Bloomberg News

Asian Stocks Follow U.S. Drop as Ukraine Tensions Rise

August 06, 2014

Russia's President Vladimir Putin

Vladimir Putin, President of Russia. Photographer : Andrey Rudakov/Bloomberg

Asian stocks fell, with the regional index extending yesterday’s losses, after U.S. equities dropped to a two-month low amid escalating tensions in Ukraine.

SoftBank Corp., a Japanese mobile-phone operator, dropped 3.5 percent after a person familiar with the matter said Sprint Corp., controlled by SoftBank, ended talks to acquire T-Mobile US Inc. Vard Holdings Ltd. plunged 5.1 percent in Singapore after the shipbuilder said it received a tax claim from Brazil authorities. Aluminum Corp. of China Ltd. surged 9.4 percent in Hong Kong after the government allowed the producer of the light metal to create a rare earth group.

The MSCI Asia Pacific Index dropped 0.4 percent to 146.18 as of 4:06 p.m. in Hong Kong, with all of its 10 industry groups falling. The measure slumped 0.8 percent yesterday, which pared its gain since a Feb. 4 low to 13 percent.

A Snapshot of Ukraine's Past and Future

“There’s quite a bit of unrest,” said Donald Williams, Sydney-based chief investment officer at Platypus Asset Management Ltd., which oversees about A$1.6 billion ($1.5 billion). “It’s unlikely that it will turn into something intractable. But the market is over-extended and I think the geopolitical risk we are seeing at the moment is an excuse for people to take profit.”

Poland’s foreign minister warned that a renewed buildup of Russian troops on Ukraine’s border may signal an invasion as President Vladimir Putin ordered a response to U.S. and European sanctions.

Regional Gauges

Japan’s Topix index fell 1 percent. South Korea’s Kospi index and India’s S&P BSE Sensex Index both declined 0.3 percent. Australia’s S&P/ASX 200 Index fell 0.1 percent and New Zealand’s NZX 50 Index lost 0.2 percent.

Hong Kong’s Hang Seng Index and the Hang Seng China Enterprises Index of mainland shares traded in the city both slid 0.3 percent. China’s Shanghai Composite Index slid 0.1 percent. Taiwan’s Taiex Index was little changed after plummeting 2 percent yesterday. Singapore’s Straits Times Index fell 0.2 percent.

Futures on the Standard & Poor’s 500 Index rose 0.2 percent today. The measure declined 1 percent yesterday to the lowest level since May 29 as energy shares tumbled and concern increased over Ukraine.

Putin is showing no sign of backing down over Ukraine since the U.S. and the European Union tightened sanctions last week, with Russia massing forces on its neighbor’s border in the biggest military buildup since troops were withdrawn from the area in May.

U.S. Services

Service industries in the U.S. expanded in July at the fastest pace since December 2005, according to data from the Institute for Supply Management, indicating the economy was building more momentum at the start of the second half of 2014. Another release showed factory orders rose 1.1 percent in June, above economists’ estimates for a 0.6 percent gain.

SoftBank fell 3.5 percent to 6,972 yen in Tokyo after Sprint ended talks to acquire T-Mobile US, a person familiar with the matter said, as regulatory concerns outweighed the potential benefits of combining the third- and fourth-largest U.S. wireless carries. Sprint plans to name Marcelo Claure, the founder of mobile-phone distributor Brightstar Corp., as its new chief executive officer as soon as today, according to two people familiar with the situation.

China Unicom (Hong Kong) Ltd., a mainland mobile carrier, declined 5.3 percent to HK$13 in Hong Kong. The company’s quarterly profit is expected to fall 3.7 percent to 3.3 billion yuan ($535 million), China International Capital Corp.’s analyst Haofei Chen wrote in a note.

SoftBank and China Unicom led the decline among telecommunication shares, which fell the most among the 10 industry groups on the MSCI Asia Pacific Index.

Tax Claim

Vard plunged 5.1 percent to S$1.025, poised for the biggest slump since November. The shipbuilder received a tax claim from Brazil authorities and is reviewing the need for provisions, the company said in a filing yesterday.

Pacific Metals Co., a Japanese maker of stainless steel, slumped 16 percent to 418 yen after forecasting a full-year loss of 415 million yen. Its rating was cut to underperform at Mizuho Securities Co.

Aluminum Corp. of China, known as Chalco, soared 9.4 percent to HK$3.74 after the Ministry of Industry and Information Technology approved its plan to form a rare earth group.

Kubota Corp., a Japanese manufacturer of industrial machinery, jumped 8.9 percent to 1,406.5 yen after reporting profit rose. First-quarter net income advanced 8.4 percent to 33.4 billion yen ($326 million), compared with analysts’ estimate of 30.2 billion yen.

Of the businesses on the Asian stock gauge that released results from the beginning of July through yesterday and for which Bloomberg had estimates, 60 percent beat earnings expectations.

The Asia-Pacific gauge traded at 13.5 times estimated earnings as of yesterday compared with 16.1 for the S&P 500 and 15.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

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

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


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