“Asian stocks dropped, with the regional benchmark index heading for its biggest loss in two months. The Nikkei 225 (NKY) Stock Average slid the most since May, while Chinese shares fell for the first time in three days.
Honda Motor Co. (7267), an automaker that gets 81 percent of its sales overseas, sank 3 percent in Tokyo as a stronger yen dimmed the outlook for exporters. GS Yuasa Corp., a supplier of lithium batteries to Boeing Co., slumped 4.5 percent after All Nippon Airways Co. grounded its fleet of Boeing Dreamliners. Agricultural Bank of China Ltd., the nation’s No. 3 lender, fell 2 percent in Hong Kong after Premier Wen Jiabao said China should “gradually” establish a property tax system.
The MSCI Asia Pacific Index slid 0.7 percent to 131.74 as of 7:02 p.m. Tokyo time, with more than two stocks falling for each that rose. The gauge rallied 11 percent from Nov. 14 through yesterday as Japanese shares surged on speculation Prime Minister Shinzo Abe will pursue more aggressive stimulus policies and reports showed China’s economy is recovering and .
“We’re seeing shares at an overbought level after such a strong rebound recently,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $126 billion. “The market just needs to consolidate before coming back. The fundamentals are looking better. It’s not going to be a deep correction, just some consolidation. Markets never go up in a straight line.”
Overheating Signs
The MSCI Asia Pacific Index (MXAP)’s 14-day relative strength index, an indicator of market momentum, reached 75 yesterday. A level above 70 is considered by some investors as a sign the shares have risen too far, too fast.
Shares on the Asian gauge traded at 14.2 times estimated earnings, compared with 13.3 for the Standard & Poor’s 500 Index and 12 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg News.
Japan’s Nikkei 225 dropped 2.6 percent, posting its biggest decline since May 18. The gauge retreated after yesterday climbing to its highest level since April 2010…”
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