Asian stocks fell, with the regional benchmark poised for its biggest drop in six weeks, as investors turned their attention to the U.S. budget debate and China’s Communist Party began a meeting to choose new leaders.
Li & Fung Ltd. (494), a supplier of clothes and toys that gets 60 percent of sales in the U.S., lost 3.5 percent in Hong Kong. Canon Inc. (7751), a camera manufacturer that depends on Europe for almost a third of its sales, sank 2.5 percent in Tokyo after the European Commission cut its growth forecast for the monetary union. Komatsu Ltd. (6301) dropped 2.2 percent after Japan’s machinery orders fell more than expected.
The MSCI Asia Pacific Index declined 1.4 percent to 121.69 as of 6:22 p.m. in Tokyo, the biggest slide since Sept. 26, with all 10 industry groups retreating. The gauge gained 13 percent through yesterday from this year’s low on June 4 as central banks added stimulus amid a slowdown in global economic growth and the European debt crisis.
“Investors are taking a step back and thinking the fiscal cliff is looming,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. in Melbourne. “There’s going to be a protracted battle to resolve it and markets are moving to price that uncertain outcome accordingly.”
Japan’s Nikkei 225 Stock Average (NKY) fell 1.5 percent, with volume 14 percent below the 30-day average, according to data compiled by Bloomberg. South Korea’s Kospi lost 1.2 percent. Hong Kong’s Hang Seng Index declined 2.4 percent.
China’s Shanghai Composite Index slipped 1.6 percent. The nation’s Communist Party starts its 18th Congress today in Beijing, where delegates will meet over several days to pick a new leader. Xi Jinping will probably replace Hu Jintao as general secretary of the party that’s ruled China since 1949.
Australia’s S&P/ASX 200 Index (AS51) lost 0.7 percent, paring declines as Australian employers boosted payrolls more than forecast last month. New Zealand’s NZX 50 Index rose 0.3 percent in Wellington after a report that unemployment rose to a 13-year high fueled speculation the Reserve Bank of New Zealand will lower rates next month to revive demand.
Futures on the Standard & Poor’s 500 Index gained 0.2 percent today. U.S. stocks slumped yesterday, with the Dow Jones Industrial Average posting its biggest decline in a year, as investors focused on the $607 billion of tax increases and federal spending cuts set to kick in automatically in January, the so-called fiscal cliff. The Congressional Budget Office has said the U.S. economy will contract by as much as 0.5 percent next year unless the president can reach a compromise with lawmakers.
Asian exporters to the U.S. fell. Li & Fung lost 3.5 percent to HK$12.82 in Hong Kong. Honda Motor Co. (7267), the Japanese carmaker that gets about 44 percent of sales from North America, dropped 3.5 percent to 2,395 yen in Tokyo.
Companies that do business in Europe slid after the European Commission cut its growth forecast for the euro zone as the debt crisis ravages southern Europe and gnaws at the economic performance of export-driven Germany. The 17-nation euro economy will expand 0.1 percent in 2013, down from a May forecast of 1 percent, the Brussels-based commission said yesterday. It cut its forecast for Germany, Europe’s largest economy, to 0.8 percent from 1.7 percent.
Canon slid 2.5 percent to 2,505 yen in Tokyo. Hutchison Whampoa Ltd. (13), an operator of ports and telephone companies that gets 55 percent of sales in Europe, declined 2.8 percent to HK$77.35 in Hong Kong.
The MSCI Asia Pacific (MXAP) Index’s 8.4 percent advance this year through yesterday pushed up valuations on the measure to 13.5 times average estimated earnings, compared with 13.4 for the S&P 500 and 12.2 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Komatsu, the world’s second-biggest maker of construction and mining equipment, lost 2.2 percent to 1,720 yen. Japan machinery orders, an indicator of capital spending in three to six months, declined 4.3 percent in September from the previous month, the Cabinet Office said today in Tokyo. The median of 29 estimates in a Bloomberg News survey was for a 2.1 percent drop.
Galaxy Entertainment Group Ltd. (27) fell 4.4 percent to HK$27.35 in Hong Kong after Permira Advisers LLP agreed to sell its remaining holdings in the casino operator through a private placement.
NCsoft Corp. tumbled 13 percent to 185,500 won in Seoul, the most on the MSCI Asia Pacific Index, after the South Korean online-game maker posted third-quarter profit that missed analyst estimates. Hyundai Securities Co. and Woori Investment & Securities Co. lowered their share-price forecasts.
Among stocks that advanced, Lynas Corp. (LYC) jumped 12 percent to 80.5 Australian cents after a Malaysian court ruled in favor of the company developing the world’s largest rare-earth refinery in that country. The court denied an application by parties associated with Save Malaysia Stop Lynas group for an injunction against Lynas’ temporary operating license.
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