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Most Asian Share Markets Advance Before Fed Meeting

Most Asian share markets advanced as investors awaited the outcome of the two-day Federal Reserve meeting that starts today and Japanese exporters rose as the yen dropped for a second day.

Toyota Motor Corp. (7203), the world’s largest carmaker, gained 1.8 percent in Tokyo. Sony Corp. (6758) climbed 4.4 percent after Third Point LLC, a hedge fund controlled by billionaire Daniel Loeb, increased its stake in the electronics maker. STX Pan Ocean Co., South Korea’s No. 1 commodities-shipping company, slumped 15 percent after a court accepted its application to seek protection.

The MSCI Asia Pacific Index dropped 0.4 percent to 131.88 as of 8:18 p.m. in Tokyo, erasing earlier gains of 0.3 percent. The gauge, which is priced in dollars, extended its decline as the yen weakened, reducing the value of Japanese companies in the measure. About 10 shares gained for every nine that fell on the gauge as benchmarks across the region increased.

“We will see continuous volatility amid concern the Federal Reserve will soon taper stimulus,” said Daphne Roth, Singapore-based head of Asia equity research at ABN Amro Private Bank, which oversees about $207 billion. “A withdrawal would be an issue for companies seeking financing. Liquidity is quite tight in China. The Chinese government isn’t bent on growing credit. It’s quite tough as they attempt to reduce the housing bubble and excess capacity in other industries.”

The Asia-Pacific measure declined 1.8 percent this month through yesterday amid concern central banks are losing appetite for more economic stimulus.

About $2.7 trillion has been erased from global markets since Fed Chairman Ben S. Bernanke said May 22 U.S. policy makers could scale back stimulus efforts if the employment outlook shows “sustainable improvement.”

Shares on the MSCI Asia Pacific Index traded at 12.7 times estimated earnings yesterday, compared with multiples of 14.8 for the Standard & Poor’s 500 Index and 13 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Regional Gauges

Singapore’s Straits Times Index jumped 1.5 percent and Jakarta’s Composite Index increased 1.4 percent. Both measures capped their biggest three-day gains in a year. South Korea’s Kospi index climbed 0.9 percent, while Taiwan’s Taiex Index added 0.2 percent. New Zealand’s NZX 50 Index rose 0.3 percent. China’s Shanghai Composite Index added 0.4 percent, while Hong Kong’s Hang Seng Index swung between gains and losses before closing little changed.

Japan’s Topix index closed 0.2 percent higher, erasing a loss of as much as 0.5 percent. The Nikkei 225 Stock Average dropped 0.2 percent after rising 0.8 percent. Australia’s S&P/ASX 200 Index slid 0.2 percent.

Futures on the Standard & Poor’s 500 Index added 0.2 percent today. The gauge climbed 0.8 percent yesterday as investors watched economic reports for clues to whether the economy is strong enough to allow the Fed to scale back its $85 billion in monthly bond buying. Confidence among U.S. homebuilders surged in June to the highest level seven years.

‘Worst Case’

“I don’t think the volatility will go away in a matter of days or in the worst case a few weeks,” Mikio Kumada, Hong Kong-based global strategist for LGT Capital Management, which oversees more than 25 billion, told Bloomberg Television. “The case for a premature tightening is not very strong. It’s about reminding the market: Don’t get too exuberant. There’s a punch bowl out there and maybe we will have to withdraw it eventually.”

Japanese exporters advanced as the yen fell as much as 0.8 percent against the dollar, heading for its second day of decline. A weaker yen boost the value of overseas income at carmakers and electronics manufacturers when repatriated.

Sony, Hyundai

Toyota gained 1.8 percent to 5,800 yen. Hino Motors Ltd. (7205), a Japanese truck maker that gets about 39 percent of sales overseas, jumped 5.3 percent to 1,383 yen. Advantest Corp., the world’s biggest maker of memory-chip testers, climbed 2.5 percent to 1,541 yen.

Sony climbed 4.4 percent to 2,036 yen in Tokyo. Third Point, which is proposing to spin off the company’s entertainment business, now holds 70 million Sony shares, according to a June 17 letter from the investor to Chief Executive Kazuo Hirai obtained by Bloomberg.

Hyundai Motor Co., South Korea’s biggest carmaker, advanced 3.8 percent to 204,500 won in Seoul. The company may report better-than-expected sales in the second quarter as it has stepped up production to make up for a drop in output in May when workers boycotted weekend shifts, said Lee Sang Hyun, an analyst at NH Investment & Securities Co.

Chinese property developers declined as home prices rose at the fastest pace in more than two years in most cities, defying tougher government curbs and constraining the ability of policy makers to ease credit in response to weakening economic growth.

China Overseas Land & Investment Ltd. (688), the biggest mainland developer traded in Hong Kong, slid 1.7 percent to HK$20.80. China Resources Land Ltd., a state-owned real-estate company, dropped 1.2 percent to HK$21.45. Agile Property Holdings Ltd. declined 2.7 percent to HK$8.56.

Chinese Dilemma

“The government is in a dilemma right now,” Zhang Zhiwei, Hong Kong-based chief China economist at Nomura Holdings Inc., said in a telephone interview today. “It’s difficult for China to tighten the property market while it also needs to bolster the economy, which has a strong reliance on property.”

STX Pan Ocean slumped 15 percent to 2,185 won in Seoul, the lowest close since its listing in September 2007, after a court accepted its application to seek protection. That means investors will see their shareholding written down and creditors will swap debt for equity as part of any restructuring, said Cho Byoung Hee, an analyst at Kiwoom Securities Co. in Seoul.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

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

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