By Patrick Rial Aug. 22 (Bloomberg) -- Asian stocks fell for the second time in three weeks as concern that China will rein in lending sent the nation’s equities briefly into a bear market and as metal prices retreated. The Shanghai Composite Index fell as much as 20 percent from its 2009 high on Aug. 4 as a slump in new lending in July fueled concern growth may decelerate. Rio Tinto Group, the world’s third-largest mining company, lost 6.1 percent in Sydney for the week as earnings missed estimates and prices for metals including copper and nickel fell. Honda Motor Co., Japan’s No. 2 automaker, tumbled 5.3 percent as the U.S. announced the end of the “cash for clunkers” subsidy program. “Everyone’s clinging to growth in the stronger economies such as China,” said Tim Schroeders, who helps manage $1.1 billion at Pengana Capital Ltd. in Melbourne. “If there’s a perceived hiccup along the way, it pretty soon flows through to much weaker share prices. We may have priced in a bit too much, too soon.” The MSCI Asia Pacific Index lost 3.2 percent this week to 110.61, slipping from the highest level for the year on Aug. 14. The benchmark has rallied: 57 percent since dropping to the lowest in almost six years on March 9. Japan’s Nikkei 225 Stock Average fell 3.4 percent to 10,238.20 as investors questioned the sustainability of a recovery even as data showed the economy expanded for the first time in more than a year last quarter. Valuations Not ‘Compelling’ Taiwan’s Taiex index fell 5.9 percent, the region’s worst performance, on concern a possible Cabinet reshuffle in September will delay the signing of a financial memorandum of understanding with China. A revival in corporate profits and economic growth amid record government stimulus measures helped sustain the MSCI Asia Pacific’s rally since March. Companies included in the benchmark currently trade at an average 24 times estimated earnings, up from as low as 9.1 times in October, according to data compiled by Bloomberg. “Investors need to see more evidence of a recovery as valuations are no longer compelling,” said Marco Wong, Singapore-based chief investment officer for Asia excluding Japan at SG Asset Management, which has $351.6 billion in assets globally. “We may see further consolidation.” China Plunge Citic Securities Co., China’s biggest brokerage, lost 12 percent to 28.78 yuan in Shanghai. China Vanke Co., the largest developer by market value, fell 11 percent to 11.34 yuan. China Construction Bank Corp., the country’s second-largest, lost 4.4 percent in Hong Kong. A plunge in new bank loans in July, disappointing earnings and concern the government will seek to damp property speculation has sapped confidence, driving down the Shanghai Composite briefly on Aug. 19 by the 20 percent threshold that signals a bear market. Rio Tinto sank 6.1 percent to A$56.31. The company said on Aug. 20 first-half profit fell 65 percent, missing analyst estimates. Japan’s Mitsubishi Corp., which generates about half its revenue from commodities, retreated 7.6 percent. Alumina Ltd., partner in the world’s biggest producer of the material used to make aluminum, tumbled 12 percent to A$1.60. A gauge of six metals traded on the London Metal Exchange, including copper and zinc, had its first weekly drop in a month and a half. Clunkers Program Ends Honda declined 5.3 percent to 2,955 yen. Larger rival Toyota Motor Corp. slipped 3.4 percent to 3,980 yen. Nissan Motor Co., Japan’s No. 3 automaker, dropped 7.1 percent to 677 yen. The “cash for clunkers” program, which offers car buyers discounts of as much as $4,500, will close next week, U.S. Transportation Secretary Ray LaHood said on a Aug. 20, after having recorded transactions valued at $1.9 billion in rebates. Japan’s gross domestic product expanded at an annual 3.7 percent pace in the three months ended June 30, a government report on Aug. 17 showed. A revival in exports and consumer spending contributed to growth, while lower residential and capital spending hindered it. Sanyo Electric Co., a maker of rechargeable batteries for mobile phones and laptop computers, rallied 15 percent for the week after the Nikkei newspaper reported Toyota will use the company’s batteries for some cars. To contact the reporter responsible for this story: Patrick Rial in Tokyo at prial@bloomberg.net.

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