Asian Stock Index Posts Biggest Weekly Drop Since August

Most Asian stocks fell, with the regional benchmark index posting its biggest weekly drop since August, as improving U.S. economic data fueled speculation the Federal Reserve may bring forward stimulus cuts.

Qantas Airways Ltd. sank 3.7 percent, extending yesterday’s 11 percent drop, after Standard & Poor’s cut its credit rating on Australia’s largest carrier to junk status. Nufarm (NUF) Ltd. slid 1.6 percent in Sydney after Credit Suisse Group AG cut its rating on the supplier of farm chemicals. Advantest (6857) Corp. jumped 6.1 percent on a newspaper report that cost cuts by the Japanese maker of semiconductor equipment reduced its break-even point.

The MSCI Asia Pacific Index added 0.1 percent to 139.70 as of 6:53 p.m. in Hong Kong, with about five shares falling for every four that that rose on the gauge. The measure fell 1.7 percent this week, the most since the period ended Aug. 23. Fed policy makers meet Dec. 17-18 after minutes of their October gathering showed they may reduce $85 billion of monthly bond buying should the U.S. economy improve as anticipated.

“We’ve seen a very good string of economic data from the U.S. in recent weeks and that suggests we’re getting closer to a Fed tapering,” Mark Lister, head of private wealth research at Craigs Investment Partners Ltd. in Wellington, said by phone. “Although the general consensus is for tapering to happen in 2014, the chance of a December tapering have gone up. That will drag equity markets weaker and push bond yields higher.”

The U.S. posted the fastest annualized growth last quarter since the start of 2012 and jobless claims unexpectedly fell as the focus turns to today’s November non-farm payrolls, projected to rise by 185,000 workers. Malaysia said today exports rose more than expected, while protesters in Thailand have said they’ll resume rallies against the government.

Japan’s GPIF

Japan’s Topix index rose 0.5 percent percent, snapping a two-day loss, as the yen fell and Japan’s pension fund was urged to sell local bonds to seek higher returns. The Government Pension Investment Fund should boost holdings of Japanese stocks, Takatoshi Ito, chairman of the wealth manager’s advisory panel, said in an interview today.

Hong Kong’s Hang Seng Index added 0.1 percent. The FTSE Bursa Malaysia KLCI index added 0.1 percent and climbed as much as 0.4 percent as the nation’s export growth accelerated to 9.6 percent in October from a year earlier.

Taiwan’s Taiex index and New Zealand’s NZX 50 Index both fell 0.1 percent. South Korea’s Kospi index and Australia’s S&P/ASX 200 Index both slipped 0.2 percent. China’s Shanghai Composite Index declined 0.4 percent. Singapore’s Straits Times Index dropped 0.3 percent.

Relative Value

The MSCI Asia Pacific Index gained 8 percent this year as central banks boosted stimulus to support growth globally and China’s economy showed signs of stabilization. The gauge traded at 13.8 times estimated earnings, compared with multiples of 16 for the Standard & Poor’s 500 Index and 14.8 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Futures (SPA) on the S&P 500 added 0.4 percent today. The gauge slid 0.4 percent yesterday, falling for a fifth day, as improving economic data boosted bets the Fed will cut stimulus sooner than estimated. In a Bloomberg Global Poll Nov. 19, four of five investors said they expected the Fed to put off a decision to start reducing its bond buying until March 2014 or later.

U.S. Economy

U.S. gross domestic product climbed at a 3.6 percent annualized rate in the third quarter, up from an initial estimate of 2.8 percent and the strongest growth since the first quarter of 2012, data showed. Claims for unemployment benefits decreased 23,000 to 298,000 in the week ended Nov. 30, after the median forecast of 41 economists surveyed by Bloomberg called for an increase to 320,000.

A report today is expected to show the U.S. unemployment rate fell to 7.2 percent last month to match the lowest level since 2008. Payrolls rose by 204,000 workers in October.

Qantas dropped 3.7 percent to A$1.03 in Sydney, the lowest close since July 2012, as its credit rating was cut to junk at Standard & Poor’s a day after the carrier flagged a record first-half loss and 1,000 job cuts.

Nufarm slid 1.6 percent to A$4.33 after Credit Suisse lowered its rating to neutral from outperform, saying the company’s first-half earnings forecast was below the brokerage’s expectations.

Beijing Development (Hong Kong) Ltd. (154) tumbled 23 percent to HK$1.84 in Hong Kong, its biggest decline since 1993, after the provider of automated public transportation fare systems terminated a deal to acquire a unit of China Green Energy Ltd.

Advantest jumped 6.1 percent to 1,297 yen in Tokyo after the Nikkei newspaper said cuts in the company’s labor and general expenses with help the company return to profit on lower sales for the year ending March 2015.

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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