Asian Stocks Drop Most in Month on Cyprus Deposit Tax

Asian stocks fell for the first

time in three days, heading for the biggest decline in a month,

amid concern an unprecedented levy on bank deposits in Cyprus

will plunge Europe back into crisis.

Toyota Motor Corp. (7203), the world’s biggest automaker, slid 2.3

percent as the yen gained against all its major peers. Esprit

Holdings Ltd., a Hong Kong-based clothier that counts Europe as

its No. 1 market, dropped 1.4 percent. Miner BHP Billiton Ltd. (BHP)

fell 2 percent in Sydney, leading companies lower with earnings

closely tied to economic growth. Panasonic Corp. (6752) rose 3.5

percent in Tokyo as the Nikkei newspaper reported the

electronics maker may exit the plasma-television market.

The MSCI Asia Pacific Index (MXAP) sank 1.4 percent to 134.75 as

of 11:04 a.m. in Tokyo, with more than four shares falling for

each that rose. The measure rose 5.6 percent this year through

last week as improving economic data from the U.S. and

speculation that Japan will unleash more stimulus countered
China’s efforts to rein in property prices.

“The inevitable bailout of Cyprus has come and that’s

setting a precedent that isn’t great,” said Angus Gluskie,

managing director at Sydney-based White Funds Management, which

oversees more than $350 million. “Its financial impact is

negligible, but markets are reacting negatively because people

have been looking for a reason to sell. The Chinese situation is

a much more pertinent issue.”

The MSCI Asia Pacific Index has rallied in the past four

months as central banks maintained loose monetary policies.

Shares on the gauge traded at 14.7 times estimated earnings last

week compared with 14 times for the Standard Poor’s 500 Index

and 12.7 for the Stoxx Europe 600 Index, according to data

compiled by Bloomberg.

‘Deeper Downturn’

“The safest place to be if you think the market’s going to

go down is cash,” Donald Williams, Sydney-based chief

investment officer at Platypus Asset Management Ltd., which

manages about $1 billion, told Bloomberg Television. “We’ve

been finding valuations problematic for about six weeks and as a

result we’ve built up cash in our portfolio. We’re looking for a

deeper downturn than what we’re seeing today. There are no

sectors that are particularly cheap right now. We’re only

looking for a 10 percent correction at the most.”

Japan’s Nikkei 225 Stock Average (NKY) retreated 1.9 percent.
Australia’s SP/ASX 200 Index dropped 1.4 percent and South

Korea’s Kospi Index lost 0.4 percent. Hong Kong’s Hang Seng

Index slipped 1.6 percent, while the Shanghai Composite Index

fell 0.4 percent

Futures on the Standard Poor’s 500 Index fell 1.3 percent

today. The SP 500 climbed on March 14 to within two points of

its record closing level of 1,565.15 set in October 2007, before

retreating on the final day of trading last week.

Cyprus Bailout

Cypriot President Nicos Anastasiades bowed to demands by

euro-area finance ministers to raise 5.8 billion euros ($7.5

billion) to help fund a bailout by taking a piece of every bank

account in Cyprus. Anastasiades delayed a vote on the measure in

parliament until today, a day later than planned, as he seeks

more time to convince lawmakers to back him.

Bill Gross, who runs the world’s biggest bond fund at

Pacific Investment Management Co. in Newport Beach, California,

said on Twitter that the concern in Cyprus “moves risk-on trade

to back seat.” He added: “Sell euro as well.”

“If it happened three years ago, you had to be pretty

worried because the U.S. economy was a lot more fragile and

there was more concern about China having a hard landing,” said

Shane Oliver, Sydney-based head of investment strategy at AMP

Capital Investors Ltd., which has $126 billion under management.

“The general trend is improving rather than getting worse. So,

it’s coming at a time when the world is stronger.”

The euro dropped against the dollar to its lowest level

this year and the yen strengthened against all major currencies.

To contact the reporters on this story:

Adam Haigh in Sydney at

ahaigh1@bloomberg.net;

Jonathan Burgos in Singapore at

jburgos4@bloomberg.net

To contact the editor responsible for this story:

Nick Gentle at

ngentle2@bloomberg.net

March 18 (Bloomberg) — Donald Williams, Sydney-based chief investment officer at Platypus Asset Management Ltd., talks about the outlook for Australian stocks and the local currency.

He speaks with Susan Li on Bloomberg Television’s “First Up.” (Source: Bloomberg)

Asian Stocks Drop Most in Month on Cyprus Deposit Tax