Bloomberg News

Asian Stocks Swing as Valuations at Six-Month High, Yen Rises

November 26, 2013

Tokyo Stock Exchange

Japan’s Topix index fell 0.5 percent. Photographer: Junko Kimura/Bloomberg

Asia’s benchmark regional stock index swung between gains and losses after valuations climbed to near the highest level in six months. Gold producers advanced, while Japanese exporters declined on a stronger yen.

Honda Motor Co. (7267) slid 2 percent as the yen strengthened against the dollar, weakening the earnings prospects for Japanese carmakers. Doosan Engineering & Construction Co. (011160) slumped 15 percent after the Korea Economic Daily said the provider of civil engineering services will sell redeemable convertible preferred shares. Perseus Mining Ltd. rose 3.6 percent in Sydney to lead a rebound in gold producers after prices for the precious metal rallied from their lowest since July.

The MSCI Asia Pacific Index added less than 0.1 percent to 141.77 as of 2:03 p.m. in Hong Kong after falling as much as 0.2 percent. The measure rose 9.6 percent this year through yesterday as investors bet the Federal Reserve will maintain its bond buying into 2014.

“People have become a little bit blasé about the risks and that’s creating an environment where we are a little too stretched,” Angus Gluskie, who helps oversee about $550 million as a fund manager at White Funds Management in Sydney, said by telephone. “The market is ready for a technical pullback and we have taken some money off the table. We are now cautious.”

Valuations on the MSCI Asia Pacific Index yesterday climbed to 13.9 times estimated earnings, close to the multiple of 14 reached on Nov. 18, the highest level since May, according to data compiled by Bloomberg. That compares with 16.3 yesterday on the S&P 500 (SPX) and 15.2 for the Stoxx Europe 600 Index.

Regional Gauges

Japan’s Topix index fell 0.5 percent. Australia’s S&P/ASX 200 Index added 0.1 percent, while New Zealand’s NZX 50 Index lost 0.5 percent. South Korea’s Kospi index advanced 0.3 percent.

Singapore’s Straits Times Index was little changed. Taiwan’s Taiex Index added 0.7 percent. Hong Kong’s Hang Seng Index climbed 0.1 percent, while China’s Shanghai Composite slid 0.1 percent.

Minutes of the Fed’s October meeting released Nov. 20 showed officials may reduce their $85 billion a month of bond buying if the economy improves as anticipated. Stimulus from the Fed has helped the S&P 500 soar 166 percent since its March 2009 low. The index has advanced 26 percent this year, poised for its best annual performance in a decade.

Global Poll

Four of every five investors expect the Fed will put off a decision to begin reducing monetary stimulus until March 2014 or later, according to a Bloomberg Global Poll of investors, traders and analysts who are subscribers. Just 5 percent are looking for a move at the central bank’s Dec. 17-18 meeting, the Nov. 19 poll showed.

“The global economic environment is improving so this should be constructive for equities,” Tai Hui, Hong Kong-based chief Asia market strategist at JPMorgan Asset Management, which oversees about $2.2 trillion globally, told Bloomberg TV. “We should be looking at a continued increase in our portfolio allocation to equities.”

Bank of Japan Governor Haruhiko Kuroda helped drive a 46 percent surge in Japan’s Topix this year by maintaining unprecedented monetary easing as he and Prime Minister Shinzo Abe sought to jolt the nation out of 15 years of deflation. The Topix is the best performing index of 24 developed markets tracked by Bloomberg.

Most Bank of Japan board members agreed that inflation was likely to reach around 2 percent toward the latter half of the projection period of between the 2013 and 2015 fiscal years, according to minutes of the Oct. 31 meeting released today in Tokyo.

The yen gained 0.2 percent to 101.51 per dollar, dragging Japanese exporters lower. Honda fell 2 percent to 4,280 yen. Toyota Motor Corp. (7203) retreated 1.2 percent to 6,350 yen.

Gold Miners

Perseus Mining advanced 3.6 percent to 28.5 Australian cents, rebounding from yesterday’s 5.2 percent slide. Evolution Mining Ltd. added 1.7 percent to 61.5 cents, following its 5.5 percent loss yesterday. Gold rose 0.1 percent to $1,253.17 per ounce, rising from a four-month low.

Doosan Engineering slumped 15 percent to 1,855 won in Seoul. The firm is seeking to sell redeemable convertible preferred shares by year-end to repay matured debt, the Korea Economic Daily reported. Doosan separately said yesterday it will reduce capital to 285.9b won from 2.77t won to help enhance shareholder value.

China Petroleum & Chemical Corp. sank 2.5 percent to HK$6.66 after Chinese authorities detained seven people from the nation’s biggest refiner following the death of 55 people in a pipeline blast.

Futures on the Standard & Poor’s 500 Index rose 0.2 percent today. The gauge fell yesterday, after seven consecutive weekly gains that boosted the gauge to a record, as energy shares retreated following Iran’s agreement to limit its nuclear program.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net


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