Bloomberg News

Asian Stocks Are Little Changed as Hong Kong Gauge Slumps

June 23, 2014

Fed Chair Janet Yellen

Janet Yellen, chair of the U.S. Federal Reserve. The Asia-Pacific gauge added 0.4 percent last week, to cap its longest run of weekly gains since August, as Yellen said she expects U.S. interest rates to stay near zero for a “considerable time” after stimulatory bond-buying ends. Photographer: Pete Marovich/Bloomberg

Asian stocks were little changed, with the regional benchmark gauge swinging between gains and losses, as Hong Kong shares sank.

China Mobile Ltd. dropped 2.4 percent in Hong Kong as telecommunication shares fell most among the regional index’s industry groups. Bank of China Ltd. sank after the nation’s seven-day repurchase rate, a gauge of cash availability, rose to a seven-week high. Olympus Corp. surged 4.9 percent after Goldman Sachs Group Inc. reiterated its buy rating on the Japanese optics maker.

The MSCI Asia Pacific Index (MXAP) rose less than 0.1 percent to 144.75 as of 7:43 p.m. in Hong Kong after climbing as much as 0.6 percent. The city’s Hang Seng Index slumped 1.7 percent, the most since March 20, reversing a 0.9 percent advance. Shares rose earlier as a preliminary index of China factory activity from HSBC Holdings Plc and Markit Economics beat estimates.

“Although PMI was better than expected today, there’s not enough confidence in the market to push any gains further,” said Mao Sheng, an analyst for Huaxi Securities Co. in Chengdu. “There’s the fear of a June liquidity crunch. It happens every June and last year’s squeeze was quite bad.”

The Hang Seng China Enterprises Index slid 1.9 percent, while the Shanghai Composite Index lost 0.1 percent. China Mobile declined 2.4 percent to HK$74 as the MSCI Asia Pacific Telecommunication Services Index retreated 0.9 percent.

The cost of one-year swaps, the fixed payment needed to receive the floating seven-day repurchase rate, climbed as much as two basis points to 3.48 percent in Shanghai, data compiled by Bloomberg show. Bank of China fell 2.6 percent to HK$3.38.

Regional Gauges

Japan’s Topix (TPX) index slid 0.1 percent. Olympus jumped 4.9 percent to 3,620 yen in Tokyo after Goldman Sachs said first-quarter operating profit would probably double.

South Korea’s Kospi index rose 0.4 percent. Australia’s S&P/ASX 200 Index gained 0.6 percent, while New Zealand’s NZX 50 Index lost 0.4 percent. Taiwan’s Taiex index fell 0.5 percent. Singapore’s Straits Times Index fell slid than 0.1 percent. India’s S&P BSE Sensex Index dropped 0.3 percent.

HSBC/Markit’s preliminary Chinese manufacturing survey reached a seven-month high of 50.8 for June, exceeding the 49.7 median estimate of analysts surveyed by Bloomberg News and a final reading of 49.4 in May. Figures above 50 indicate expansion.

‘Much Better’

“The Chinese data is looking much better, definitely better than my expectation,” Pauline Dan, who helps oversee $153 billion as the Hong Kong-based head of greater China equities at Pictet Asset Management Ltd., said by phone. “The government is trying to maintain economic momentum, fine-tuning monetary policy to achieve the 7.5 percent growth target this year. Relative to the region, definitely Chinese stocks are looking attractive. We have been nibbling.”

The nation’s central bank won’t loosen its “appropriately tight” monetary policy in the second-half and will deploy targeted reserve requirement ratio adjustments, Yi Xianrong, a researcher at the Chinese Academy of Social Sciences, wrote in an article in Shanghai Securities News.

China’s economic slowdown deepened this quarter, as capital spending showed weakness and fewer companies applied for credit, according to the China Beige Book, a report published quarterly by New York-based China Beige Book International.

Futures on the Standard & Poor’s 500 Index were little changed today. The equity gauge rose 0.2 percent on June 20 as drugmakers rallied on merger activity and investors speculated economic growth will accelerate.

Among other shares that rose, Hon Hai Precision Industry Co. gained 3.5 percent to NT$97.60 in Taipei. The Economic Daily News reported that Hon Hai is hiring workers for the production of Apple Inc.’s iPhone 6.

The Asia-Pacific gauge traded at 13.3 times estimated earnings at the last close, compared with 16.6 for the S&P 500 and 15.5 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Weiyi Lim in Singapore at wlim26@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net John McCluskey, Jim Powell


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