Asian stocks outside Japan dropped as China resumed trading after a week-long holiday and ahead of a meeting by European finance ministers today aimed at easing the region’s debt crisis.
LG Display Co. (034220), the world’s second-largest maker of liquid- crystal displays that gets 18 percent of sales in Europe, fell 1.5 percent in Seoul. CapitaLand Ltd. dropped 3.3 percent, pacing declines among Singapore builders, after the central bank restricted home-loan maturities. ZTE Corp. sank 6 percent in Hong Kong after a draft U.S. congressional report said China’s largest phone-equipment maker poses a security threat.
The MSCI Asia Pacific Excluding Japan Index (MXAPJ) declined 1 percent to 440.15 as of 4:28 p.m. in Hong Kong, its first decline in three days, with almost three stocks falling for each that rose. Japanese markets are closed for a holiday. The regional index gained 5.6 percent last month amid speculation China will add to stimulus measures following moves by central banks in the U.S. and Japan.
“There’s still a fair amount of skepticism with regard to how things are going to pan out for China,” said Ng Soo Nam, Singapore-based chief investment officer at Nikko Asset Management, which oversees about $165 billion. “A lot will depend on how policy makers address the economic slowdown. So far, they’ve been focused on measures aimed at sustainable long- term growth. Europe is still the biggest concern among investors. Problems are going to take some time to resolve.”
Hong Kong’s Hang Seng Index (HSI) declined 0.9 percent. The Hang Seng China Enterprises Index of mainland companies, also known as the H-share index, slid 1.3 percent. China’s Shanghai Composite Index slipped 0.6 percent as it resumed trading following a week-long holiday.
South Korea’s Kospi Index (KOSPI) dropped 0.7 percent. Taiwan’s Taiex Index and Singapore’s Straits Times Index both fell 1 percent. Australia’s S&P/ASX 200 Index lost 0.3 percent.
The Philippine Stock Exchange Index was little changed, having swung between a gain of 0.2 percent and a loss of 0.4 percent. President Benigno Aquino announced a peace accord with Muslim rebels yesterday, providing the best chance since 2008 to extinguish a four-decade insurgency that has killed as many as 200,000 people in the mineral-rich south.
Futures on the Standard & Poor’s 500 Index lost 0.4 percent today. The gauge closed little changed on Oct. 5 after a Labor Department report showed the unemployment rate in the U.S. unexpectedly fell to 7.8 percent in September, the lowest level since President Barack Obama took office in January 2009.
Companies that do business in Europe dropped as European finance ministers meet in Luxembourg today to discuss Spain’s overhaul effort and closer banking cooperation. Spanish Prime Minister Mariano Rajoy will travel to Paris on Oct. 10 for talks with French President Francois Hollande. German Chancellor Angela Merkel will visits Greece tomorrow for the first time since the sovereign-debt crisis erupted.
“Europe isn’t quite finished discussing its policy response to the crisis,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. in Melbourne. “There would be some posturing by countries like Spain and Italy to extract the best bailout terms. That would generate some negative and positive headlines. Markets have had a good run and we’ll probably see some consolidation.”
LG Display fell 1.5 percent to 26,450 won in Seoul. LG Electronics Inc. (066570), the maker of home appliances and mobile phones that gets about 16 percent of sales from Europe, dropped 2.2 percent to 68,300 won. Cosco Pacific Ltd., which operates a port in Greece, decreased 2 percent to HK$10.78 in Hong Kong.
Singapore developers declined after the Monetary Authority of Singapore capped the maximum tenure for new residential loans at 35 years in a bid to curb a housing bubble that has seen property prices in the city rise to a record.
CapitaLand (CAPL), Southeast Asia’s biggest homebuilder, dropped 3.3 percent to S$3.29. City Developments Ltd., Singapore’s second-largest real-estate company, slipped 2.1 percent to S$11.70. SC Global Developments Ltd. sank 4.9 percent to S$1.175.
The MSCI Asia Pacific excluding Japan Index advanced 12 percent this year as policy makers boosted stimulus measures to counter a global economic slowdown and tame Europe’s debt crisis. The Asian gauge traded at 12.5 times estimated earnings, compared with 13.9 times for the Standard & Poor’s 500 Index and 12.2 times for the Stoxx Europe 600 Index.
ZTE declined 6 percent to HK$12.60 in Hong Kong. ZTE and Huawei Technologies Co., China’s two largest phone-equipment makers, provide opportunities for Chinese intelligence services to tamper with U.S. telecommunications networks for spying, according to a congressional report to be released today.
Executives for Huawei and ZTE, both based in Shenzhen, China, denied links to Chinese espionage at an intelligence committee hearing last month, telling lawmakers they aren’t controlled by the Chinese government.
DLF Ltd. (DLFU), India’s biggest developer, slumped 7.4 percent to 223.95 rupees in Mumbai, the largest decline in the MSCI Asian gauge. Anti-corruption activists on Oct. 5 accused Robert Vadra, the son-in-law of the Congress Party president Sonia Gandhi, of being involved in “illegal land deals” with DLF. DLF said on Oct. 6 the allegations are “completely baseless and untrue.”
Foxconn Technology Co. declined 3.1 percent to NT$110.5 in Taipei. The assembler of Apple Inc.’s iPhones had to stop production for the second time in as many weeks after workers at one of its plants in China protested against increased pressure.
Among stocks that advanced, QR National Ltd. jumped 5.2 percent to A$3.65 in Sydney after Australia’s No. 1 haulage company announce a plan to buy back shares.
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