Rising tensions in West Asia and North Africa contribute to the fall.
Asian stocks fell, snapping three days of gains, as BlueScope Steel Ltd led steelmakers lower after saying rising raw material costs triggered a wider loss, tempering gains by oil producers amid increasing tensions in West Asia and North Africa.
BlueScope, Australia’s largest steelmaker, dropped three percent. BHP Billiton, the world’s biggest mining company, lost 1.5 per cent as copper futures fell as much as 0.8 per cent on speculation China may act further to contain inflation. Hyflux Ltd, which is building desalination plants in Algeria and the Middle East, fell five percent in Singapore amid mounting tensions in the region. Cnooc Ltd, China’s No 1 offshore oil producer, gained 1.7 per cent in Hong Kong as crude oil prices rose.
The MSCI Asia Pacific Index dropped 0.1 per cent to 139.72 as of 7:52 pm in Tokyo, with about three stocks declining for every two that advanced. The gauge climbed three percent last week, the most since the period ended December 3, after intensified anti- government protests in Egypt forced President Hosni Mubarak to resign and reports showed the US economic recovery and corporate earnings are improving.
“The relief markets felt after Egypt’s President Mubarak resigned was shortlived as unrest continues in North Africa and West Asia amid concern it might spread to other countries where democracy isn’t established,” said Sydney-based Shane Oliver, head of investment strategy at AMP Capital Investors Ltd, which manages about $93 billion. “I think it’ll settle down without major negative global consequences, but the tail risk of an escalation is high enough to keep investors nervous.”
China reserve ratio
China’s central bank on February 18 raised reserve requirements for lenders 10 days after boosting interest rates as Premier Wen Jiabao tackles accelerating inflation and the risk of asset bubbles in the fastest-growing major economy.
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Japan’s Nikkei 225 Stock Average rose 0.1 per cent. South Korea’s Kospi Index lost 0.4 per cent. Australia’s S&P/ASX 200 Index fell 0.7 per cent, while New Zealand’s NZX 50 Index slid 0.9 per cent. Hong Kong’s Hang Seng Index dropped 0.5 per cent, while the Shanghai Composite Index increased 1.1 per cent.
Arab governments are cracking down on pro-democracy activists as uprisings that toppled leaders in Tunisia and Egypt spread to Libya, Algeria, Yemen and Bahrain. In Libya, security forces attacked anti-government protesters, increasing the death-toll over five days of unrest to more than 170, according to Human Rights Watch.
Chinese authorities acted to halt an online call for a “Jasmine Revolution,” detaining activists and boosting police on streets, the Associated Press reported, citing Chinese websites and a Hong Kong human rights group.
US futures
“Investors are looking to see whether concern over the situation in West Asia will overshadow optimism about the US economic outlook,” said Kazuhiro Takahashi, a general manager at Tokyo-based Daiwa Securities Capital Markets Co.
Futures on the Standard & Poor’s 500 Index slipped 0.3 per cent. The index rose 0.2 per cent in New York on February 18, as companies reported higher-than-estimated earnings.
BlueScope declined three per cent to A$2.30. The company said first-half net loss widened to A$55 million ($55.8 million) from a A$28 million loss a year because of higher raw material costs and lower domestic demand.
South Korean steelmaker Posco, which said on February 18 it aims to cut operating costs amid rising iron ore and coal prices, dropped 3.3 per cent to 472,500 won in Seoul. JFE Holdings Inc, Japan’s No 2 producer of the alloy by market capitalization, sank 2.1 per cent to 2,672.
US, Europe stocks
The MSCI Asia Pacific Index increased 1.6 per cent through February 18 in 2011, compared with gains of 6.8 per cent by the S&P 500 and 5.5 per cent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 14.2 times estimated earnings on average, compared with 14 times for the S&P 500 and 11.5 times for the Stoxx 600.
Gauges of raw-material producers posted the biggest decline among the 10 industry groups in the MSCI Asia Pacific Index.
BHP Billiton declined 1.5 percent to A$45.85 in Sydney. Rio Tinto Group, the world’s third-largest mining company, dropped 1.7 per cent to A$86.14. Jiangxi Copper Co, China’s No. 1 producer of the metal, fell 1.2 per cent to HK$25.15.
Copper for three-month delivery on the London Metal Exchange fell as much as 0.8 per cent earlier on speculation demand in China, the world’s biggest user of the metal, will fall after the government stepped up measures to rein in liquidity. The contract has since gained 0.3 per cent.
China property curbs
Chinese banks and property developers dropped after the reserve requirement ratio for domestic banks was increased by 50 basis points. The increase came 10 days after boosting interest rates as Premier Wen Jiabao tackles accelerating inflation and the risk of asset bubbles in the fastest-growing major economy.
China Construction Bank Corp, the nation’s second-biggest lender by market value, slipped 0.9 per cent to HK$6.83. Smaller rival Bank of China Ltd. lost 0.5 per cent to HK$4.11.
Agile Property Holdings Ltd., which builds villas and apartments in China’s southern city of Guangzhou, decreased 1.3 per cent to HK$10.52 in Hong Kong. Hang Lung Properties Ltd., the Hong Kong-based developer that gets 16 per cent of sales from China, slipped 1.4 per cent to HK$32.75.