Asian Stocks Drop as Yen Rises Amid China Growth Concern
Asian stocks headed for their longest losing streak since November as a stronger yen weakened the profit outlook for Japanese exporters and China signaled it will tolerate slower growth.
Nissan Motor Co., Asia’s third-largest carmaker, slid 6.8 percent in Tokyo as the yen gained against the dollar. Softbank Corp. dropped 4.1 percent after U.S. Senator Charles Schumer said the carrier’s $20.1 billion bid for Sprint Nextel Corp. raises national security concerns. 361 Degrees International Ltd. (1361) sank 7.7 percent in Hong Kong after the sportswear manufacturer projected a profit drop.
The MSCI Asia Pacific Index slid 1.2 percent to 136.97 as of 5:11 p.m in Hong Kong, extending losses for a fifth day toward the lowest since April 23. About three stocks fell for every two that rose and all 10 industry groups on the gauge retreated. The measure lost 2.7 percent last week, the most since July, as speculation grew the Federal Reserve will reduce its bond purchases as the economy improves and China manufacturing data missed estimates.
“I wouldn’t be putting any risk on now,” Keith Poore, New Zealand-based head of investment strategy at AMP Capital, which has about $126 billion in assets under management, said in a phone interview from Wellington. “We’ve had confirmation from China that the recovery is going to be very shallow by their standards. In Japan, we expect more volatility, and with bond yields that low you don’t need a big move to end up with a capital loss. Those that are overweight risk assets might want to take some more risk off.”
Japan’s Topix Index (TPX) slid 3.4 percent, extending the worst weekly decline in more than a year. The measure has lost 9.6 percent from May 22, when it closed at the highest level since August 2008. The exporter-heavy Nikkei 225 Stock Average fell 3.2 percent today.
The two gauges have risen more than 30 percent this year to outperform all major equity indexes amid unprecedented monetary easing policies from the Bank of Japan. The Standard & Poor’s 500 Index is up 16 percent and the Stoxx Europe 600 Index rose 8.5 percent this year.
There’s “no sign at this point of excessively bullish expectations in asset markets or in the activities of financial institutions,” BOJ Governor Haruhiko Kuroda said yesterday in Tokyo.
Australia’s S&P/ASX 200 Index (AS51) fell 0.5 percent and New Zealand’s NZX 50 Index dropped 1.1 percent. Singapore’s Straits Times Index lost 0.1 percent. Taiwan’s Taiex Index advanced 0.9 percent. South Korea’s Kospi index and Hong Kong’s Hang Seng Index both added 0.3 percent.
China’s Shanghai Composite Index rose 0.2 percent. Net income for Chinese industrial companies last month rose 9.3 percent from a year earlier to 437 billion yuan ($71.3 billion) after a 5.3 percent increase in March, the National Bureau of Statistics said in Beijing. Profit in the first four months of the year climbed 11.4 percent to 1.61 trillion yuan, it said.
Stronger profit growth may spur investment in factories and equipment, helping sustain growth in the world’s second-biggest economy as the government avoids adding stimulus. China’s President Xi Jinping signaled a tolerance for slower expansion to reduce environmental damage.
Futures on the Standard & Poor’s 500 Index were little changed. Markets in the U.S. and U.K. are closed for holidays.
A gain of 7.1 percent in 2013 on the MSCI Asia Pacific Index through the end of last week left the measure trading at 13.4 times estimated earnings, compared with a multiple of 15 on the S&P 500 and 13.3 on the Stoxx 600, according to data compiled by Bloomberg.
Japanese exporters declined as the yen climbed 0.4 percent to 100.85 as of 5:43 p.m. in Tokyo. A stronger yen reduces the value of overseas income at automakers and electronics manufacturers when repatriated.
Nissan lost 6.8 percent to 1,076 yen. Honda Motor Co. declined 4.3 percent to 3,885 yen. Sony Corp., the maker of Bravia televisions and PlayStation game consoles, sank 6.3 percent to 2,013 yen.
SoftBank sank 4.1 percent to 5,170 yen. New York Senator Schumer wrote to the Treasury Department that SoftBank’s purchase of Sprint could open “a backdoor for hackers” targeting the U.S. because of a possible reliance on Chinese networking equipment.
David Jones Ltd. (DJS) slid 0.8 percent to A$2.56, fifth straight decline, after the Australian retailer said third-quarter sales dropped 3.4 percent on the previous year. That compares with a forecast 1 percent decline.
361 Degrees International fell 7.7 percent to HK$1.93 in Hong Kong as the company forecast profit will fall and Bank of America Corp. cut its recommendation on the shares.
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