Asian Stocks Slump on Growth Concerns; China Mobile, Orix Fall

(Bloomberg) -- Asian stocks slumped, dragging the regional benchmark index from a three-month high, as lower-than- expected profit at China Mobile Ltd. curbed optimism the global economy is recovering.

China Mobile, the world’s biggest wireless carrier, sank 5.8 percent in Hong Kong trading. Orix Corp., Japan’s No. 1 non- bank financial company, slid 8 percent as Nomura Holdings Inc. downgraded the stock and Bank of America Corp. set aside more money to cover loan losses. BHP Billiton Ltd., the world’s largest mining company, lost 4.3 percent as oil and metals prices slumped.

The MSCI Asia Pacific Index lost 2.9 percent to 87.36 as of 12:22 p.m. in Tokyo, retreating from its highest close since Jan. 7. A 27 percent rally through yesterday from a five-year low reached on March 9 had lifted the valuation of companies on the gauge to the highest since November 2007.

“You’re seeing cold water being poured on the theme of a sharp rebound in growth,” said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. “It’s encouraging that a bottom has been perceived, but given the likelihood of a protracted period of low growth, some of these share prices ran ahead of reality.”

Japan’s Nikkei 225 Stock Average tumbled 3.4 percent to 8,625.69. Mitsubishi Corp., Japan’s No. 1 trading company, led declines with a 6.5 percent drop after the Nikkei newspaper said falling coal prices will erode profits. Australia’s S&P/ASX 200 Index slumped 2.7 percent. All markets open for trading declined.

Futures on the Standard & Poor’s 500 Index were little changed at 832.90. The gauge slid 4.3 percent yesterday, the most since March 2, as Bank of America increased reserves for future loan losses by 57 percent since the end of December. The MSCI World Index slumped 3.7 percent yesterday.

Safe Haven

Prospects for more bank losses spurred demand for the yen and gold as havens. The Japanese currency touched 97.66, a level not seen since March 31, compared with 98.89 at the 3 p.m. close of stock trading in Tokyo yesterday. Bullion climbed 2.3 percent in New York yesterday. Treasuries advanced for a second day.

Speculation the worst of the global recession has passed drove valuations on the MSCI Asia Pacific Index to 19 times reported profit yesterday, the highest since Nov. 2, 2007. The 14-day relative strength index for the gauge rose to 67.7 yesterday, nearing the 70 threshold that some traders see as a sign to sell.

China Mobile slid 5.8 percent to HK$70.15. First-quarter net income rose 5.2 percent to 25.2 billion yuan ($3.3 billion), the company reported yesterday, the slowest growth rate in five years. The result missed the 26.5 billion yuan median estimate of five analysts in a Bloomberg survey as intensifying competition undermined earnings.

Financial Shares

Financial companies accounted for 31 percent of the MSCI Asia Pacific Index’s decline today. Orix, whose shares have more than doubled in the past month, retreated 8 percent to 4,370 yen. Wataru Ohtsuka, an analyst at Nomura, lowered Orix to “neutral” from “buy,” on the view that recent gains have reduced the attractiveness of the shares.

Westpac Banking Corp., Australia’s third largest, dropped 3.3 percent to A$19.60. Shinhan Financial Group Co., South Korea’s second-biggest financial company, dropped 4.4 percent to 28,550 won.

Toyota Motor Corp., the world’s largest automaker, fell 4.4 percent to 3,700 yen on concern demand will take longer than expected to recover. Sony Corp., the world’s second-biggest consumer electronics maker, lost 5.1 percent to 2,520 yen after Nikko Citigroup Ltd. cut the stock to “hold” from “buy.”