Bloomberg News

Asian Stocks Outside Japan Fall as IMF Cites China Growth Risks

July 18, 2013

Asian stocks outside Japan fell after the International Monetary Fund said risks are rising for slower growth in China. Japanese shares rose as the yen fell.

China Shanshui Cement Group slumped 11 percent in Hong Kong after saying first-half profit will drop. Innolux Corp. and AU Optronics Corp. fell at least 4.6 percent in Taipei on a report Taiwan and Korean panel makers cut output this month. SoftBank Corp., Japan’s third-biggest mobile phone company, rose 4 percent after forming a fuel-cell venture with Bloom Energy Corp.

The MSCI Asia Pacific excluding Japan Index fell 0.2 percent to 441.65 as of 6:34 p.m. in Hong Kong. The MSCI Asia Pacific Index, which includes Japanese stocks, increased 0.1 percent to 135.99 after rising as much as 0.4 percent. Shares rose after Federal Reserve Chairman Ben S. Bernanke said U.S. asset purchases are not on a preset course.

China’s leadership “seems to be accepting a lower trajectory of growth and they don’t look like jumping in and taking short-term measures,” said Binay Chandgothia, a Hong Kong-based portfolio manager at Principal Global Investors, which manages $250 billion globally. “Bernanke’s testimony was in line with expectations and what he has been saying over the past week or two.”

The Asia-Pacific measure advanced 5 percent this year through yesterday, with consumer discretionary stocks leading the gain and energy shares falling the most among the 10 industry groups on the measure. The Asian benchmark gauge traded at 13.3 times estimated earnings as of yesterday, compared with 15.2 times for the Standard & Poor’s 500 Index and 13.3 times for the Stoxx Europe 600 Index.

Regional Gauges

Japan’s Topix index rose 0.7 percent, gaining for a fourth day as the yen fell against 15 of its 16 major counterparts, boosting the earnings outlook for exporters. South Korea’s Kospi index lost 0.6 percent. Australia’s S&P/ASX 200 Index added 0.2 percent, while New Zealand’s NZX 50 Index slipped 0.3 percent.

Hong Kong’s Hang Seng Index lost 0.1 percent and China’s Shanghai Composite Index dropped 1.1 percent. Taiwan’s Taiex Index fell 0.8 percent and Singapore’s Straits Times Index gained 0.3 percent.

The IMF said yesterday risks are increasing that China’s economic growth this year will fall short of the lender’s 7.75 percent estimate as it urged the nation to follow through on policy reforms to sustain expansion.

China Shanshui Cement slumped 11 percent to HK$3.11 in Hong Kong after saying first-half profit will drop at least 40 percent from a year earlier on excessive capacity.

China Property

Chinese developers dropped as the nation’s June new home prices increased from a year earlier in 69 of 70 cities the government tracked, raising the prospect of more property curbs. China Overseas Land & Investment Ltd., the biggest state-owned developer, dropped 1.4 percent to HK$21.20. China Resources Land Ltd., which gets all of its revenue on the mainland, lost 3.3 percent to HK$20.25.

Futures of the S&P 500 were little changed today. The measure added 0.3 percent in New York yesterday. The Fed’s asset purchases “are by no means on a preset course” and could even be expanded should economic conditions warrant, Bernanke said in prepared testimony to the House Financial Services Committee yesterday.

“We’re going to be responding to the data,” Bernanke said. “If the data are stronger than we expect, we’ll move more quickly” to reduce purchases. If data “don’t meet the kinds of expectations we have about where the economy’s going, then we would delay that process or potentially increase purchases for a time.”

Bond Purchases

Weekly U.S. jobless claims data due today may help investors assess the outlook for the Fed’s $85 billion-a-month bond buying program, which has contained increases in borrowing costs and stoked global equity gains over the past three years.

Innolux and AU Optronics, which make thin film transistor-liquid crystal displays, fell after the Commercial Times reported Taiwan and Korean panel makers cut output amid weak demand and falling prices. Innolux lost 6.7 percent to NT$13.95 and AU Optronics slid 4.6 percent to NT$10.40.

SoftBank rose 4 percent to 6,450 yen in Tokyo. Its joint venture with Bloom aims to market and distribute the California startup’s fuel-cell technology in Japan, the companies said.

Woolworths Ltd., Australia’s largest retailer, fell 1.1 percent to A$33.32 in Sydney after saying it expects to lose A$157 million ($144 million) in the year ended June for its Masters home-improvement joint venture.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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


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