Asian Stocks Post Biggest Drop Since March 20 as Topix Plunges

May 07, 2014 6:09 am ET

May 7 (Bloomberg) -- Asian stocks fell by the most in almost seven weeks, with Japanese shares plunging as the yen maintained gains and Internet shares slumping after a U.S. selloff.

Panasonic Corp., a Japanese consumer electronics company that gets half its revenue overseas, dropped 3.4 percent. SoftBank Corp., which owns a stake in Alibaba Group Holding Ltd., slid 5.1 percent after the Chinese e-commerce company filed for a U.S. initial public offering. Giordano International Ltd. fell 17 percent in Hong Kong after the clothier forecast lower profit. The Bloomberg Asia Pacific Internet Index lost 2.7 percent, its lowest close since November.

The MSCI Asia Pacific Index fell 1.5 percent to 136.91 as of 7:07 p.m. in Tokyo, with all 10 industry groups on the gauge falling, as markets in Japan, Hong Kong and South Korea reopened after holidays. Japan and Hong Kong equities have posted the largest declines this year among 24 developed markets tracked by Bloomberg as the yen strengthened and concern mounted that Chinese economic growth is slowing.

“Investors need to remain cautious,” Matthew Sherwood, Sydney-based head of investment markets research at Perpetual Ltd., which manages about $29 billion, said in an e-mail. “They have decided to take some profits in the wake of recent upbeat sentiment.”

Regional Gauges

Japan’s Topix index slid 2.6 percent as the yen today touched a three-week high. Most members of the Bank of Japan agreed to keep easing monetary policy until inflation stabilizes at 2 percent, according to minutes of the April 7-8 policy meeting released today.

Panasonic fell 3.4 percent to 1,080 yen. Honda Motor Co., a carmaker that gets 46 percent of its revenue in North America, lost 2.9 percent to 3,371 yen.

Idemitsu Kosan Co. tumbled 6.1 percent to 2,101 yen in Tokyo after the oil refiner projected net income that trailed estimates.

Hong Kong’s Hang Seng Index fell 1 percent and the Hang Seng China Enterprises Index of mainland shares traded in the city retreated 0.9 percent. Chinese developers dropped after the China Securities Journal said some medium and small property companies are facing liquidity problems. The Shanghai Composite Index lost 0.9 percent as a services index for China released today by HSBC Holdings Plc and Markit Economics declined in April from March.

Giordano sank 17 percent to HK$4.31 after the apparel maker said it expects “significantly lower” profit in the first half.

Retail Sales

New Zealand’s NZX 50 Index rose 0.3 percent after Reserve Bank Governor Graeme Wheeler said the central bank may sell the nation’s currency if it remains high. Australia’s S&P/ASX 200 Index retreated 0.8 percent after a report showed March retail sales rose less than economists forecast.

South Korea’s Kospi index declined 1 percent, while Singapore’s Straits Times Index lost 0.3 percent. Taiwan’s Taiex index slipped 0.2 percent, and India’s S&P BSE Sensex slid 0.8 percent.

Alibaba Group, China’s largest e-commerce operator, may raise as much as $20 billion via an initial public offering in the U.S., topping the $19.65 billion offering by Visa Inc. in 2008, data compiled by Bloomberg show. The company didn’t specify the number or price of shares it will offer. SoftBank, which owns 34 percent of Alibaba, slid 5.1 percent to 7,420 yen in Tokyo. Yahoo! Inc. is the second-largest investor at almost 23 percent.

Alibaba IPO

“We strongly believe that much of the good news in regards to the Alibaba IPO has been baked well into SoftBank’s share price,” said Amir Anvarzadeh, a manager of Japanese equity sales in Singapore at BGC Partners Inc. “Moreover, we also expect U.S. investors to divest from SoftBank and Yahoo as most will want direct exposure to Alibaba without the telecom businesses, which are facing pricing pressure.”

The MSCI Asia Pacific Index trades at 12.5 times estimated earnings, compared with 15.9 for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

Futures on the S&P 500 were little changed. The gauge yesterday retreated 0.9 percent as Twitter Inc. slumped to a record low. Internet stocks continued the rout in Asia today, with Tencent Holdings Ltd.’s 3.8 percent drop contributing the most to the Bloomberg Asia Pacific Internet Index’s decline.

The U.S. trade deficit narrowed in March as exports grew by the most in nine months, the Commerce Department reported yesterday.

Federal Reserve Chair Janet Yellen is due to testify to lawmakers today after the U.S. central bank pressed ahead April 30 with reductions to its monthly bond buying, while holding its short-term interest rate target at near zero.