Most Asian Stocks Drop as U.S. Debt Talks Deadline Loom

Most Asian stocks declined as U.S. lawmakers resumed talks to avoid a default ahead of tomorrow’s deadline to raise the debt ceiling.

Techtronic Industries Co., a maker of power tools that gets about 73 percent of sales from North America, fell 3 percent in Hong Kong. Japan Tobacco Inc., Asia’s largest listed cigarette maker, slid 2 percent as report on how much it would raise prices after the nation’s sales-tax increased disappointed investors. GungHo Online Entertainment Inc. jumped 16 percent in Tokyo after the game developer and parent SoftBank Corp. agreed to buy 51 percent of Finland’s Supercell Oy.

The MSCI Asia Pacific Index fell less than 0.1 percent to 141.36 as of 7:35 p.m. in Tokyo, after swinging between gains and losses of as much as 0.2 percent. Almost five shares declined for every three that rose on the gauge, which traded near a five-month high. Senate leaders have restarted negotiations to reopen the government and prevent default, according to a statement from Republican Senator Mitch McConnell’s spokesman.

“The leaders in the Senate are optimistic and that’s keeping the markets supported.” Chris Weston, chief market strategist at brokerage IG Ltd. in Melbourne, said by phone. “It’s all very confusing and extremely frustrating. There’s not a lot of clarity now, so people are probably going to stay on the sidelines until we get something more meaty on the bone.

McConnell and Senate Majority Leader Harry Reid “are optimistic that an agreement is within reach,” a spokesman for Reid. They earlier suspended talks, while House lawmakers postponed a potential vote on a plan to resolve the impasse stripped of Republican conditions.

China Slowdown

China’s Shanghai Composite Index (SHCOMP) dropped 1.8 percent, the most among major Asia-Pacific gauges. JPMorgan Chase & Co. cut its rating on the nation’s equities to underweight, citing a cyclical slowdown and a potential disappointment from a Communist Party meeting in November.

Hong Kong’s Hang Seng Index slipped 0.5 percent. Japan’s Topix (TPX) fell 0.1 percent and Taiwan’s Taiex index lost 0.4 percent.

South Korea’s Kospi index dropped 0.3 percent. A report showed the nation’s unemployment rate unexpectedly fell to 3 percent in September from 3.1 percent a month earlier.

Australia’s S&P/ASX 200 Index rose 0.1 percent. New Zealand’s NZX 50 Index added 0.2 percent, while Singapore’s Straits Times Index climbed 0.3 percent. Indian markets were closed for a holiday.

The MSCI Asia Pacific Index gained 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 today, compared with 15.4 for the Standard & Poor’s 500 Index and 14.4 for the Stoxx Europe 600 Index.

U.S. Futures

S&P 500 futures advanced 0.3 percent today. The U.S. equity gauge slipped 0.7 percent yesterday as the absence of a deal to raise the $16.7 trillion U.S. debt limit spurred a surge in Treasury bill rates. With U.S. borrowing authority set to lapse tomorrow, Fitch Ratings put the world’s biggest economy on watch for a possible credit downgrade, citing lawmakers’ inability to forge a deal.

House Speaker John Boehner, a Republican, was making a last-minute attempt to influence the outcome of the fiscal showdown with a proposal that would extend government funding through Dec. 15, compared with the Jan. 15 threshold included in the Senate’s plan.

Exporters declined. Techtronic slipped 3 percent to HK$19.94 in Hong Kong. Li & Fung Ltd. (494), a supplier of toys and clothes to retailers including Wal-Mart Stores Inc., fell 1.1 percent to HK$10.88. Panasonic Corp., Japan’s second-largest television maker, dropped 1.5 percent to 947 yen.

Japan Tobacco

Japan Tobacco slid 2 percent to 3,450 yen. The cigarette maker will likely raise prices by 3 percent from April due to the sales-tax hike, the Yomiuri newspaper reported, without citing anyone. Mizuho Securities Co. analyst Hiroshi Saji said he was expecting a 5 percent rise and called the smaller increase a “short-term negative.”

Prince Frog International Holdings Ltd. plunged 26 percent to HK$4.66 in Hong Kong, the most on record, after short-seller Glaucus Research Group questioned the company’s sales and branded the baby-care products maker a “strong sell.” Trading was suspended in the afternoon after the shares dropped.

Iluka Resources Ltd. declined 4.4 percent to A$10 in Sydney after the world’s biggest zircon producer said demand in China declined. Weak demand in the quarter is “unlikely to be offset in full by stronger sales volumes in the fourth quarter,” Iluka said today in a statement.

GungHo Online Entertainment jumped 16 percent to 81,900 yen in Tokyo, the most on the MSCI Asia Pacific Index. SoftBank said yesterday it will team up with unit GungHo to buy a 51 percent stake in Finnish game maker Supercell for $1.53 billion.

SoftBank, PCCW

SoftBank, Japan’s third-largest wireless carrier, rose 2.2 percent to 7,400 yen after saying it is talks to buy a stake in Brightstar Corp., a U.S.-based mobile-phone distributor.

PCCW Ltd., owner of Hong Kong’s biggest telecommunications operator, climbed 4.6 percent to HK$3.64 after winning regulatory approval to compete in the city’s free-to-air television market after few permits were given for the first time in almost 40 years. I-Cable Communications Ltd., which also got a license, surged 155 percent to HK$1.20.

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

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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