After Japan’s Tankan Misses Estimates

By Jonathan Burgos

Asian stocks fell, led by Japanese shares, after a survey of sentiment among the country’s largest manufacturers missed estimates and an official gauge of China’s factory output expanded at a slower-than-expected pace.

Bridgestone Corp. (5108), the world’s biggest tiremaker, dropped 2.5 percent in Tokyo. Nomura Holdings Inc. slipped 3.6 percent after Japan’s No. 1 brokerage was sued by a trust over an alleged breach of contract involving $1.14 billion of mortgage- backed securities. Inner Mongolia Baotou Steel Rare-Earth Hi- Tech Co., China’s largest producer of rare-earth minerals, slid 2.1 percent in Shanghai after reporting a slump in earnings. The MSCI Asia Pacific Index (MXAP) lost 0.9 percent to 134.34 as of 1:19 p.m. in Tokyo, with more than two shares falling for each that rose. The gauge has rallied in the past five months amid signs the U.S. economy is recovering and speculationJapan will introduce aggressive measures to stimulate the world’s third-largest economy.

“We need to see the economy showing signs of improvement and inflation numbers picking up in Japan,” Vasu Menon, head of content and research at OCBC Bank Ltd. in Singapore, told Bloomberg Television. “We’ve seen too many flashes in the pan in Japan. Rethoric is not enough. We need to see concrete action. We need to see economic numbers react to that action. China is recovering but the recovery is going the be a modest one.”

The cost of bearish options on the Nikkei 225 traded near an eight-month high as investors bought protection against declines amid concern the Bank of Japan will fail to deliver stimulus at this week’s meeting.

Japan’s Nikkei 225 Stock Average (NKY) declined 1.1 percent after last week capping its best back-to-back quarterly gain since 1972. Confidence among big Japanese manufacturers improved by less than economists estimated, in a sign that the weaker yen is yet to boost conditions for the nation’s exporters, the quarterly Bank of Japan’s Tankan survey showed.

China Factories

China’s Shanghai Composite Index slipped 0.2 percent. The nation’s Purchasing Managers’ Index was 50.9 in March, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing.

While the reading was the highest in 11 months, it fell short of the 51.2 median estimate of 26 analysts surveyed by Bloomberg News. A separate gauge from HSBC Holdings Plc and Markit Economics rose to 51.6 in March from 50.4. Readings above 50 indicate expansion.

South Korea’s Kospi Index (KOSPI) slid 0.5 percent, whileTaiwan’s Taiex Index lost 0.1 percent. Singapore’s Straits Times Index added 0.1 percent. Markets in Hong Kong,Australia and New Zealand are closed today for a holiday.

U.S. Futures

The MSCI Asia Pacific Index rose 4.8 percent this year through March 29 amid a rally in Japanese shares. The Asian benchmark index traded at 14.9 times estimated earnings on average, compared with 14.2 times for the Standard & Poor’s 500 Index and 12.6 times for the Stoxx Europe 600 Index.

Futures on the S&P 500 Index lost 0.1 percent today. The gauge rose to a record on March 28 as data bolstered confidence in the world’s largest economy. U.S. markets were closed on March 29. The Institute for Supply Management factory index will come in at 54 for March, little changed from February’s 54.2, which was the highest since June 2011, economists estimated before data today.

Manufacturers declined. Bridgestone dropped 2.5 percent to 3,090 yen in Tokyo. Komatsu Ltd. (6301), Japan’s biggest maker of construction equipment that gets about 14 percent of sales from China, slid 1.5 percent to 2,216 yen. Samsung Electronics Co., which counts China as its largest market, lost 0.7 percent to 1.517 million won in Seoul.

Panasonic, Nomura

Panasonic Corp., the Japanese unprofitable electronics maker, dropped 3.4 percent to 632 yen after the Wall Street Journal reported a unit that makes entertainment and communications systems for airlines is under a bribery investigation by U.S. regulators.

Nomura, the best performing stock in the Topix Core 30 Index since Japanese share started rallying in November, sank 3.6 percent to 556 yen. HSBC Bank USA, National Association, acting as trustee, sued the Japanese brokerage in state Supreme Court in Manhattan yesterday, accusing Nomura Credit & Capital Inc. of failing to comply with obligations associated with 5,292 residential mortgages it purchased and sold to the trust.

Inner Mongolia Baotou Steel fell 2.1 percent to 29.21 yuan in Shanghai after the supplier of raw material used in electronics production reported a 57 percent slump in full-year earnings to 1.51 billion yuan ($243 million.)

SMRT Corp. fell 2.2 percent to S$1.545 in Singapore, heading for its lowest close since May 2009, after the city’s biggest commuter train operator predicted a fourth-quarter loss.

To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Jonathan Burgos in Singapore at jburgos4@bloomberg.net

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