Asia Stocks Decline Before Fed, Paring Monthly Increase

Photographer: Tomohiro Ohsumi/Bloomberg

A pedestrian holding an umbrella looks at an electronic stock board outside a securities firm in Tokyo. Close

A pedestrian holding an umbrella looks at an electronic stock board outside a securities firm in Tokyo.

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Photographer: Tomohiro Ohsumi/Bloomberg

A pedestrian holding an umbrella looks at an electronic stock board outside a securities firm in Tokyo.

Asian stocks dropped, with the regional benchmark index paring its first monthly advance since April, before U.S. economic growth data and the conclusion of a Federal Reserve policy meeting.

HTC Corp., Taiwan’s biggest smartphone maker, tumbled 6.7 percent after forecasting an eighth consecutive drop in quarterly sales. GungHo Online Entertainment Inc., which climbed 10-fold this year through yesterday, slumped 13 percent in Tokyo as more than five shares fell for each that rose on the Topix index. Guangzhou R&F Properties Co. jumped 6.7 percent in Hong Kong, pacing gains among Chinese developers, after the government endorsed development of the property market.

The MSCI Asia Pacific Index dropped 0.8 percent to 132.74 as of 7:41 p.m. in Tokyo. More than two shares fell for each that rose on the measure, which is heading for a 1.7 percent advance this month.

“The market will pore through every word” in the Fed’s statement,’’ Bob Van Munster, head of Australian equities at Tyndall Investment Management Ltd. in Sydney, which oversees about $21 billion, said by telephone. “The overall message is we are coming to an end of quantitative easing but we are going to manage it according to the data that comes out.”

The Fed will probably maintain key interest rates at 0.25 percent in its announcement today, which will be watched by investors for clues to the timing of reductions in monetary stimulus. The European Central Bank and Bank of England review policy tomorrow.

Regional Gauges

Japan’s Topix index and the benchmark Nikkei 225 Stock Average both closed 1.5 percent lower. The Japanese yen gained as much as 0.3 percent against the dollar today. A stronger currency reduces the value of overseas sales for the nation’s exporters when repatriated.

Japan’s Topix index climbed 32 percent this year amid optimism Prime Minister Shinzo Abe will push through reforms while the Bank of Japan continues record stimulus to beat deflation. The gauge traded at 1.2 times book value, compared with 2.5 for the S&P 500 and 1.7 for the Stoxx Europe 600 Index.

Taiwan’s Taiex index dropped 0.7 percent. The nation’s economy expanded faster than economists estimated in the second quarter, even as a slowdown in China damps the outlook for the island’s exports.

India’s S&P BSE Sensex 30 index was little changed after five straight days of declines, the longest streak since April.

South Korea’s Kospi index slipped 0.2 percent. Hong Kong’s Hang Seng Index and New Zealand’s NZX 50 Index both fell 0.3 percent. Australia’s S&P/ASX 200 Index added 0.1 percent.

China Rally

The Shanghai Composite Index gained 0.2 percent, its second day of advance. China’s ruling Politburo pledged to stabilize growth while pressing on with economic reforms after exports fell by the most since the global financial crisis and manufacturing and investment cooled.

The Asia-Pacific gauge lost 7.3 percent through yesterday from this year’s high on May 20 amid signs China’s economic slowdown is deepening and on concern the Fed will start tapering monetary stimulus. Shares on the gauge traded at 13 times estimated earnings as of yesterday, compared with 15.3 times for the Standard & Poor’s 500 Index and 13.5 times for the Stoxx Europe 600 Index.

Eight of the 10 industries on the measure have advanced this month, led by material producers as well as phone and energy companies. BHP Billiton Ltd., the world’s No. 1 miner, has contributed most to the index’s gain. Tencent Holdings Ltd. (700), China’s biggest Internet company, surged 16 percent to a record in July.

U.S. Futures

Futures on the S&P 500 Index added 0.1 percent today ahead of a report economists forecast will show annualized growth slowed in the second quarter to 1 percent from 1.8 percent. The gauge rose less than 0.1 percent in New York yesterday as investors analyzed corporate earnings and awaited results from the Fed’s two-day meeting.

HTC sank 6.7 percent to NT$159.50 in Taipei, the lowest close since November 2005. Revenue will be as much as NT$60 billion ($2 billion) in the three months ending September, the Taoyuan, Taiwan-based company said in a statement yesterday. That missed the NT$72.7 billion average of 21 analysts’ estimates compiled by Bloomberg.

GungHo (3765), maker of the mobile games for Apple Inc. iPhones, slumped 13 percent to 80,000 yen in Tokyo, extending its two-day loss to 25 percent. The company, the best-performing company on the MSCI World Index of developed-market shares this year, reported sales and operating profit on July 29 that were below expectations, according to Macquarie Group Ltd., which yesterday kept its underperform rating on the stock and reduced its share-price forecast to 57,000 yen from 70,000 yen.

Earnings Performance

Of the 227 companies on the MSCI Asia Pacific Index that posted results since July 1 and for which estimates are available, 51 percent exceeded analyst estimates, according to data compiled by Bloomberg. More than 100 members on the gauge are scheduled to report earnings this week, including Sony Corp. and billionaire Li Ka-shing’s Cheung Kong Holdings Ltd.

China Cosco Holdings Co., the nation’s biggest shipping company, dropped 4.5 percent to HK$3.20 in Hong Kong after saying it expects to post a first-half loss.

Chinese developers advanced. China will seek “stable and healthy” development of the property market, the government said on its website after a meeting led by President Xi Jinping yesterday. It is the first time this year that the government didn’t mention further tightening of the property market, according to Credit Suisse Group AG and Orient Finance Holdings (H.K.) Ltd.

Guangzhou R&F Properties jumped 6.7 percent to HK$12.06. China Overseas Land & Investment Ltd. (688), the biggest mainland developer traded in Hong Kong, gained 1.6 percent to HK$22.35 in Hong Kong. China Resources Land Ltd., a state-owned homebuilder, increased 3.4 percent to HK$21.30.

To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net

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

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