Asian Stocks Fall on Valuation Concern; BHP, Hutchison Decline

June 9 (Bloomberg) -- Asian stocks fell, led by commodity and finance companies, on concern a three-month rally had overvalued earnings prospects.

BHP Billiton Ltd., the world’s largest mining company, declined 3.1 percent from a more than eight-month high in Sydney. Cnooc Ltd. lost 3.3 percent in Hong Kong, pacing declines by energy companies, Asia’s best performers in the past month. Billionaire Li Ka-shing’s Hutchison Whampoa Ltd. slumped 4.7 percent as Fitch Ratings forecast a bigger contraction for Hong Kong’s economy.

“People are just buying and selling stocks for short-term returns,” said Naoki Fujiwara, who oversees about $6.1 billion at Shinkin Asset Management Co. in Tokyo. “There are concerns the market has risen too fast and will have a big drop, so investors don’t want to hold any stocks for a long time.”

Three stocks declined for each one that advanced on the MSCI Asia Pacific Index, which dropped 0.8 percent to 101.50 as of 12:47 p.m. in Tokyo. The gauge has risen 44 percent from a five-year low on March 9 on optimism government stimulus measures worldwide are succeeding in reviving growth.

Hong Kong’s Hang Seng Index sank 2.3 percent, while Australia’s S&P/ASX 200 Index, which resumed trading today after a one-day holiday, fell 0.5 percent. Japan’s Nikkei 225 Stock Average declined 1.1 percent as Nipponkoa Insurance Co. slumped 3.7 percent on a newspaper report that former executives opposed a merger with a rival.

Limiting declines in Tokyo, Softbank Corp. jumped 4.2 percent after saying it will sell Apple Inc.’s new iPhone. CSL Ltd., a maker of blood plasma products, climbed 5.6 percent in Sydney on a plan to buy back shares after dropping a $3.1 billion acquisition.

Summer Recovery?

Futures on the U.S. Standard & Poor’s 500 Index lost 0.3 percent. The gauge dipped 0.1 percent yesterday as a drop in commodities shares countered gains among financial companies. Paul Krugman, a Princeton University economist, said he wouldn’t be surprised “if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer.”

BHP lost 3.1 percent to A$36.99, following an 8.7 percent surge on June 5 that took the stock to its highest close since Sept. 22. Those gains came after the company said it will pay Rio Tinto Group $5.8 billion to create an iron-ore venture.

Materials producers and energy stocks are the best performing of the MSCI Asia Pacific Index’s 10 industry groups in the past month on speculation a pick-up in global growth will boost demand for oil and metals. The rally has taken the average valuation of companies in the materials sub-index to 23 times reported profit, the highest since March 2004.

Cashing Out

Cnooc, China’s largest offshore oil producer, slumped 3.3 percent to HK$10.46. Sumitomo Metal Mining Co., Japan’s biggest copper smelter, lost 2.2 percent to 1,445 yen, its third day of declines since closing at an 11-month high. China Steel Corp. sank 3.4 percent to NT$27.35 in Taipei, paring its advance in the past three months to 30 percent.

“It’s no surprise to see people cash out to some degree after the huge run we’ve had in the last couple of weeks,” said Michiya Tomita, who helps manage $51 billion at Mitsubishi UFJ Asset Management Co. in Hong Kong.

Hutchison slumped 4.7 percent to HK$55.25. Hong Kong’s economy will probably contract 9.1 percent in 2009, according to Fitch Ratings. The ratings agency previously estimated that Hong Kong’s economy will shrink 6.4 percent this year, James McCormack, head of Asian sovereign ratings at Fitch said today.

Japanese Insurers

Nipponkoa lost 3.7 percent to 566 yen, leading Japanese insurers to the biggest slump among the Topix’s 33 industry groups. Former executives wrote in a letter to the company that a planned merger would benefit Sompo Japan Insurance Co. at the expense of Nipponkoa, the Asahi newspaper reported today.

The insurers said in March they planned to merge next year. Sompo slipped 1.3 percent to 712 yen.

Softbank, Japan’s No. 3 mobile-phone carrier, rose 4.2 percent to 1,874 yen. The company said today it will start offering the new model of the iPhone on June 26, which Apple said can run applications twice as fast as the current version.

Melbourne-based CSL climbed 5.6 percent to A$30.61 after saying it will repurchase up to 9 percent of its shares, costing about A$1.59 billion ($1.3 billion). The company dropped its proposed acquisition of Talecris Biotherapeutics Holdings Corp. after the plan was blocked by the U.S. Federal Trade Commission.