Asian Stocks Fall for Third Day on Growth Concern; BHP Drops

Asian stocks fell for a third day, led by mining companies and banks, after U.S. President Barack Obama said unemployment in the world’s largest economy may reach 10 percent.
Jiangxi Copper Co., China’s biggest producer of the metal, sank 3.3 percent as metal prices dropped amid concern demand will decline. Westpac Banking Corp., Australia’s biggest lender by market value, dropped 2.6 percent after a government official said it’s too soon to say the economy avoided a recession. Sekisui House Ltd. jumped 3.9 percent in Tokyo, pacing gains by developers as the central bank raised its assessment of the economy for a second month.
“We’re probably more into a grinding period for the economy rather than a rapid recovery,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State, which holds about $102 billion. “We’ve avoided the Armageddon scenario, but it doesn’t mean we’re back to the brave new world that we were all in a few years ago.
The MSCI Asia Pacific Index lost 0.3 percent to 101.74 at 2:46 p.m. in Tokyo, having swung between gains and losses at least seven times. Japan’s Nikkei 225 Stock Average added 1 percent, while the Topix Index gained 0.9 percent as a weaker yen boosted prospects for export earnings.
Hong Kong’s Hang Seng Index lost 1.3 percent, with China Resources Gas Group Ltd. tumbling 13 percent as Credit Suisse Group AG and Morgan Stanley offered to sell their stakes in the company. Australia’s S&P/ASX 200 Index dropped 1.3 percent, led by ports and rail operator Asciano Group, which slumped 12 percent after it increased the size of a share sale. The Philippines Composite Index sank 2.9 percent.
The MSCI Asia Pacific Index’s 3.4 percent drop in the past three days pared its rally from a five-year low on March 9 to 44 percent. The rally drove the average valuation of companies in the gauge to 1.5 times the book value of assets, the highest level since September, according to Bloomberg data.
Copper Drop
Futures on the Standard & Poor’s 500 Index added 0.2 percent. The gauge slid 1.3 percent yesterday as Best Buy Co., the world’s largest electronics retailer, posted disappointing sales.
In an interview with Bloomberg News, U.S. President Obama predicted a 10 percent unemployment rate even as he said the “engines” of an economic recovery have begun to turn. Obama is due to unveil his plan to revamp financial market regulation later today.
Jiangxi Copper slipped 3.3 percent to HK$12.74. Mitsubishi Corp., which gets more than half of its profit from commodities, slipped lost 1.3 percent to 1,857 in Tokyo. Alumina Ltd. sank 4.9 percent to A$1.45 in Sydney.
Copper prices in New York sank 1.4 percent yesterday as the U.S. Federal Reserve said industrial production sank in May. In London, a gauge of six metals dipped for a third day, the longest losing stretch since February.
Australian Banks
BHP Billiton Ltd. the world’s biggest mining company, sank 3 percent to A$35.36 in Sydney. Its credit-default swaps, the cost of protecting its debt, had their biggest gain since Oct. 22 on speculation it is planning an acquisition.
Westpac dropped 2.6 percent to A$19.34. Australia & New Zealand Banking Group Ltd. fell 2.1 percent to A$16.45. Commonwealth Bank of Australia, the nation’s largest mortgage lender, lost 1.3 percent to A$37.60.
The MSCI Asia Pacific Index slumped as much as 51 percent in the past year as the financial crisis dragged economies including Japan into recession. Australia’s economy unexpectedly grew 0.4 percent in the first quarter after contracting a 0.6 percent in previous three months, government figures released on June 3 showed.
“Celebration would be premature,” David Gruen, executive director of the Australian Treasury Department’s Macroeconomic Group, said in a speech late yesterday. “The global recession, and its Australian counterpart, still has some way to run.”
Taking Profit
The MSCI gauge climbed more than 10 percent for a second month in May, which hasn’t happened since the two months ended 1993. Stocks on the index trade at 23 times estimated profit, more than the MSCI World Index’s 15 times, Bloomberg data show.
“Some people are taking profit as the market has risen too fast,” said Naoki Fujiwara, who oversees the equivalent of $3.7 billion at Shinkin Asset Management Co. in Tokyo. “Investors’ appetite for bargain hunting is surprisingly strong.”
Japan’s Sumitomo Forestry Co. surged 12 percent to 777 yen, while Sekisui House jumped 3.9 percent to 989 yen. Morgan Stanley upgraded the stocks to “overweight” and lifted its outlook on the country’s real estate sector to “attractive,” saying home orders probably bottomed in the first quarter and should benefit from tax breaks.
Daiwa Investment
Daiwa Securities Group Inc. gained 0.6 percent to 651 yen. The company will invest 10 billion yen ($104 million) in DA Office Investment Corp., the Nikkei newspaper reported today, without citing anyone. Daiwa said it is not the source of the Nikkei report. DA Office, which denied the report, wasn’t traded as orders to buy outnumbered those to sell.
In Hong Kong, China Resources Gas plunged 13 percent to HK$5.10. Credit Suisse and Morgan Stanley are offering a combined 166 million existing shares at HK$4.30 to HK$4.60 each, according to an e-mail sent to fund managers yesterday.
Asciano slumped 12 percent to A$1.28 after the Australian ports and rail operator increased a share sale by 18 percent to A$2.35 billion ($1.86 billion) to slash debt.