Bloomberg News

Asian Stocks Fall a Fourth Day Amid China, Fed Stimulus Concerns

January 28, 2014

Securities Firm in Tokyo

A man walks past an electronic stock board outside a securities firm in Tokyo on Jan. 27, 2014. Photographer: Yuriko Nakao/Bloomberg

Asian stocks fell, with the regional benchmark index on course to drop for a fourth day, amid concern over the Federal Reserve’s plan to cut stimulus and as profit growth at China’s industrial companies slowed.

BHP Billiton Ltd., the world’s biggest mining company that counts China as its No. 1 market, fell 2 percent to be the biggest drag on the index as Australian markets opened after a holiday. LG Display Co. (034220) lost 3.3 percent in Seoul after customer Apple Inc. (AAPL:US) forecast sales that trailed analyst estimates. Komatsu Ltd., the world’s second-largest maker of construction equipment, gained 1 percent in Tokyo after bigger rival Caterpillar Inc. projected earnings that topped expectations.

The MSCI Asia Pacific Index fell 0.4 percent to 134.23 as of 9:36 p.m. in Tokyo. The regional gauge dropped yesterday by the most since June as part of a global slump sparked by weaker-than-expected data from China and a sell-off in emerging-market currencies. India unexpectedly raised interest rates today, while Fed policy makers start a two-day meeting.

“Investors can’t move much until they see the policy statement of the Federal Open Market Committee meeting on Jan. 28-29 and the market’s reaction to it,” said Toshihiko Matsuno, a strategist at SMBC Friend Securities Co., a unit of Japan’s second-largest lender. “The abrupt changes in developing markets are showing signs of settling down and the yen has stabilized. That should start buying back gradually.”

Regional Gauges

Japan’s Topix index lost 0.4 percent, after posting its biggest drop since August yesterday. Australia’s S&P/ASX 200 Index declined 1.3 percent, led by miners and banks. New Zealand’s NZX 50 Index lost 0.1 percent.

India’s S&P BSE Sensex (SENSEX) swung between gains and losses after the Reserve Bank of India said it raised its benchmark interest rate to 8 percent from 7.75 percent. Only three of 45 analysts in a Bloomberg News survey predicted the move, with the rest expecting no change.

Thailand’s SET Index slipped 1.3 percent. The nation’s manufacturing production decreased 6.2 percent in December from a year earlier, according to a report today. An anti-government protester was injured in a shooting incident in Bangkok, near the venue where Prime Minister Yingluck Shinawatra is meeting members of the Election Commission to discuss proposals to delay the Feb. 2 general election, Bluesky TV reported.

Hong Kong’s Hang Seng Index lost 0.1 percent. China’s Shanghai Composite Index and South Korea’s Kospi Index both climbed 0.3 percent. Singapore’s Straits Times Index added 0.7 percent.

Investor Challenge

Profit at China’s industrial companies increased 6 percent in December from a year earlier, after rising 9.7 percent in the previous month, the National Bureau of Statistics said today.

“China will continue to spook investors,” Toby Lawson, head of futures, options and cash equities trading for Asia-Pacific at Newedge Group SA in Sydney, said by telephone. “Investors just need to ride out this volatility until we find a bottom.”

The Asia-Pacific equity gauge is headed for its biggest monthly decline since May after a private gauge of China’s manufacturing dropped to a six-month low in January, adding to signs growth is slowing in the world’s second-largest economy. Shares on the measure traded at 12.7 times estimated earnings, compared with a multiple of 15.1 for the Standard & Poor’s 500 Index and 13.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

U.S. Futures

Futures on the S&P 500 added 0.4 percent today. The measure declined 0.5 percent yesterday. Federal Reserve officials have been scrutinizing U.S. economic data to determine the timing and pace of reductions to asset purchases. The central bank, which starts a two-day meeting today, decided at its December gathering to begin cutting its monthly bond buying by $10 billion to $75 billion.

“The fear around another Fed taper and the effects on emerging markets seem to be based more on the effect it will have on profits made over the past year than a genuine fear of credit squeezes,” Evan Lucas, a markets strategist in Melbourne at IG Ltd., wrote in an e-mail to clients today.

Shares of Apple sank 6.8 percent in early U.S. trading. The technology company forecast second-quarter sales of $42 billion to $44 billion, trailing the median analyst estimate of $46.1 billion. Sales of iPhones were also below projections.

BHP dropped 2 percent to A$36.31. Rio Tinto Group (RIO), the world’s second-largest mining company, lost 1.3 percent to A$64.31.

Mining Profit

Zijin Mining Group Co., China’s No. 1 gold producer, lost 2.8 percent to HK$1.71 in Hong Kong. Full-year net profit tumbled 58 percent from a year earlier to 2.18 billion yuan ($360.4 million), according to a preliminary earnings statement posted to the Shanghai Stock Exchange.

Apple suppliers (AAPL:US) declined. LG Display dropped 3.3 percent to 25,300 won in Seoul. Sharp Corp., which supplies panels used in Apple’s iPhones and iPads, fell 3.4 percent to 343 yen in Tokyo. AAC Technologies Holdings Inc., a supplier of speakers, decreased 4.8 percent to HK$32.95 in Hong Kong.

LG Electronics Inc. fell 3.9 percent to 66,200 won in Seoul after the world’s second-largest maker of televisions posted an unexpected loss as a stronger South Korean won curved the value of overseas sales.

Among stocks that advanced, Komatsu gained 1 percent to 2,048 yen in Tokyo. Rival Caterpillar, the world’s largest maker of mining and construction equipment, forecast earnings and revenue for 2014 that topped analysts’ estimates as the recovery in the U.S. building industry spurs sales of bulldozers and excavators.

Kawasaki Heavy Industries Ltd. (7012) climbed 2 percent to 462 yen after JPMorgan Chase & Co. advised buying shares of the maker of industrial-machinery equipment.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net

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


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