Bloomberg News

Asian Stocks Slide to Three-Month Low Before Fed Policy Meeting

December 16, 2013

Asian stocks fell for a fourth day, reaching a three-month low, after a gauge of Chinese manufacturing fell and as investors awaited a Federal Reserve meeting starting tomorrow to gauge the timing of stimulus cuts.

Toyota Motor Corp., Asia’s largest carmaker, slid 1.9 percent, as Japanese exporters dropped as the yen advanced against the dollar. Senex Energy Ltd. sank 8.4 percent after its A$752 million ($673 million) initial takeover proposal for AWE Ltd. was rejected by the oil and gas explorer. AWE shares surged 7.2 percent. Tokyo Electric Power Co. gained 1 percent on a report the government plans to double interest-free loans to the utility.

The MSCI Asia Pacific Index lost 0.7 percent to 136.95 as of 7:32 p.m. in Hong Kong, for its lowest close since Sept. 9. The measure dropped 1.1 percent last week, a second week of declines, as improving U.S. economic data spurred bets stimulus will be reduced. The Fed will start paring $85 billion of monthly bond purchases this week, according to 34 percent of economists surveyed Dec. 6 by Bloomberg. Futures on the Standard & Poor’s 500 Index added 0.4 percent today.

“The market is very divided on whether the Fed will announce any changes,” Stewart Richardson, who helps oversee about $100 million as chief investment officer at RMG Wealth Management LLP in London, said in an e-mail. “Equity markets seem to be behaving a little more bearishly in the run-up to this meeting compared to September.”

Manufacturing Data

China’s Shanghai Composite Index slipped 1.6 percent. A Chinese manufacturing index unexpectedly fell to a three-month low as output gains eased and employment weakened, suggesting the world’s second-largest economy is vulnerable to a slowdown.

The HSBC Holdings Plc/Markit Economics preliminary manufacturing purchasing managers’ index for China fell to 50.5 in December, missing the 50.9 estimate in a Bloomberg survey after coming in at 50.8 in November. Readings above 50 signal expansion. China set a economic growth target of about 7.5 percent for 2014, the same as this year’s goal, Caixin reported on its website, citing a decision from the central economic work conference ended Dec. 13.

Hong Kong’s Hang Seng Index slid 0.6 percent, while the Hang Seng China Enterprises Index declined 0.9 percent. Singapore’s Straits Times Index fell 0.4 percent, and Taiwan’s Taiex Index lost 0.8 percent.

Japan’s Topix index slid 1.3 percent. Australia’s S&P/ASX 200 Index fell 0.2 percent, while New Zealand’s NZX 50 Index rose 0.4 percent. South Korea’s Kospi index added 0.1 percent.

Japan’s Tankan

Japan’s quarterly Tankan index for large manufacturers rose to the highest since 2007, climbing to 16 from 12 in September, according to the Bank of Japan, beating estimates for a reading of 15 in a Bloomberg poll. Positive figures indicate optimists outnumber pessimists.

India’s S&P BSE Sensex Index fell 0.3 percent, its fifth day of losses. The nation’s wholesale inflation was faster than economists estimated in November, reaching a 14-month high and adding pressure for a further increase in the benchmark interest rate this week to quell price pressures.

The MSCI Asia Pacific Index has gained 5.9 percent this year as central banks added stimulus to shore up growth globally. The Asia-Pacific gauge trades at 13.5 times estimated earnings, compared with 16 for the S&P 500 and 14.7 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

The Topix rose 42 percent this year, the most among 24 major developed markets tracked by Bloomberg, amid unprecedented stimulus by the Bank of Japan in support of Prime Minister Shinzo Abe’s efforts to end 15 years of deflation.

U.S. Economy

The Fed has said it won’t cut stimulus until it sees signs of sustainable economic recovery. Unemployment has since fallen to a five-year low and third-quarter GDP growth was stronger than expected.

“There won’t be any move until 2014” to reduce stimulus, Richard Gibbs, global head of economics at Macquarie Group Ltd., told Bloomberg TV in Sydney. “The underlying resilience of the U.S. labor market is not as strong as a lot of commentators would have you believe.”

Exporters dropped. Toyota Motor slid 1.9 percent to 6,060 yen. Honda Motor Co., which gets almost half its revenue in North America, dropped 2.8 percent to 4,060 yen.

Askul Corp. tumbled 6.7 percent to 3,050 yen in Tokyo after profit at the seller of office equipment dropped 70 percent.

CP Lotus Corp., a Chinese operator of hypermarkets, dropped 4.3 percent to 20.2 Hong Kong cents after competitor Wumart Stores Inc. said it won’t proceed with plans to buy stores from CP Lotus just two months after the companies announced the deal. Wumart closed unchanged at HK$10.94 after falling as much as 7.7 percent earlier.

Sensex Bid

AWE surged 7.2 percent to A$1.27. Brisbane-based Senex offered the equivalent of A$1.44 a share, 22 percent more than the closing price of A$1.185 last week. Senex, which withdrew its bid according to a separate statement, lost 8.4 percent to 70.5 Australian cents.

Tokyo Electric Power gained 1 percent to 524 yen. The government plans to increase interest-free loans to the owner of the crippled Fukushima Dai-Ichi nuclear power plant to as much as 10 trillion yen ($97 billion).

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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