By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Mainland Chinese stocks fell Tuesday to lead most major Asian markets lower amid worries Beijing may not ease policy to immediately address an economic slowdown.
Japanese equities retreated a day after the after Nikkei Stock Average ended at its highest level in more than five years as the yen strengthened to drop, while South Korean shares advanced on bargain buying in beaten-down automobile firms.
The Shanghai Composite /zigman2/quotes/206600939/delayed CN:000001 +0.92% ended 1.1% lower during the session. The drop comes a day after April data on industrial output and retail sales was broadly interpreted as a slow start to the second quarter for the Chinese economy.
Elsewhere in the region, Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -0.10% dropped 0.3% and Japan’s Nikkei /zigman2/quotes/210597971/delayed JP:NIK +0.17% let early gains slip by to end 0.2% lower. The benchmark had on Monday ended at its highest close since December 2007.
Meanwhile, South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -0.01% jumped 1% after underperforming other Asian markets recently, while Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.53% added 0.2%.
The performance came even as the Standard & Poor’s 500 Index /zigman2/quotes/210599714/realtime SPX -0.80% rose marginally to set a fresh closing record Monday, in the wake of data showing an increase in U.S. retail sales. The Dow industrials /zigman2/quotes/210598065/realtime DJIA -0.38% retreated, however, amid concerns over the Federal Reserve’s quantitative-easing program, which also weighed on sentiment in Asia.
“Although recent central-bank policy has distorted market prices in equities and bonds, it seems unlikely that the U.S. Fed will reduce its asset-purchase program until the second half of the year,” said Perpetual head of investment market research Matthew Sherwood.
“Low [interest] rates should continue to support asset prices, but stretched valuations means that earnings growth is now necessary to keep the market rising,” he said.
Chinese property stocks were hit after Reuters cited local media as reporting that Beijing has tightened regulations for developers looking to obtain pre-sales licenses for new housing projects.
Shares of Gemdale Corp. /zigman2/quotes/208026094/delayed CN:600383 +2.72% slid 3.3% and Poly Real Estate Group Co. /zigman2/quotes/201864015/delayed CN:600048 +1.29% dropped 3% in Shanghai, China Vanke Co.’s yuan-denominated stock shed 2.6% in Shenzhen and China Resources Land Ltd. /zigman2/quotes/202417326/delayed HK:1109 -0.30% /zigman2/quotes/201656413/composite CRBJF +5.10% lost 3% in Hong Kong.
Betting on commercial property in Hong Kong
Property developer Hongkong Land Holdings is bullish on the city’s commercial-property market as it continues to expand across Asia.
“Going forward, investment still holds the key to sustaining the growth recovery. While the renewed property market tightening is likely to weigh on property investment in the coming months, investment ... is likely to continue to find support from strong credit growth,” HSBC’s China economists led by Hongbin Qu wrote in a report Tuesday.
In Japan, the best performing stock market in Asia this year, exporters pulled back as the U.S. dollar /zigman2/quotes/210561789/realtime/sampled USDJPY +0.2451% slipped to around 101.50 yen, down from about ¥101.81 late in North America on Monday.
Shares of Fanuc Corp. /zigman2/quotes/202054799/delayed JP:6954 +1.29% /zigman2/quotes/209410825/composite FANUY +0.75% fell 1.6%, Bridgestone Corp. /zigman2/quotes/205589013/delayed JP:5108 +2.11% /zigman2/quotes/204111038/composite BRDCY +2.73% lost 1.7%, and Nikon Corp. /zigman2/quotes/203281219/delayed JP:7731 -0.99% /zigman2/quotes/209396469/composite NINOY +8.96% slid 1.7%.
On the upside, shares of Hino Motors Ltd. /zigman2/quotes/209422954/delayed JP:7205 +1.09% /zigman2/quotes/207652388/composite HINOY +13.07% rose 1.3%, and those of Isuzu Motors Ltd. /zigman2/quotes/202637468/delayed JP:7202 +0.19% /zigman2/quotes/206362374/composite ISUZY +3.21% climbed 1.8%. Their advance followed a Nikkei newspaper report that the two firms had increased their budget outlays for the current financial year after posting record-high profits in the last fiscal year.
Citizen Holdings Co. /zigman2/quotes/202792467/delayed JP:7762 +3.11% rose 0.6% after forecasting a return to profit this financial year.
While the stronger yen weighed on Tokyo, it also helped lift shares of some South Korean exporters that had recently suffered on concern their global competitiveness would be hurt amid an improving outlook for their Japanese rivals.
Hyundai Motor Corp. /zigman2/quotes/206684590/delayed KR:005380 -1.68% /zigman2/quotes/204364212/composite HYMTF +4.38% gained 2.7%, and Kia Motors Corp. /zigman2/quotes/206019389/delayed KR:000270 -2.65% /zigman2/quotes/205439169/composite KIMTF +8.21% climbed 3.8%, while shipbuilder Hyundai Heavy Industries Co. /zigman2/quotes/206598861/delayed KR:009540 -1.09% advanced 0.8%.
In Hong Kong, shares of United Co. Rusal PLC /zigman2/quotes/204335089/delayed HK:486 -2.48% gained 1.5% after the world’s largest aluminum producer reported a narrower loss in the first quarter.
Some Asian gold miners lost ground after the metal’s futures weakened for a third straight session in the U.S. overnight.
Newcrest Mining Ltd. /zigman2/quotes/203840223/delayed AU:NCM -3.94% /zigman2/quotes/203286036/composite NCMGY -6.87% dropped 2.5% in Sydney, while Zijin Mining Group Co. /zigman2/quotes/204517000/delayed HK:2899 -11.20% /zigman2/quotes/203833875/delayed CN:601899 -8.29% /zigman2/quotes/209836076/composite ZIJMF -8.89% lost 1.3% in Hong Kong as well as Shanghai.