BLBG: Asian Stocks Fall for Second Week; Chinese Developers Lead Drop
By Hanny Wan and Shiyin Chen
Dec. 19 (Bloomberg) -- Asian stocks fell for a second week, led by Chinese developers on concern the nation will step up measures to curb property speculation. Japanese banks rose on optimism they’ll have at least a decade to implement stricter capital rules.
Greentown China Holdings Ltd., a real estate developer in the country, tumbled 18 percent. Mongolia Energy Corp. sank 22 percent on speculation the Hong Kong-listed exploration company will report a first-half earnings loss next week. Mizuho Financial Group Inc., Japan’s third-largest bank by market value, soared 13 percent. Axa Asia Pacific Holdings Ltd. rallied 12 percent after National Australia Bank Ltd. offered A$13.3 billion ($11.8 billion) to buy unit of French insurer Axa SA.
“China’s asset markets are a ponzi scheme,” former Morgan Stanley chief Asian economist Andy Xie said in a Bloomberg Television interview in Hong Kong. “Property is heading for one huge bust that will take a year and a half to unfold.”
The MSCI Asia Pacific Index fell 1.8 percent this week to 117.52, adding to a 0.4 percent drop last week. Japan’s Nikkei 225 Stock Average added 0.4 percent this week, while South Korea’s Kospi Index slid 0.6 percent.
Hong Kong’s Hang Seng Index declined 3.3 percent, and the Shanghai Composite Index retreated 4.1 percent. Australia’s S&P/ASX 200 Index added 0.3 percent.
Asset Bubble Concerns
The MSCI gauge has climbed 31 percent this year, set for its biggest annual gain since 2003, on signs government spending and lower interest rates bolstered economies. Stocks in the benchmark trade at 22 times estimated earnings, compared with 17.6 times for the Standard and Poor’s 500 Index in the U.S. and 15.5 times for the Dow Jones Stoxx 600 Index in Europe.
Concerns about asset bubbles and expectations that the U.S. Federal Reserve will raise interest rates next year dragged Asian stocks this week. China’s lenders declined after a regulatory official said bad loans pose a long-term risk.
Greentown China plunged 18.4 percent to HK$12.06. Sino- Ocean Land Holdings Ltd., a Beijing-based developer of residential, office and commercial property, slumped 17 percent to HK$6.83. Hopson Development Holdings Ltd., a Hong Kong-based developer of real estate in China, sank 17 percent to HK$10.66.
China’s government set the deposit requirement for land purchases at a minimum of 50 percent of the total price, according to a statement issued by the Ministry of Finance, the People’s Bank of China and other agencies.
Property Market Supervision
The new down-payment level is an increase, said Zhou Hu, a real estate analyst at Bohai Securities Co. in Beijing. China didn’t previously have a standard deposit rule for land purchases, Zhou said.
The Xinhua News Agency said the government will target “excessive” property prices in some cities, and plans to “speed the construction of low-cost housing” and strengthen supervision of the real-estate market.
Mongolia Energy plunged 22 percent to HK$4.14, paring its gains this year to 74 percent, on speculation the company will report a first-half earnings loss next week.
“Investors are taking profit ahead of a possible loss in their results,” said Timothy Kwai, an analyst at Quam Securities in Hong Kong. “It’s quite a volatile stock as the company is investing a lot ahead of going into production next year.”
Mizuho soared 13 percent to 179 yen. Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by market value, climbed 1.5 percent to 462 yen. Sumitomo Mitsui Financial Group Inc., the No. 2, advanced 4.8 percent to 2,840 yen.
Capital Adequacy Rules
The Basel Committee on Banking Supervision will begin to introduce rules requiring banks to raise their capital ratios from 2012 and give them a transition period of 10 years to 20 years, the Nikkei newspaper said Dec. 16, without citing anyone as the source of the information.
Japanese banks trimmed their gains yesterday after the Basel Committee on Banking Supervision said lenders should increase the quality of the capital they hold by the end of 2012 to cope with losses.
“Concerns about having to raise capital will continue to haunt banks,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees the equivalent of $96 billion. “Banks cannot avoid raising capital.”
Axa Asia Pacific rallied 12 percent to A$6.49. National Australia Bank tumbled 7.9 percent to A$25.99 after the lender said it will sell A$1.5 billion in stock next year to help fund the purchase of Axa Asia Pacific’s operations in Australia and New Zealand.
PT Bumi Resources, Indonesia’s biggest coal producer, plunged 13 percent to 2,250 rupiah. Three Indonesian companies are being investigated for “tax-related issues,” the country’s taxation authority said Dec. 16, after the Jakarta Globe reported Dec. 12 that Bumi and two of its units may have underreported in 2007.
Bumi is “awaiting further explanation while studying the facts,” it said Dec 13. Dileep Srivastava, Bumi’s senior vice president for investor relations, said Dec. 16 that the statement stands.
To contact the reporters for this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net; Shiyin Chen in Singapore at schen37@bloomberg.net
