Asian Stocks Tumble, Led by China, on Fed, China

Asian  stocks  plunged, with a gauge of Chinese companies in  Hong Kong  erasing the year’s gains, amid concern the  Federal Reserve  may scale back U.S. economic stimulus and asChina  ordered increased property curbs.

The MSCI Asia Pacific Index dropped 1.5 percent to 133.21 as of 3:21 p.m. in Tokyo, at one point heading for its biggest single day decline since July. The Hang Seng China Enterprises Index tumbled 2.3 percent, erasing the year’s advance, and the  CSI 300 Index (SHSZ300)  of mainland-listed shares plummeted by the most in more than 18 months after China ordered local authorities to do more to rein in property speculation. More than three stocks fell for each that rose on the Asia-Pacific measure, which closed yesterday at the highest level since August 2011.

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Pedestrians holding umbrellas look at an electronic stock board outside a securities firm in Tokyo. Photographer: Junko Kimura/Bloomberg

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Feb. 19 (Bloomberg) -- Joseph Tanious, a New York-based global market strategist for JPMorgan Funds, talks about the outlook for global stocks and investment strategy. He speaks with Deirdre Bolton, Dominic Chu and Alix Steel on Bloomberg Television's " In the Loop." (Source: Bloomberg)

Guangzhou R& F Properties Co. (2777)  lost 2.5 percent in Hong Kong, pacing declines among Chinese developers.  BHP Billiton Ltd. (BHP), the world’s biggest mining company, dropped 3.8 percent, the most since May on concern that global demand will decrease if policymakers reduce stimulus.

“The Fed now is getting very nervous about the continuation of its quantitative easing program,” said Matthew Sherwood, head of investment market research in Sydney at Perpetual Investments, which manages about $25 billion. “If they say they have to wind it down before the labor market stabilizes, that would take one of the key supports away from the market.”

The MSCI Asia Pacific Index advanced 11 percent from the start of November through yesterday, led by Japanese shares as Prime Minister Shinzo Abe pledged to beat deflation and pressed the central bank to ease monetary policy. Asia’s benchmark traded at 14.9 times estimated earnings as of yesterday compared with 13.7 for the  Standard & Poor’s 500 Index (SPX)  and 12.5 for the  Stoxx Europe 600 Index (SXXP), according to data compiled by Bloomberg.

Nikkei, Kospi

Japan’s  Nikkei 225 Stock Average (NKY)  fell 1.4 percent. South Korea’s  Kospi (KOSPI)  Index lost 0.5 percent after yesterday rising the most since September. Australia’s S& P/ASX 200 Index dropped 2.3 percent, headed for its biggest loss since May.

Hong Kong’s Hang Seng Index declined 1.9 percent, while China’s Shanghai Composite Index lost 2.8 percent, poised for the biggest drop since November 2011.  Taiwan’s Taiex Index (TWSE)  slid 0.9 percent and Singapore’s Straits Times Index dropped 0.6 percent. New Zealand’s NZX 50 Index fell 1 percent.

Futures on the  S& P 500 Index (SPXL1)  slipped 0.1 percent today. The index fell 1.2 percent in New York yesterday, the biggest drop since November, as minutes of the  Federal Open Market Committee’s Jan. 29-30 meeting showed policy makers were divided about the strategy behind Chairman  Ben S. Bernanke’s program of buying bonds, known as quantitative easing, until there is “substantial” improvement in a U.S. labor market.

Some said an earlier end to purchases might be needed, and others warned against a premature withdrawal of stimulus. Several policy makers said the central bank should be ready to vary the pace of its $85 billion in monthly bond purchases.