Bloomberg News

Asian Stocks Fall as Republicans Cancel Budget-Plan Vote

December 21, 2012

Asian Stocks Head for Five-Week Gain as U.S. Data Fuels Optimism

Investors monitor prices and trade stocks at a securities exchange hall in Shanghai, China. Asia’s benchmark equities index has risen about 14 percent this year as central banks around the world boosted stimulus and on signs of recovery in the U.S. and China. Photographer: Qilai Shen/Bloomberg

Asian stocks fell, with the regional benchmark index heading for the first two-day loss in five weeks, after U.S. House Republican leaders canceled a planned vote that would permit higher taxes amid stalled budget talks.

Techtronic Industries Co. (669), a maker of power tools that gets 72 percent of its sales in North America, dropped 1.3 percent in Hong Kong. Samsung Electronics Co. (005930) slid 4.1 percent in Seoul after the European Union said it’s preparing an antitrust complaint against the maker of TVs and smartphones. Innolux Corp., a maker of liquid crystal display products, slumped 6.9 percent in Taipei on a report the price of large LCD panels declined.

The MSCI Asia Pacific Index slipped 0.7 percent to 128.32 as of 7:07 p.m. in Tokyo, reversing a 0.6 percent gain that was driven by reports which added to signs the U.S economy is recovering. About three stocks fell for each that gained. For the week, the measure has risen 0.7 percent, heading for a fifth weekly advance.

“It’s cutting it quite close, and the pressure is definitely on the politicians,” said Shane Oliver, Sydney-based head of strategy at AMP Capital Investors Ltd., which has almost $130 billion under management. “If they go off the fiscal cliff, the U.S. economy could go into a recession. At stake is the U.S. economy and by implications the global economy.”

Asia’s benchmark equities index has risen about 13 percent this year as central banks around the world boosted stimulus and on signs of recovery in the U.S. and China. The gauge traded at 14.6 times average estimated earnings compared with 13.9 for the Standard & Poor’s 500 Index and 12.8 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Nikkei, Kospi

Japan’s Nikkei 225 Stock Average (NKY) fell 1 percent with trading volume 72 percent greater than the 30-day average as the yen advanced against all of its 16 major counterparts. South Korea’s Kospi Index fell 1 percent. The nation may get a growth boost next year as President-elect Park Geun Hye abandons fiscal restraint and increases spending on welfare.

Australia’s S&P/ASX 200 lost 0.2 percent and New Zealand’s NZX 50 Index slipped 0.5 percent. Hong Kong’s Hang Seng Index (HSI) fell 0.7 percent, while China’s Shanghai Composite Index dropped 0.7 percent. Taiwan’s Taiex Index declined 1 percent and Singapore’s Straits Times Index slid 0.4 percent.

Futures on the S&P 500 index fell 1.2 percent after slumping as much as 3.4 percent. House Republican leaders canceled a planned vote on Speaker John Boehner’s plan to raise rates for taxpayers making more than $1 million, as time runs down in budget talks.

Vote Delay

A House leadership announcement said the chamber will hold no more votes until after the Christmas holiday and will return “when needed.” Fewer than two weeks remain to avert more than $600 billion in automatic spending cuts and tax increases, known as the fiscal cliff, set to take effect in January.

Exporters to the U.S. dropped, with Techtronic falling 1.3 percent to HK$14.72. James Hardie Industries SE (JHX), a building- materials supplier that gets 67 percent of sales from the U.S., dropped 2.8 percent to A$9.10 in Sydney.

Samsung dropped 4.1 percent to 1,442,000 won in Seoul after the EU’s competition commissioner said yesterday it faces a complaint over its use of standard-essential patents in legal disputes with Apple Inc. The two companies are fighting each other in courts on four continents over patents used in mobile phones.

Stocks gained earlier after purchases of existing houses increased 5.9 percent to a 5.04 million annual rate, the most since November 2009, the National Association of Realtors said yesterday. The data reinforces forecasts that the industry is set to contribute to annual economic growth for the first time since 2005.

’Reasonable Growth’

A separate report from the Commerce Department showed the U.S. economy grew at a 3.1 percent annual rate in the third quarter, compared with a previously estimated 2.7 percent expansion.

“The U.S. data has been very good and it all points toward reasonable growth going forwards,” said Oliver at AMP Capital. “We have a tug of war in the share markets, with the flow of positive economic data against the concerns about the fiscal cliff.”

Innolux and AU Optronics Corp. fell the most on the MXAP Asia Pacific measure as Economic Daily News reported a drop in the price of large LCD panels. Innolux dropped 6.9 percent to NT$16.3 and AU Optronics declined 6 percent to NT$13.3.

Japan’s realtors advanced as the Nikkei newspaper reported the Bank of Japan will probably adopt an inflation target in January. The central bank expanded its asset purchases yesterday at its first meeting after the Liberal Democratic Party reclaimed power in the Dec. 16 election. The LDP has called on the Bank of Japan to add more monetary stimulus.

Mitsubishi Estate Co. gained 2.9 percent to 1,897 yen and Sumitomo Realty & Development Co. added 3 percent to 2,643 yen. Tokyo Tatemono Real Estate Sales Co. surged 16 percent to 332 yen.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net


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