Most Asian stocks declined after India unexpectedly raised its key interest rate. Japanese exporters gained as the yen weakened.
DLF Ltd., India’s biggest developer, tumbled 12 percent in Mumbai. CapitaLand Ltd., Southeast Asia’s largest homebuilder, slipped 2.5 percent in Singapore after proposing a convertible bond offering. Nikon Corp. (7731), a camera maker that gets 85 percent of sales outside Japan, climbed 6.4 percent in Tokyo. Shiseido Co. surged 5.8 percent after the cosmetics makers’ shares were recommended by Citigroup Inc.
The MSCI Asia Pacific Index added 0.1 percent to 141.14 at 7:51 p.m. in Tokyo as 11 shares fell for every 10 that rose. India’s central bank Governor Raghuram Rajan surprised analysts today by raising the benchmark interest rate to rein in inflation. The Asian stocks measure climbed 3 percent this week as the Federal Reserve unexpectedly refrained from reducing stimulus, saying it wants more evidence of an economic recovery before paring $85 billion in monthly bond purchases.
“Investors reversed positions built up across the board on speculation about the stimulus reduction,” said Tohru Nishihama, an economist covering emerging markets at Dai-ichi Life Research Institute Inc. in Tokyo. “But the Fed will eventually trim stimulus, and investors will become more selective.”
India’s S&P BSE Sensex slid 1.9 percent, its biggest drop in two weeks. The Reserve Bank of India boosted the repurchase rate by a quarter point to 7.5 percent, the first increase since 2011, the central bank said today in a statement.
“Governor Rajan isn’t taking any chances with inflation,” said Shishir Bajpai, a senior vice president at IIFL Wealth Management Ltd., which has about $1.8 billion of shares under management and advisory. “The RBI policy was unexpected, but not unjustified. The Fed’s decision has eased some of the short-term concerns on rupee and foreign outflows.”
Singapore’s Straits Times Index dropped 0.4 percent. Australia’s S&P/ASX 200 Index (AS51) declined 0.4 percent, retreating from a five-year high. New Zealand’s NZX 50 Index lost 0.5 percent, retreating from a record high. Futures on the Standard & Poor’s 500 Index fell less than 0.1 percent.
Japan’s Topix (TPX) index gained 0.3 percent, closing higher for a third day. The FTSE Bursa Malaysia KLCI Index rose 0.5 percent. Markets in Hong Kong, China, South Korea and Taiwan are shut for holidays.
The Asia-Pacific gauge rallied 9.1 percent this year through yesterday amid signs China’s economic growth is stabilizing.
Japan’s Topix has climbed 42 percent this year, the most among 24 developed markets tracked by Bloomberg, amid optimism Prime Minister Shinzo Abe and the Bank of Japan can lead the country out of deflation through unprecedented monetary easing. About 23 trillion yen ($232 billion) was added to the market capitalization of the Topix in the two weeks through yesterday, according to data compiled by Bloomberg, after the city was selected to host the 2020 Olympic Games.
Indian developers and lenders fell after the rate increase. All 36 analysts surveyed by Bloomberg forecast it to remain unchanged. DLF tumbled 12 percent to 151.50 rupees. State Bank of India, the nation’s largest lender, lost 3.3 percent to 1,747.55 rupees. ICICI Bank Ltd. declined 4.7 percent to 987.25 rupees.
CapitaLand (CAPL) dropped 2.5 percent to S$3.16 in Singapore after saying it will raise S$750 million ($601 million) from a bond offering to repurchase existing notes.
Exporters in Japan climbed after the yen fell 1.5 percent against the dollar yesterday. Nikon soared 6.4 percent to 1,809 yen. Toyota Motor Corp., Asia’s largest carmaker, gained 1.3 percent to 6,480 yen.
Shiseido gained 5.8 percent to 1,725 yen after Citigroup analysts upgraded the shares to buy from sell.
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