Asian Stocks Fall on Economic Growth Concern, Before BOJ – Businessweek

Asian stocks fell as worse-than-
estimated U.S. economic data spurred concern about the pace of
growth and as investors speculated the Bank of Japan (8301) won’t meet
forecasts for monetary policy expansion.

Toyota Motor Corp., the world’s largest carmaker, declined
1.4 percent in Tokyo as the yen strengthened against the dollar.
Mizuho Financial Group Inc., Japan’s third-biggest bank by
market value, lost 2 percent ahead of the central bank decision
today. BHP Billiton Ltd., the world’s No. 1 miner, retreated 1.3
percent in Sydney.

The MSCI Asia Pacific Index (MXAP) slid 0.9 percent to 133.70 as
of 11:24 a.m. in Tokyo, with more than three shares falling for
each that rose. The regional gauge climbed the past five months
as Japanese shares increased on speculation the nation will
deploy more stimulus and amid signs the U.S. economy is
recovering. Markets in China, Hong Kong and Taiwan are closed
today for a holiday.

“Caution has set in as disappointing economic data finally
caught up with investors,” said Matthew Sherwood, head of
investment markets research in Sydney at Perpetual Investments,
which manages about $25 billion. “Any under-whelming policy
response from the Bank of Japan, which is something the BOJ is
notorious for, will be detrimental. It could be a bumpy end to
the week.”

Japan’s Nikkei 225 Stock Average (NKY) sank 1.7 percent after
yesterday posting its largest advance in eight weeks.
Australia’s S&P/ASX 200 Index slid 0.7 percent and Singapore’s
Straits Times Index lost 0.3 percent. New Zealand’s NZX 50 Index
added 0.3 percent.

North Korea

South Korea’s Kospi Index (KOSPI) retreated 1.9 percent as the risk
of conflict with North Korea curbed demand for the nation’s
assets. The North ratified a law this week authorizing plans for
“counter-actions” against U.S. aggression including a nuclear
strike, official media reported today.

“North Korea is heightening its threats day by day and
that risk factor is having a negative impact on South Korean
financial markets,” said Jeon Seung Ji, an analyst at Samsung
Futures Inc. in Seoul. “Rising tension is prompting foreign
investors to sell more Korean stocks, weakening the currency. In
the meantime, exporters are likely to look for a point to sell
dollars.”

The MSCI Asia Pacific Index, the benchmark regional
equities gauge, yesterday traded at 13.4 times average estimated
earnings compared with 14 for the Standard & Poor’s 500 Index
and 12.6 times for the Stoxx Europe 600 Index, according to data
compiled by Bloomberg.

U.S. Jobs

Futures on the S&P 500 Index (SPX) were little changed. Financial
and energy shares tumbled yesterday, leading the S&P 500 to its
largest drop in five weeks, as ADP Research Institute data
showed U.S. companies boosted employment by 158,000 workers in
March, less than the median forecast of 39 economists surveyed
by Bloomberg who called for a 200,000 gain.

The data came before a non-farm payrolls report from the
Labor Department on April 5, which may show U.S. employers hired
a net 195,000 workers for the month, according to the median
forecast of 87 economists surveyed by Bloomberg.

The Institute for Supply Management’s index of U.S. non-
manufacturing businesses, which covers almost 90 percent of the
economy, fell to 54.4 in March from 56 in February, the Tempe,
Arizona-based group said yesterday. The median forecast of 73
economists surveyed by Bloomberg was 55.5. Readings above 50
signal expansion.

Exporters Fall

Exporters accounted for the largest declines in the Asia-
Pacific region today. Toyota Motor slid 1.4 percent to 4,725 yen
and Honda Motor Co. declined 1.1 percent to 3,485 yen. Canon
Inc. (7751), a camera maker that gets 80 percent of sales outside
Japan, lost 4.7 percent to 3,115 yen. The yen was little changed
at 92.98 per dollar, having strengthened since the equity market
closed yesterday. Gains in the currency erode the value of
Japanese earnings made abroad when repatriated.

Bank of Japan Governor Haruhiko Kuroda may be constrained
in the amount of stimulus he can deliver at the conclusion of
his first policy meeting today as he seeks support from a board
mostly appointed by the previous government.

The central bank chief has only three definite allies for
boosting monthly bond purchases on the nine-person committee,
according to BNP Paribas SA. Credit Suisse Group AG says a
struggle to secure consensus could limit Kuroda to doing the
“minimum required” and signaling stronger measures to come.

Inflation Target

Disappointing investors would risk a rebound in the yen,
making it harder for the central bank to achieve Kuroda’s goal
of 2 percent inflation in two years. The currency reached a 3
1/2-year low against the dollar last month and stocks surged as
Kuroda proposed policies from increased bond buying to bringing
forward open-ended asset purchases from 2014.

Japanese banks were among companies posting the largest
declines on Japan’s broader Topix Index. Mizuho Financial lost 2
percent to 192 yen and Mitsubishi UFJ Financial Group Inc.
retreated 1.6 percent to 539 yen.

The London Metal Exchange Index (LMEX) of industrial metals
retreated 0.9 percent yesterday. BHP Billiton declined 1.3
percent to A$31.80 and Rio Tinto Group slid 1 percent to
A$54.84.

To contact the reporter on this story:
Adam Haigh in Sydney at
ahaigh1@bloomberg.net

To contact the editor responsible for this story:
John McCluskey at
j.mccluskey@bloomberg.net