Asian Stocks Decline as U.S. Mired in Debt Stalemate
Asian stocks fell, with a regional gauge retreating from a four-month high, as American lawmakers struggled over an accord to raise the U.S. debt limit and restore government operations.
Hon Hai Precision Industry Co., the assembler of Apple Inc.’s iPhones and iPads, slid 1.9 percent in Taipei. Newcrest Mining Ltd. (NCM), Australia’s No. 1 gold producer, fell 3.8 percent as the bullion traded near a three-month low. CSR Corp. and China CNR Corp., the nation’s biggest train makers, jumped by the 10 percent daily limit in Shanghai on speculation they will win contracts to construct of Thailand’s high-speed rail system.
The MSCI Asia Pacific excluding Japan Index dropped 0.3 percent to 471.15 as of 3:17 p.m. in Singapore, with more than two shares falling for each that rose. Markets in Tokyo and Hong Kong are shut for holidays. With the U.S. borrowing authority set to lapse Oct. 17, Senate leaders in Washington sought a pact to avert a default and re-open the government.
“It’s a situation no one wants to be in, causing market volatility,” said Angus Gluskie, managing director at White Funds Management Ltd., where he helps oversee about $550 million “The two political parties do need to reach an agreement. If there’s no deal by Thursday, markets will fall further. Investors are getting a little bit concerned on China after seeing a couple of weak data points.”
Senate Majority Leader Harry Reid was negotiating with Minority Leader Mitch McConnell after talks between President Barack Obama and House Speaker John Boehner broke down. Chinese exports unexpectedly fell in September, data Oct. 12 showed.
Australia’s S&P/ASX 200 Index declined 0.4 percent and Taiwan’s Taiex retreated 0.9 percent. New Zealand’s NZX 50 Index lost 0.1 percent and South Korea’s Kospi Index (KOSPI) fell 0.2 percent. The Philippine Stock Exchange Index slid 0.5 percent.
Singapore’s Straits Times Index dropped 0.6 percent. The nation’s economy shrank an annualized 1 percent in the three months through September from the previous quarter, when it expanded a revised 16.9 percent, the Trade Ministry said in a statement today. The median forecast in a Bloomberg News survey of 13 economists was for a 4 percent contraction.
China’s Shanghai Composite Index gained 0.4 percent. The nation’s consumer prices rose 3.1 percent in September from a year earlier. That exceeded the 2.8 percent median estimate of 44 analysts surveyed by Bloomberg News and compared with a 2.6 percent gain in August.
The MSCI Asia Pacific Index, which includes Japan, climbed 1.3 percent last week amid optimism U.S. lawmakers were moving closer to resolving the debt impasse. The gauge traded at 13.6 times estimated earnings on Oct. 11, compared with 15.4 for the Standard & Poor’s 500 Index and 14.3 for the Stoxx Europe 600 Index.
S&P 500 futures fell 0.8 percent. Reid said he’s “in conversation” with McConnell and is “confident” Republicans will agree to end the partial government shutdown and raise the debt ceiling. McConnell said in a statement that it’s time for Democrats to support a plan, based on one drafted by Republican Susan Collins, which Reid rejected Oct. 12.
The talks are shifting away from Republican efforts to curtail Obama’s signature health-care law to rescinding a tax on medical devices to focus on the level of spending and the duration of the deficit-ceiling extension.
Obama, in a phone call with House Minority Leader Nancy Pelosi of California, “reinforced that there must be a clean debt limit increase” -- and a stopgap spending measure also free of policy add-ons -- before budget negotiations can begin, according to a White House statement.
“The market fully expects a deal to be done, but they are going to be nervous until it’s confirmed,” Matt McCormick, who helps oversee $10.1 billion as a portfolio manager at Cincinnati, Ohio-based Bahl & Gaynor Inc., said by phone. “It will be jittery until it happens. A jittery, nervous market will blow up when it is finally resolved. Then it will trend back down.”
Exporters declined. Hon Hai slid 1.9 percent to NT$74 in Taipei. AU Optronics Corp., a maker of liquid crystal display screens used in electronics devices, sank 4.5 percent to NT$9.60. Creative Technology Ltd. (CREAF), a maker of digital music players, dropped 4 percent to S$2.15 in Singapore.
Gold producers slumped as the precious metal swung between gains and losses after touching a three-month low on Oct. 11. Newcrest Mining fell 3.8 percent to A$10.10 in Sydney. Regis Resources Ltd. decreased 3.9 percent to A$3.46.
OZ Minerals Ltd. sank 9.3 percent to A$3.99 after the copper producer cut its output forecast by as much as 20 percent and raised its production cost estimate.
China’s train makers rallied after Thai Prime Minister Yingluck Shinawatra told reporters on Oct. 11 after meeting with Chinese Premier Li Keqiang in Bangkok that Chinese companies had expressed interest in developing the southeastern Asian nation’s high-speed train system. CSR, which makes locomotives, jumped 10 percent to 4.31 yuan in Shanghai, while China CNR, which manufactures rail cars and wagons, climbed 10 percent to 4.59 yuan.
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