Asian Stocks Retreat From Five-Month High on China Rates

Asian stocks fell, with the regional benchmark index retreating from a five-month high, after China’s money-market rates surged.

Industrial & Commercial Bank of China Ltd., the nation’s largest lender, dropped 2.2 percent. Japan Exchange Group Inc. sank 3.7 percent after the main bourse operator in the world’s second-largest equity market didn’t boost its full-year profit forecast as analysts had expected. Hyundai Merchant Marine Co. jumped 14 percent after South Korea’s biggest shipping line by market value refinanced 280 billion won ($265 million) of debt.

The MSCI Asia Pacific Index dropped 0.8 percent to 142.71 at 7:31 p.m. in Tokyo, erasing gains of as much as 0.5 percent. The gauge had risen for four days amid speculation the Federal Reserve will delay tapering economic stimulus. The Shanghai Composite Index (SHCOMP) closed at its lowest level in more than three weeks as China’s money market rates jumped the most since July.

“The market has had a good run since the U.S. government ended a shutdown last week,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has about $130 billion under management. “We’re seeing a bit of a correction. Chinese interest rates are an issue. There’s a fear that the mini credit crunch we saw in June could return.”

China’s Shanghai Composite Index slipped 1.3 percent to its lowest close since Sept. 30. The seven-day repurchase rate, a gauge of funding availability in the Chinese banking system, surged 47 basis points to 4.05 percent in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. The rate jumped to a record in June as the government engineered a credit crunch to curb speculative lending after credit expansion outpaced economic growth.

Bank Funding

The People’s Bank of China has suspended selling reverse-repurchase contracts since Oct. 17, leading to a net withdrawal of 44.5 billion yuan ($7.3 billion) from the financial system last week. The authority asked commercial banks to submit orders today for 28-day repurchase contracts, 91-day bills, and 14-day reverse repos planned for tomorrow, according to a trader at a primary dealer required to bid at the auctions.

Hong Kong’s Hang Seng Index decreased 1.4 percent. Japan’s Topix Index (TPX) slid 1.5 percent, while Taiwan’s Taiex index fell 0.3 percent. South Korea’s Kospi index dropped 1 percent. Singapore’s Straits Times Index lost 0.2 percent.

Australian Inflation

Australia’s S&P/ASX 200 Index declined 0.3 percent, erasing gains of 0.5 percent. The nation’s inflation accelerated in the third quarter from the previous three months, a report showed today. New Zealand’s NZX 50 Index rose 0.9 percent to a record.

The MSCI Asia Pacific Index has climbed 3 percent this month after U.S. lawmakers ended the government shutdown and raised the debt ceiling. The gauge traded at 13.7 times estimated earnings, compared with 15.9 for the Standard & Poor’s 500 Index and 14.7 for the Stoxx Europe 600 Index.

The S&P 500 climbed 0.6 percent yesterday, a fourth day of record closing highs, on speculation slower growth in hiring will extend Federal Reserve stimulus. That pushed the U.S. equities benchmark to within a percentage point of the best yearly gain in a decade. Futures on the S&P 500 expiring in December fell 0.6 percent today.

Barclays Plc changed its estimate for the start of Fed tapering to March from December after data showed U.S. employers added 148,000 workers in September, missing the 180,000 increase projected in a Bloomberg survey of economists. The data’s release was delayed due to the 16-day U.S. government shutdown.

Chinese Banks

Chinese developers and lenders declined. Industrial & Commercial Bank of China fell 2.2 percent to HK$5.28. China Construction Bank Corp., the nation’s second-largest lender, slid 2.3 percent to HK$5.87. China Overseas Land & Investment Ltd. (688), the biggest mainland real estate company traded in Hong Kong, fell 1.7 percent to HK$23.65. Shimao Property Holdings Ltd., controlled by billionaire Hui Wing Mau, sank 5.6 percent to HK$18.70.

Japan Exchange Group dropped 3.7 percent to 2,219 yen, erasing gains of 3.3 percent. The company reiterated it expects to earn 22 billion yen ($225 million) in the year ending March 31 even as it reported first-half profit that exceeded expectations. Analysts had expected the bourse to raise its projection to 29.1 billion yen, according to the average of seven estimates compiled by Bloomberg.

Nitto Denko Corp. (6988), a supplier of chemicals used in the semiconductor industry, sank 7.5 percent to 5,300 yen after JPMorgan Chase & Co. lowered its rating to neutral from overweight.

Hyundai Merchant Marine jumped 14 percent to 16,000 won, the most since Aug. 13. State-run Korea Development Bank said it purchased 224 billion won of bonds from the shipping company, enabling it to refinance 280 billion won of debts that were due yesterday.

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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