Asian Stocks Drop as China PMI Data Misses Estimates

By Jonathan Burgos & Adam Haigh

Asian stocks fell, erasing earlier gains, after a preliminary report showed Chinese manufacturing expanded less than economists estimated.

Agricultural Bank of China Ltd., the nation’s third-largest lender, slid 2.8 percent, the most in two months, in Hong Kong. Yamada Denki (9831) Co. sank 6.2 percent in Tokyo after the consumer electronics retailer said it will miss its full-year profit forecast. Woodside Petroleum Ltd. (WPL),Australia’s second-biggest oil producer, jumped 8 percent after announcing plans to return cash to shareholders. The MSCI Asia Pacific Index (MXAP) slid 0.3 percent to 136.99 as of 12:34 p.m. in Tokyo, erasing gains of as much as 0.3 percent. Almost two shares fell for each that rose on the gauge. The measure increased 6.2 percent this year through yesterday as Japanese equities rallied on speculation the Bank of Japan will step up efforts to stimulate its economy. China’s manufacturing is expanding at a slower pace this month, according to a preliminary report.

“There could be some overreaction in the market,” said Ng Soo Nam, Singapore-based chief investment officer at Nikko Asset Management Asia Ltd., whose Japan-based parent oversees about $165 billion. “I’m not too worried over China’s softening economic data. The government is introducing policies to make sure the economy moves along a sustainable growth path. Valuations are still OK and earnings are still growing.”

China PMI

China’s Shanghai Composite Index dropped 1.6 percent, heading for its biggest decline since March 28. The preliminary reading of 50.5 for a Purchasing Managers’ Index, a gauge of manufacturing activity that was released by HSBC Holdings Plc and Markit Economics, compared with a final reading of 51.6 for March. The number was also below the median 51.5 estimate in a Bloomberg News survey of 11 analysts. A reading above 50 indicates expansion.

Hong Kong’s Hang Seng Index slipped 1.1 percent. Japan’s Nikkei 225 Stock Average (NKY)decreased 0.4 percent as the yen advanced away from the 100-to-the-dollar level. South Korea’s Kospi Index fell 0.7 percent, while Taiwan’s Taiex Index lost 0.6 percent.

Australia’s S&P/ASX 200 Index and New Zealand’s NZX 50 Index added 0.8 percent.

Shares on the benchmark MSCI Asia Pacific Index traded at 14 times estimated earnings as of yesterday compared with 14.1 for the Standard & Poor’s 500 Index and 12.4 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures on the Standard & Poor’s 500 Index slid 0.2 percent today. The gauge climbed 0.5 percent yesterday as Caterpillar Inc. jumped and a rally in commodity prices spurred energy and raw-material producers.

Chinese Lenders

Chinese lenders declined. Agricultural Bank of China sank 2.8 percent to HK$3.43 in Hong Kong. Industrial & Commercial Bank of China Ltd., the world’s biggest lender by market value, slipped 1.3 percent to HK$5.18. China Construction Bank Corp., fell 1 percent to HK$6.16.

China Mobile Ltd., the world’s largest phone company by subscribers, dropped 1.3 percent to HK$81.55 after reporting its weakest profit growth in three quarters as higher costs eroded gains from an increase in users of high-speed network services.

Yamada Denki slumped 6.2 percent to 4,640 yen in Tokyo. The company said yesterday it expects to report a full-year net income 22 billion yen ($223 million), compared with its previous forecast of 34 billion yen.

Among stocks that advanced, Woodside Petroleum jumped 8 percent to A$37.38. The company said it will return about $520 million to investors in dividends after dropping plans to build a liquefied natural gas project estimated to cost $45 billion.

To contact the reporters on this story: Jonathan Burgos in Singapore atjburgos4@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net

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