Asian Stocks Reverse Losses as Utilities Gain; Tencent Retreats

Mar 27, 2014 4:32 am ET

March 27 (Bloomberg) -- Asia’s benchmark stock gauge headed toward its highest close in two weeks, reversing earlier losses as utilities advanced. Tencent Holdings Ltd. dropped as regional Internet shares sank on concern valuations are too high.

Citic Pacific Ltd. soared 13 percent in Hong Kong on a plan to buy its parent’s assets. A measure tracking power and gas companies rose the most among the MSCI Asia Pacific Index’s 10 industry groups as Japanese utilities advanced. Tencent fell 5.9 percent in Hong Kong after King Digital Entertainment Plc, the maker of the “Candy Crush” smartphone game, posted the biggest decline of a newly listed U.S. company in over four months, even after pricing its shares at a discount to peers.

The MSCI Asia Pacific Index rose 0.3 percent to 136.07 as of 5:09 p.m. in Tokyo, heading for the highest close since March 13. The gauge fell as much as 0.7 percent on concern tension in Ukraine may escalate.

“Investors are seeing how resilient the market is after we had risk-off situations due to China and Ukraine,” said Hitoshi Asaoka, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by market value. “They are poised to buy back shares.”

Japan’s Topix index rose 0.4 percent after opening lower as most stocks on the gauge traded without the right to the latest dividend. South Korea’s Kospi index added 0.4 percent. Australia’s S&P/ASX 200 Index lost 0.5 percent, while New Zealand’s NZX 50 Index was little changed. Taiwan’s Taiex Index climbed 0.5 percent, and Singapore’s Straits Times Index gained 0.6 percent.

Regional Gauges

Hong Kong’s Hang Seng Index fell 0.2 percent, while the Hang Seng China Enterprises Index of mainland shares traded in the city gained 0.2 percent and the Shanghai Composite Index slid 0.8 percent. Data today showed China’s industrial profits increased 9.4 percent in the two months through February year- on-year, compared with 17 percent growth a year earlier.

President Barack Obama said yesterday the U.S. and its European allies stand united against Russian attempts to redraw Ukraine’s boundaries, while warning that indifference would ignore the lessons from two world wars.

“There’s definitely the chance that things will escalate on the fact that the U.S. has been speaking increasingly strongly about actions,” said Angus Gluskie, managing director at White Funds Management in Sydney who oversees about $550 million. “It’s likely that the market will get nervous.”

Tech Selloff

Futures on the Standard & Poor’s 500 Index rose 0.1 percent today. The measure lost 0.7 percent yesterday with the drop led by technology companies and losses accelerating in the final hour of trading. King Digital Entertainment tumbled 16 percent yesterday from its IPO price.

Citigroup Inc. dropped in extended U.S. trading after the Federal Reserve said the bank’s capital plan failed its stress tests. Citigroup was among five banks to fail. Bank of America Corp. raised its quarterly payout after the Fed’s statement showed it passed after modifying its plans.

Data showed U.S. factories received fewer orders for machinery, communications equipment and computers in February, signaling business investment is slowing after an unusually harsh winter damped sales.

Citic Pacific

Citic Pacific jumped 13 percent to HK$14.30 as it plans to sell about $4 billion of shares to restore its public float after absorbing assets from state-owned parent Citic Group Corp., people with knowledge of the matter said. The stock led gains on the regional equity benchmark.

Utilities rose the most among the 10 industry groups on the MSCI gauge. Kansai Electric Power Co. advanced 4.8 percent to 1,079 yen in Tokyo, while Tohoku Electric Power Co. added 4.1 percent to 1,063 yen.

Internet shares slid today. Tencent fell 5.9 percent to HK$521.50, dropping 18 percent drop from March 6, when the stock’s price-to-earnings ratio reached the highest in almost six years. The company yesterday announced it was buying a $500 million stake in South Korea’s CJ Games. Naver Corp., which provides Internet portal services, lost 3 percent to 773,000 won in Seoul. Co. declined 6.6 percent to 71.31 yuan in Shanghai, and Yahoo Japan Corp. dropped 2.9 percent to 549 yen.

The Asia-Pacific stock gauge traded at 12.8 times estimated earnings as of yesterday, compared with 15.8 for the S&P 500 and 14.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.