Bloomberg News

Asian Stocks Fall on U.S. Services Data as Materials Shares Drop

January 07, 2014

Asian stocks fell for a fourth day as a report showed that U.S. service industries expanded less than expected and raw-material shares declined.

Sinopec Shanghai Petrochemical Co., an oil processor, slumped 6.3 percent, leading material shares lower. Oversea-Chinese Banking Corp., Southeast Asia’s second-biggest lender, fell 1.2 percent in Singapore amid concern it may pay too much to take over Hong Kong’s Wing Hang Bank Ltd. Li & Fung Ltd., the world’s largest supplier of clothes and toys to retailers, soared 9.6 percent in Hong Kong as the company called its 2013 performance “solid.”

The MSCI Asia Pacific Index lost 0.4 percent to 138.62 at 9:04 p.m. in Tokyo, its lowest close since Dec. 19. Janet Yellen won U.S. Senate confirmation to become the 15th chairman of the Federal Reserve and the first woman to head the central bank in its 100-year history.

“There’s a little bit of pullback from” a strong rally at the end of 2013, said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $160 billion. “The U.S. payrolls data on Friday night is probably going to be quite important. That’s the key macro data this week, but we might get some cautiousness throughout January, up until the next FOMC meeting.”

U.S. Jobs

The U.S. Labor Department will release the unemployment rate and new hiring figures for last month on Jan. 10. The Federal Open Market Committee said last month it plans to taper monthly bond purchases to $75 billion from $85 billion starting January, saying in a statement that “labor-market conditions have shown further improvement.” The committee is scheduled to meet Jan. 28-29.

The Asia-Pacific gauge rose for 11 days through Dec. 31, completing a 9.3 percent advance for the year.

Seven of the 10 industry groups on the benchmark index fell today with raw-material shares dropping the most. Sinopec Shanghai Petrochemical lost 6.3 percent to HK$2.07. Fortescue Metals Group Ltd., an Australian iron-ore producer, declined 4.7 percent to A$5.44.

Japan’s Topix (TPX) index slipped 0.7 percent, while the yen weakened 0.2 percent versus the dollar. The currency strengthened 0.6 percent yesterday. South Korea’s Kospi index added 0.3 percent.

Australian Equities

Australia’s S&P/ASX 200 Index slipped 0.2 percent as data showed the nation had a smaller-than-expected trade deficit in November. New Zealand’s NZX 50 Index lost 0.1 percent. Singapore’s Straits Times Index declined 0.1 percent, while Taiwan’s Taiex index rose 0.1 percent.

Hong Kong’s Hang Seng Index (HSI) increased 0.1 percent, while the Hang Seng China Enterprises Index of mainland shares traded in the city, also known as the H-share index, fell 0.5 percent. China’s Shanghai Composite Index added 0.1 percent.

Futures on the Standard & Poor’s 500 Index added 0.4 percent today. The equity benchmark lost 0.3 percent yesterday after slower-than-forecast growth in U.S. service industries. The Institute for Supply Management’s non-manufacturing index decreased to 53 in December from 53.9 in November, a report from the Tempe, Arizona-based group showed. The median projection in a Bloomberg survey of 69 economists was 54.7. A reading above 50 indicates expansion.

Yellen, 67, was confirmed as Fed chairman by a 56-26 vote, with 11 Republicans supporting her. She’ll replace Ben S. Bernanke, whose second term as chairman expires Jan. 31.

Yellen’s Appointment

Currently Fed vice chairman, Yellen has backed Bernanke’s efforts to steer the economy through its most severe crisis since the 1930s with record-low interest rates and three rounds of bond buying that have swelled Fed assets to $4.02 trillion. She pledged in a Nov. 14 confirmation hearing to press on with accommodation until achieving a “strong recovery.”

Yellen’s nomination “will have a very market friendly outcome,” said Chris Weston, chief strategist at IG Markets Ltd. in Melbourne. “It’s really now down to growth and the ability of Yellen to communicate that superiority to the market because the market has clearly moved away from tapering to the credibility of the Fed’s forward guidance.”

Oversea-Chinese Banking lost 1.2 percent to S$9.75. The biggest shareholders of Wing Hang agreed to “engage exclusively” with Singapore-based OCBC through Jan. 31 to complete terms of a possible offer, the Hong Kong-based family-run lender said in a statement to the city’s exchange yesterday. No financial details were disclosed.

Li & Fung jumped 9.6 percent to HK$10.78, its biggest gain since Aug. 15, as its 2013 performance was in line with its target to return to 2011 levels after net income fell last year for the first time since 2008, according to a statement yesterday.

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

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


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