Asian Stocks Fall for Second Day on China Housing Slowdown

May 19, 2014 6:02 am ET

May 19 (Bloomberg) -- Asian stocks fell, with the regional benchmark index posting its second day of losses, after data showed a spreading slowdown in China’s housing market.

China Resources Land Ltd., the second-biggest mainland developer listed in Hong Kong by market value, lost 1.2 percent. Malaysian Airline System Bhd., the unprofitable state carrier that’s still searching for a lost flight, plunged 18 percent amid concern the government may let the company fail. UGL Ltd. slumped 9.7 percent in Sydney on a report the sale of the builder’s property unit may be scrapped.

The MSCI Asia Pacific Index lost 0.3 percent to 139.35 as of 5:43 p.m. in Hong Kong after rising 1.3 percent last week, the biggest such advance in six weeks.

“People can see a number of negatives out there, which is sufficient enough to keep them cautious about the investment outlook,” said Angus Gluskie, a fund manager who helps oversee more than $550 million at White Funds Management in Sydney. “We might be in for a soft couple of months in the meantime.”

The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong fell 0.4 percent, while the benchmark Hang Seng Index slid less than 0.1 percent. The Shanghai Composite Index lost 1.1 percent.

Japan’s Topix index slipped 0.8 percent as the yen extended gains against the dollar after rising three days. Data today showed Japan’s machine orders jumped more than forecast in March.

South Korea’s Kospi index gained 0.1 percent. Australia’s S&P/ASX 200 Index lost 1.3 percent, while New Zealand’s NZX 50 Index slipped 0.4 percent. Taiwan’s Taiex index rose 0.1 percent, and Singapore’s Straits Times Index was little changed.

China Property

China’s new-home prices rose in April in the fewest cities in 1 1/2 years as developers offered discounts and economic growth slowed, prompting the easing of property curbs in some places. Prices last month climbed in 44 of the 70 cities tracked by the government compared with 56 cities in March.

“Market sentiment is still cautious although Hong Kong had a quick rebound last week,” said Linus Yip, chief strategist at First Shanghai Securities Ltd. in Hong Kong. “Purchasing power for properties isn’t strong right now and it’s not good for housing prices in China.”

China Resources Land dropped 1.2 percent to HK$15.12. China Overseas Land & Investment Ltd. lost 1.4 percent to HK$18.98.

Futures on the Standard & Poor’s 500 Index fell 0.4 percent today. The measure added 0.4 percent on May 16 as small-cap shares reversed declines amid a faster-than-forecast gain in the pace of U.S. home construction. Another report showed a regional measure of U.S. consumer confidence unexpectedly declined from a nine-month high.

Malaysian Airline

Malaysian Airline plummeted 18 percent to 15.5 sen. The government should consider giving up its stake in the flag carrier, Sinar Harian newspaper reported, citing Malaysia’s Public Accounts Committee Chairman Nur Jazlan Mohamed. Bankruptcy may be an option to allow the company to restructure, the Wall Street Journal said last week, citing an interview with Prime Minister Najib Razak.

UGL slumped 9.7 percent to A$6.86. The Australian Financial Review reported the construction company has received just one fully financed offer its DTZ property unit.

Among stocks that rose, Tokyo Electron Ltd. jumped 5.3 percent to 6,187 yen. Applied Materials Inc., which will acquire the Japanese industrial-electronics maker in a stock swap, forecast fiscal third-quarter sales that topped the low end of analysts’ estimates.

STATS ChipPAC Ltd., which provides semiconductor test and assembly services, surged 14 percent to 52.5 Singapore cents after saying it’s considering a takeover bid.

Earnings Analysis

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

The regional index traded at 12.7 times estimated earnings compared with 15.9 for the S&P 500 and 15 for the Stoxx Europe 600 Index, data compiled by Bloomberg show.