Asian Stocks Fall First Time in 4 Days on China Bad Loans, Yen

May 16, 2014 5:52 am ET

May 16 (Bloomberg) -- Asian stocks fell the first time in four days after China’s bad loans jumped the most since 2005 and the yen held gains amid concern about global growth. Indian shares touched a record before paring gains.

Toyota Motor Corp., a carmaker that gets 31 percent of its revenue in North America, lost 2 percent in Tokyo. Japan Display Inc. slumped 12 percent after the maker of screens for smartphones and tablets forecast a drop in profit. India’s Sensex Index advanced as much as 6.2 percent, as early vote counting showed the main opposition alliance set for the biggest election win in 30 years, before trimming gains to less than 1 percent. NCSoft Corp. plunged 8.5 percent in Seoul, the biggest loss on the regional equity index, after the online-game developer’s quarterly net income missed estimates.

The MSCI Asia Pacific Index declined 0.6 percent to 139.66 as of 5:33 p.m. in Hong Kong, paring its weekly advance to 1.3 percent. Futures on the Standard & Poor’s 500 Index lost less than 0.1 percent after the equity measure fell the most in a month yesterday.

“There’s a bit of nervousness on the part of investors even as the market has been in an uptrend,” said Donald Williams, Sydney-based chief investment officer at Platypus Asset Management Ltd. that oversees about A$1.3 billion ($1.2 billion). China “is no longer a benefit to the market. We just see China as neutral.”

Chinese banks had the biggest quarterly increase in bad loans since 2005 as an economic slowdown causes defaults to rise, a report showed yesterday. An unexpected drop in U.S. industrial output and weaker-than-projected growth in Europe also stoked concern over the global outlook, driving the yen to its strongest level in almost two months yesterday.

Regional Gauges

Hong Kong’s Hang Seng Index slid 0.1 percent, halting a six-day advance. The Hang Seng China Enterprises Index of mainland companies traded in the city fell 0.2 percent. The Shanghai Composite Index added 0.1 percent.

Japan’s Topix index sank 1.6 percent as the yen held at 101.55 per dollar after gaining 0.3 percent yesterday. Toyota declined 2 percent to 5,522 yen. Panasonic Corp., an electronics maker that gets about half its revenue abroad, dropped 2.4 percent to 1,061 yen.

South Korea’s Kospi index gained 0.2 percent. Australia’s S&P/ASX 200 Index slid 0.6 percent, while New Zealand’s NZX 50 Index lost 0.2 percent. Taiwan’s Taiex index climbed 0.1 percent. Singapore’s Straits Times Index fell 0.3 percent.

India’s Sensex Index added 0.8 percent, paring gains after surging the most since the last national election in May 2009, as the opposition Bharatiya Janata Party and its allies headed for victory at the polls.

The S&P 500 declined 0.9 percent yesterday as investors continued to sell small-cap shares and Wal-Mart Stores Inc. forecast profit that missed estimates.

U.S. Recovery

Federal Reserve Chair Janet Yellen yesterday said the U.S. economy has further to go to achieve full health and predicted small businesses will play a vital role in the recovery.

Non-performing loans in Asia’s biggest economy rose by 54 billion yuan ($8.7 billion) in the three months through March to 646.1 billion yuan, the highest level since September 2008, according to data released by the China Banking Regulatory Commission yesterday. Bad credit accounted for 1.04 percent of total lending, up from 1 percent three months earlier.

Among companies on the Asian gauge that reported quarterly results through yesterday since April 1 and for which Bloomberg had estimates, 50 percent beat profit expectations, according to data compiled by Bloomberg.

Profit Forecast

Japan Display plummeted 12 percent to 518 yen after the supplier of screens to Apple Inc. said net income will probably be 26.8 billion yen ($264 million) this fiscal year, compared with the 42.8 billion yen average of analyst estimates compiled by Bloomberg.

NCSoft plunged 8.5 percent to 188,500 won after its quarterly net income fell to 36.8 billion won ($36 million), below the average analyst estimate of 53.3 billion won, according to data compiled by Bloomberg.

Johnson Electric Holdings Ltd. slumped 17 percent to HK$6.44 in Hong Kong, the biggest loss since 2009. The manufacturer of micromotors reported full-year net income of $207.9 million, below the $221 million average of analyst estimates compiled by Bloomberg, and said its profit may drop this fiscal year.

Among stocks that gained, Greentown China Holdings Ltd. added 2.8 percent to HK$8.03 after the developer said it was in talks to sell a stake of as much as 30 percent to Sunac China Holdings Ltd. The potential buyer lost 6.5 percent to HK$3.86.

The Asia-Pacific gauge traded at 12.8 times estimated earnings, compared with 15.9 for the S&P 500 and 15 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

--With assistance from Adam Haigh in Sydney.