Asian Stocks Fall on U.S. Shares Drop, China Money Rates

Asian stocks fell for a second day as China's money-market rates continued to surge and after U.S. shares retreated from a record amid disappointing company earnings forecasts.

Agricultural Bank of China Ltd. dropped 2 percent in Hong Kong, pacing declines among Chinese lenders. Komatsu Ltd. (6301), Asia's biggest maker of construction equipment, sank 2.8 percent in Tokyo after larger rival Caterpillar Inc. lowered its 2013 sales and profit forecast. Hitachi Ltd. jumped 7.4 percent in Tokyo after the electronics and machinery maker posted preliminary first-half earnings that beat analyst estimates.

The MSCI Asia Pacific Index slipped 0.2 percent to 142.42 as of 1:01 p.m. in Tokyo as seven of the 10 industry groups on the measure declined. The gauge fell 0.8 percent yesterday, snapping a four-day advance, as a surge in China's money-market rates fueled a global slump in stocks and metals. The measure climbed to a five-month high on Oct. 22 amid speculation the Federal Reserve will delay tapering its economic stimulus.

"The market has been overbought and a pull-back is just natural," John Woods, Hong Kong-based head of fixed income at Citi Investment Management, said by telephone. "Excessive capital inflows into China may have been a concern for authorities and they've probably taken steps to address the underlying liquidity. We remain positive on equities."

China Rates

China's Shanghai Composite Index slid 0.2 percent as money-market rates climbed for a sixth day as the nation's central bank refrained from injecting cash in open-market operations for the third auction in a row amid signs of a pickup in Asia's biggest economy.

The HSBC Holdings Plc and Markit Economics flash purchasing managers' index of China's manufacturing increased to 50.9 this month from 50.2 in September. That compares with the median estimate of 50.4 in a Bloomberg survey of economists.

China's seven-day repurchase rate, a gauge of funding availability in the banking system, surged as much as 95 basis points today to 5 percent, the highest since Aug.1, according to a weighted average compiled by the National Interbank Funding Center.

Regional Gauges

Hong Kong's Hang Seng Index slipped 0.9 percent and Japan's Topix index fell 0.4 percent. New Zealand's NZX 50 Index declined 0.9 percent, retreating from a record. South Korea's Kospi index, Taiwan's Taiex index and Singapore's Straits Times Index all lost 0.1 percent. Australia's S&P/ASX 200 Index rose 0.4 percent.

The MSCI Asia Pacific Index climbed 3 percent this month through yesterday after U.S. lawmakers ended the government shutdown and raised the debt ceiling. The gauge traded at 13.7 times estimated earnings, compared with 15.8 for the S&P 500 and 14.7 for the Stoxx Europe 600 Index.

Standard & Poor's 500 futures gained 0.3 percent today. The U.S. equity gauge fell 0.5 percent yesterday, snapping a five-day rally, as forecasts at companies from Caterpillar Inc. to Broadcom Corp. disappointed investors.

'Too Optimistic'

"The market has come a long way now and there's not enough of a boost from earnings for the market to sustain this strong pace of advance," Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages $131 billion, said by telephone. "People are still a bit too optimistic on earnings."

Of the 169 S&P 500 companies that have reported results this season, 76 percent exceeded analysts' predictions for profit, while 54 percent beat sales estimates, according to data compiled by Bloomberg.

Former Federal Reserve Chairman Alan Greenspan said stock market momentum is heading upward.

"In a sense, we are actually at relatively low stock prices," Greenspan, who guided the central bank for more than 18 years, said in an interview with Sara Eisen on Bloomberg Television. "So-called equity premiums are still at a very high level, and that means that the momentum of the market is still ultimately up."