April 19 (Bloomberg) -- Asian stocks declined the most in two months, while commodities and currencies slumped, after the Securities and Exchange Commission sued Goldman Sachs Group Inc. for fraud and China curbed property loans.
The MSCI Asia Pacific Index dived 1.8 percent to 125.91 as of 1:10 p.m. in Tokyo, the most since Feb. 19. Standard & Poor’s 500 Index futures lost 0.4 percent. China’s Shanghai Composite Index slid 2.7 percent after the government told banks to stop loans for third-home purchases. Oil prices dropped 1.5 percent in New York, while copper slumped 2.7 percent in Shanghai.
Goldman Sachs shares plummeted 13 percent on April 16 after the SEC claimed the most-profitable Wall Street firm in history misstated key facts about collateralized debt obligations tied to subprime mortgages. China’s latest move to cool its property market comes after prices gained a record 11.7 percent in March.
“The Goldman news, in isolation, undermines credibility in the financial system,” said Tim Schroeders, who helps manage about $1.1 billion at Pengana Capital Ltd. in Melbourne. “It also creates uncertainty as to whether this is a one-off action, or the first of many that results in greater scrutiny regarding the integrity of U.S. financial institutions.”
Japan’s Nikkei 225 Stock Average sank 1.9 percent, Taiwan’s Taiex index dropped 2.1 percent, South Korea’s Kospi index dropped 1.7 percent and Hong Kong’s Hang Seng Index lost 1.7 percent. U.K. Prime Minister Gordon Brown called yesterday for the Financial Services Authority to start an inquiry into Goldman Sachs, while Germany’s financial regulator has asked the SEC for details on the suit.
Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by market value, fell 3.5 percent to 496 yen in Tokyo. Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest bank by market value, sank 4.6 percent to 3,140 yen. In Sydney, Westpac Banking Corp. slid 1.8 percent to A$27.67.
The cost of protecting Asia-Pacific corporate and sovereign bonds from default increased, according to traders of credit- default swaps. The Markit iTraxx Asia index of 50 investment- grade borrowers outside Japan climbed 5 basis points to 95 basis points.
Banks and material companies posted the biggest declines among the MSCI Asia Pacific Index’s 10 industry groups as 16 shares fell for every one that gained. Companies in the gauge trade at an average 16.2 times estimated earnings, compared with 15.5 times for the S&P 500.
BHP Billiton Ltd., the world’s biggest mining company, retreated 1.5 percent to A$42.90. Newcrest Mining Ltd., Australia’s biggest gold producer, slid 1.3 percent to A$34.16. Woodside Petroleum Ltd., Australia’s second-biggest oil and gas producer, declined 1.2 percent to A$46.14. In Wellington, New Zealand Oil & Gas Ltd. fell 1.9 percent to NZ$1.53.
“The Goldman shock is discouraging investors from taking on risk in stocks, currencies and commodities,” said Tomochika Kitaoka, a senior strategist at Mizuho Securities Co. in Tokyo.
Oil dropped to $81.97 a barrel in New York after Qatar’s Oil Minister Abdullah bin Hamad al-Attiyah said yesterday there is no need for the Organization of Petroleum Exporting Countries to review output before the group meets in October.
Copper in Shanghai for July delivery tumbled 2.7 percent to 60,760 yuan ($8,901) per ton and nickel for three-month delivery in London fell 2.1 percent to $26,150 a ton after reaching $27,595 a ton on Friday, the highest level for 23 months.
China Vanke Co. and Poly Real Estate Group Co., the nation’s two-largest developers by market value, dropped more than 3 percent. Deutsche Bank AG said the latest move is the “most draconian measures on the property market in history,” and Goldman Sachs Group Inc. said the nation’s real estate stocks now face “high policy risk.’ “The latest measures are going to weigh on sentiment for the market as property is an important pillar of the economy,” said Zhou Xi, a strategist at Bohai Securities Co.
Thailand’s SET stock index fell 2.8 percent after anti- government demonstrators called for another major rally in Bangkok tomorrow, risking clashes with securities officials similar to those that killed two dozen people earlier this month. Foreign investors sold 6.7 billion baht ($207 million) of Thai shares in the past four trading days, the most in five months.
South Korea’s won declined 0.6 percent to 1,117.10 per dollar, retreating from near a 19-month high. Malaysia’s ringgit weakened 0.8 percent to 3.2175. The Dollar Index, which gauges the currency against those of six major U.S. trading partners, rose 0.3 percent, while 10-year Treasury yields were near the lowest level in more than three weeks.
“It’s just risk aversion,” said Gerrard Katz, head of currency trading for Asia at Standard Chartered Plc in Hong Kong. “It creates a bit of uncertainty in the market around banking and regulation again.”
The difference in yield to own bonds in developing nations instead of Treasuries widened to 2.41 percentage points up from 2.31 percentage points on April 16, the least since December 2007, according to the EMBI Plus Index compiled by JPMorgan Chase & Co.
The euro fell against the dollar and the yen after European Union finance ministers told Greece to brace itself for the International Monetary Fund’s conditions on a bailout package. Talks on Greece involving the European Commission, the IMF and the European Central Bank are due April 21.
“Investors remain wary the country can roll over its debts without external assistance,” Mansoor Mohi-uddin, chief currency strategist in Singapore at UBS AG, wrote in an e-mail yesterday. “We continue to see the euro falling back to $1.30 over the next three months.”
The euro weakened to $1.3462 from $1.3503 after touching $1.3457, the weakest since April 9. It fell to 123.84 against the yen from 124.44.