Asia Stocks Fall as China Manufacturing Contracts a Fourth Month

May 05, 2014 4:15 am ET

May 5 (Bloomberg) -- Asian stocks fell amid low trading volumes after a private gauge signaled Chinese manufacturing contracted for a fourth month, missing analysts’ estimates and raising concern the economy’s slowdown is deepening.

China Longyuan Power Group Corp. sank 4.6 percent, leading energy companies lower in Hong Kong. Westpac Banking Corp., Australia’s second-biggest lender by market value, slid 1.2 percent even as first-half cash profit grew. HTC Corp. soared 7 percent in Taipei as investors awaited a conference call on which the smartphone maker is expected to give a forecast for second-quarter profit.

The MSCI Asia Pacific excluding Japan Index slipped 0.1 percent to 474.94 at 4:04 p.m. in Hong Kong, following three weeks of losses. Three shares retreated for every two that rose. Markets in Japan and South Korea are closed today and tomorrow for holidays. Futures on the Standard & Poor’s 500 Index were little changed.

China’s “economy is suffering from relatively weak growth momentum,” Yao Wei, a Hong Kong-based China economist at Societe Generale SA, told Bloomberg TV after the Chinese manufacturing report. “It’s a structural problem. The economy will remain weak and the deceleration is not over yet.”

The HSBC Holdings Plc/Markit Economics Ltd. gauge of China manufacturing dropped to 48.1 from a preliminary reading of 48.3, signaling a contraction. Economists had forecast a final reading of 48.4. An official gauge of April factory output released last week came in at a lower-than-projected level of 50.4 from 50.3 in March.

Regional Gauges

Hong Kong’s Hang Seng Index lost 1.3 percent, dropping to the lowest close in more than a month. China Longyuan slid 4.6 percent to HK$8.02 and China Resources Power Holdings Co. retreated 1.5 percent to HK$19.18.

Australia’s S&P/ASX 200 Index added 0.1 percent, with Westpac falling 1.2 percent to A$34.45. China’s Shanghai Composite and Taiwan’s Taiex index was little changed. HTC soared 7 percent to NT$169. Singapore’s Straits Times Index slipped 0.1 percent and New Zealand’s NZX 50 Index slid 0.6 percent, while India’s S&P BSE Sensex Index advanced 0.7 percent.

China’s Premier Li Keqiang is trying to avoid a deeper slowdown after property construction plunged in the first quarter and economic growth cooled. The Chinese economy is projected to expand 7.3 percent this year, the weakest pace since 1990, as the government reins in credit.

U.S. Jobs

New home sales fell 47 percent over the May 1-3 holidays to the lowest level in four years in 54 Chinese cities, Centaline Group said in a report dated yesterday. China Overseas Land & Investment Ltd. fell 1.7 percent to HK$18.58 in Hong Kong and Sun Hung Kai Properties Ltd. lost 1.1 percent to HK$96.95.

A report last week showed U.S. employers added 288,000 workers in April, marking the biggest upside surprise in the payrolls data since February 2012. Economists surveyed by Bloomberg predicted an increase of 218,000. The jobless rate dropped to 6.3 percent, the lowest level since the collapse of Lehman Brothers in 2008.

Unrest intensified in Ukraine’s east. Ukrainian soldiers took back a television tower in the Donetsk area at the weekend, after it was seized by pro-Russian forces, Interior Minister Arsen Avakov said on his Facebook feed.

Seven people died amid fighting in Kramatorsk, northern Donetsk, according to website Kramatorsk.info, while an assault by Ukrainian troops on the eastern city of Slovyansk saw militants shoot down two helicopters, killing two pilots, the Defense Ministry said.

The MSCI Asia Pacific excluding Japan Index traded today at 12.3 times estimated earnings compared with 16 for the S&P 500 at the end of last week, according to data compiled by Bloomberg.

Aquila Resources Ltd. soared 36 percent to A$3.34 in Sydney after Baosteel Group Corp., the parent of China’s biggest publicly-traded steelmaker, bid to take control of Aquila in a A$1.4 billion ($1.3 billion) deal to gain iron-ore, coal and port projects in Australia.