Asian Stocks Drop on Growth Concerns; Yen, Treasuries Advance

June 16 (Bloomberg) -- Asian stocks fell, giving the MSCI Asia Pacific Index its biggest drop in a month, after a New York manufacturing report missed economist estimates and commodity prices sank. The yen strengthened and Treasuries rose.

Toyota Motor Corp., the world’s No. 1 automaker, fell 2.6 percent in Tokyo. Sony Corp., which gets 24 percent of its sales from the U.S., retreated 2.7 percent. PetroChina Co., China’s biggest oil producer, fell 4.7 percent in Hong Kong and Rio Tinto Group, the world’s third-largest mining company, slumped 4.2 percent in Sydney as oil and copper prices fell. Declines in Asia extended a global slump that dragged the MSCI World Index down by the most in two months yesterday.

“Some may have believed that the deterioration of the global economy had ended, but that’s not the case,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $52 billion in Tokyo. “Those who bought stocks on a perception the economy would improve are now selling on reality.”

The MSCI Asia Pacific Index sank 2.2 percent to 101.30 as of 12:57 p.m. in Tokyo, the biggest drop since May 14. The gauge has surged 44 percent from a more than five-year low on March 9 amid speculation the global economy is recovering.

Japan’s Nikkei 225 Stock Average fell 2.6 percent to 9,781.30 as the central bank left the overnight lending rate unchanged at 0.1 percent today. Hong Kong’s Hang Seng Index slumped 3.2 percent.

The Kospi Index dropped 1.1 percent in Seoul as MSCI Inc., whose stock indexes are tracked by investors with about $3 trillion in assets, left South Korea unchanged as an emerging market. The country, the Asia Pacific’s sixth-largest stock market, had been under review for an upgrade to developed status.

Manufacturing Contraction

Konica Minolta Holdings Inc., which makes printers, slumped 6.2 percent in Tokyo after Credit Suisse Group AG downgraded the stock. Australia’s Nufarm Ltd., which supplies farm chemicals, sank 12 percent after cutting its profit target. Among stocks that rose today, Macquarie Communications Infrastructure Group surged 26 percent after receiving an increased takeover bid.

Futures on the Standard & Poor’s 500 Index dropped 0.1 percent. The gauge slid 2.4 percent yesterday, the most since May 13, as the Federal Reserve Bank of New York’s general economic index fell to minus 9.4 in June from minus 4.6 the previous month. Economists in a Bloomberg survey had expected the gauge to stay unchanged. Readings below zero for the index signal manufacturing is shrinking.

‘Moderate’ Recovery

The New York data was the latest in a string of figures that have made some investors more cautious on economic growth prospects. Japan’s government reported on June 8 that the country’s current-account surplus narrowed in April as exports slumped. Overseas shipments declined 26.4 percent last month from a year earlier, China’s customs bureau said on June 11.

“Investors expected the global economy will recover at a fairly fast pace, but this view is changing to one that a recovery will remain moderate,” said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities Co.

Toyota, which gets 31 percent of its revenue from North America, sank 2.6 percent to 3,730 yen. Sony, the maker of the PlayStation 3, lost 2.7 percent to 2,560 yen.

Japanese exporters also fell as the yen’s gains against all 16 of the most-traded currencies threatened the value of overseas sales. The currency advanced 0.9 percent to 133.83 per euro after climbing to 133.24, the highest level since May 28. It rose to 96.96 per dollar from 97.84.

Safe Havens

Treasuries and the yen rose as the decline in stocks increased demand for safer assets. Treasuries gained for a fourth day, the longest winning streak in five months. The yield on the benchmark 10-year note fell two basis points to 3.69 percent according to BGCantor Market data.

PetroChina slumped 4.7 percent to HK$8.57 as crude oil fell today for the third-straight day in New York. Cnooc Ltd., China’s largest offshore oil producer, dropped 5.3 percent to HK$9.93.

Rio Tinto slumped 4.2 percent to A$72.33 after copper futures dropped 3.6 percent in New York yesterday, the most in almost two weeks. BHP Billiton Ltd., the world’s biggest mining company, fell 1.8 percent to A$36.33.

Materials and energy stocks are the best performing of the MSCI Asia Pacific Index’s 10 industries in the past month as investors bet demand for raw materials will pick up as the global economy recovers. The International Monetary Fund raised its growth forecast for the U.S. economy yesterday.

Rising Valuations

“The green shoots of an economic turnaround continue to appear, but the question is whether markets have priced in a bumper harvest,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. in Melbourne. “People are now turning their attention to the appropriateness of stock prices.”

The MSCI gauge climbed more than 10 percent for a second month in May, which hasn’t happened since the two months ended 1993. The rally since March has driven the average valuation of companies in the gauge to 1.5 times the book value of assets, the highest level since Sept. 26, according to Bloomberg data.

Konica Minolta fell 6.2 percent to 980 yen, paring its climb in the past six months to 43 percent. Credit Suisse Group lowered its recommendation to “underperform” from “neutral” saying the shares may have “overheated.”

Nufarm tumbled 12 percent to A$10.68 after it cut its earnings forecast on lower-than-expected weed killer sales.

Macquarie Communications, which invests in television and radio-transmission towers, surged 26 percent to A$2.93. Canada Pension Plan Investment Board raised its offer for the company by 20 percent after shareholders threatened to block the purchase.

Berjaya Sports Toto Bhd., Malaysia’s biggest number-betting operator, rose 4.8 percent to 5.20 ringgit after fourth-quarter net income jumped 67 percent and the company announced a special dividend.