Asia Stocks Fall as World Outlook Damps China Easing Speculation

January 12, 2012, 12:30 AM EST By Jonathan Burgos

Jan. 12 (Bloomberg) -- Asian stocks fell, with a regional benchmark index snapping three days of gains, as weaker Japan trade data added to evidence of a global slowdown, damping speculation that lower inflation in China may result in looser monetary policy.

Sony Corp., Japan’s biggest exporter of consumer electronics, fell 2.5 percent after the nation’s current-account surplus narrowed. QBE Insurance Group Ltd. plunged 13 percent in Sydney after saying 2011 profit dropped as much as 50 percent. Infosys Ltd., India’s second-largest software exporter, tumbled after cutting its sales forecast. Zoomlion Heavy Industry Science & Technology Co., a Chinese construction machinery maker, gained 1.6 percent in Hong Kong.

The MSCI Asia Pacific Index dropped 0.4 percent to 115.9 as of 1:54 p.m. in Tokyo, with three shares falling for every two that rose. The gauge advanced 1.7 percent in the past three days amid bets that China will ease monetary policy. The MSCI Asia Pacific excluding Japan Index was little changed after rising as much as 0.3 percent.

“If inflation keeps coming down, it increases the likelihood that China will deem it appropriate to continue to ease monetary policy,” said Will Seddon, who helps oversee $300 million at White Funds Management in Sydney. “The market has largely digested the possibility of a recession in Europe.”

Regional Indexes

China’s Shanghai Composite Index fell 0.2 percent, reversing gains of as much as 0.8 percent as the nation’s inflation cooled for a fifth straight month in December. Hong Kong’s Hang Seng Index slipped 0.1 percent, after advancing as much as 0.6 percent earlier.

Japan’s Nikkei 225 Stock Average slipped 0.9 percent. Australia’s S&P/ASX 200 Index lost 0.2 percent, with QBE Insurance as the main drag, according data compiled by Bloomberg.

South Korea’s Kospi Index added 0.3 percent and the BSE India Sensitive Index dropped 0.7 percent as Infosys declined.

Futures on the Standard & Poor’s 500 Index slid 0.1 percent today. The gauge was little changed in New York yesterday. The U.S. economic expansion improved last month across most of the country, while hiring was limited and housing remained stagnant, the Federal Reserve said in its Beige Book business survey.

Japanese exporters slid as the nation’s current-account surplus shrank 86 percent from a year earlier as slowing growth in China and Europe and the appreciation of the yen damped demand for Japanese products.

Japan’s Exporters

Sony, the maker of Bravia televisions and PlayStation game consoles, dropped 2.5 percent to 1,316 yen. Toyota Motor Corp., the world’s biggest carmaker by market value, dropped 1.4 percent to 2,589 yen. Canon Inc., the No. 1 camera maker, slipped 1.4 percent to 3,240 yen.

Infosys sank 6.7 percent to 2,636.55 rupees. The company reduced its full-year forecast for sales in dollar terms, citing weaker demand in developed economies including Europe.

The MSCI Asia Pacific Index gained 2.1 percent this year through yesterday, compared with a 2.8 percent advance by the S&P 500 and a 2.2 percent increase by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.2 times estimated earnings on average, compared with 12.3 times for the S&P 500 and 10 times for the Stoxx 600.

QBE Insurance tumbled 13 percent to A$11.30 in Sydney, the biggest decline on the regional benchmark index. The company said 2011 profit fell as much as 50 percent on record natural disaster claims and losses on bond investments.

‘Falling Knife’

“There won’t be too many brave investors stepping in to catch this falling knife,” Peter Esho, Sydney-based chief market analyst at City Index Ltd., a London-based provider of trading services in bonds, stocks and commodities, said in a note. “The number of catastrophes in such a short period of time have finally caught up to hurt the group’s bottom line.”

Chinese construction companies and machinery makers advanced after China’s inflation cooled to a 15-month low and producer-price gains were the smallest in two years in December, leaving the government more room to support growth as a global slowdown hurts exports.

Zoomlion Heavy gained 1.6 percent to HK$9.58 in Hong Kong. China Communications Construction Co., a builder of transport infrastructure, increased 2.2 percent to HK$6.85.

Solar energy producers surged after the China said it plans to start developing 3 gigawatts of solar power capacity in the five years through 2015.

GCL-Poly Energy Holdings Ltd., a Chinese producer of polysilicon used in solar panels, jumped 14 percent to HK$2.50. Trony Solar Holdings Co Ltd., a panel maker, climbed 8.3 percent to HK$1.17.

OCI Co., a South Korean supplier of polysilicon, surged 15 percent to 255,000 won in Seoul, the most on the MSCI Asia Pacific Index. Unit OCI Solar Power said it plans to build 400 megawatts of solar energy projects for CPS Energy in Texas.

--Editors: Nick Gentle, Jim Powell

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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