Asia Stocks Outside Japan Drop; Japan Shares Rise on Poll

Asian stocks outside Japan slid toward a two-month low amid concern a budget standoff in the U.S. may curb global growth. Japanese shares gained on speculation a change of government may result in more action to stimulate the economy.

BHP Billiton Ltd. (BHP), the world’s largest mining company, fell 1.8 percent in Sydney, declining for a sixth day in its longest losing streak since July. Tencent Holdings Ltd. (700), China’s biggest Internet company, dropped 7 percent in Hong Kong after earnings missed estimates. Nippon Steel & Sumitomo Metal Corp. surged 4.8 percent in Tokyo.

The MSCI Asia Pacific Ex-Japan Index (MXAPJ) fell 1.1 percent to 433.74 as of 7:54 p.m. in Tokyo, the lowest level since September 13. Hong Kong’s Hang Seng lost 1.6 percent and China’s Shanghai Composite declined 1.2 percent as Xi Jinping replaced Hu Jintao as head of the Chinese Communist Party. Japan’s Nikkei 225 Stock Average (NKY) rose 1.9 percent.

The fiscal-cliff “creates more uncertainty for investors and markets all over the world,” said Wayne Bowers, chief executive officer for Asia-Pacific and Europe at Northern Trust Global Investments, which has about $750 billion in assets under management. He spoke in a Bloomberg TV interview in Hong Kong. “You have this negative feedback loop continuing that really does affect both consumer consumption, personal confidence, as well as business investment.”

Futures on the Standard & Poor’s 500 Index rose 0.4 percent today. The S&P 500 lost 1.4 percent yesterday and the Dow Jones Industrial Average slid to the lowest level since June. Investors’ attention remained fixed on Washington, where lawmakers need to reach a budget agreement in order to avoid a so-called “fiscal cliff” of $607 billion in automatic tax increases and spending cuts next year for the world’s largest economy.

China Leadership

The MSCI Asia Pacific Index, which includes Japanese shares, fell 0.2 percent today. The measure gained 9.9 percent through yesterday from this year’s low on June 4 as central banks added stimulus to spur economic growth and data showed a slowdown in China may be ending. The measure traded at 13.2 times estimated earnings yesterday, compared with 13 for the S&P 500 and 12 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Xi Jinping was named today to replace Hu Jintao as head of the Chinese Communist Party, ushering in the fifth generation of leaders set to run the world’s second-biggest economy over the next decade. He was also named chairman of the party’s Central Military Commission.

Australia, Singapore

Australia’s S&P/ASX 200 Index lost 0.9 percent. BHP Billiton declined 1.8 percent to A$33.12 and Rio Tinto Ltd., the world’s second-largest mining company, sank 1.8 percent to A$56.82. Singapore’s Straits Times lost 1.1 percent and South Korea’s Kospi declined 1.2 percent.

Japanese shares advanced as the ruling Democratic Party of Japan decided the national vote for the lower house will be held Dec. 16. The deal to bring forward elections due in August came after LDP leader Shinzo Abe agreed to end an impasse over financing the budget and to support a plan to reduce the number of Diet seats.

“A government led by the Liberal Democratic Party is expected to win,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “Investors believe that will add pressure on the Bank of Japan to ease policy, and the government will adopt strong policies to get the economy out of deflation.”

An 8.9 percent plunge by Sony Corp. (6758) was the second biggest drag on the Nikkei 225 as the electronics maker touched its lowest level since 1980. The company, reeling from four consecutive annual losses, said it will sell convertible bonds.

Esprit Jumps

Tencent retreated 7 percent to HK$249.20. Net income climbed to 3.22 billion yuan, missing the 3.33 billion-yuan average estimated by eight analysts’ surveyed by Bloomberg, as a slowing economy pared growth in online advertising sales.

Esprit Holdings Ltd. (330) surged 22 percent to HK$12.96, the highest level since May. Former chairman Michael Ying doubled his stake in the apparel maker that’s struggling with a sales slump.

Qantas Airways Ltd. (QAN), Australia’s largest carrier, rose 4.1 percent to A$1.28 after saying it will buy as much as A$100 million ($104 million) of its own shares with cash from cutting a Boeing Co. order.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net; Satoshi Kawano in Tokyo at skawano1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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