Asian Stocks Pare Loss on China Shares; Tencent Surges

Asian stocks were little changed, erasing earlier losses, as Chinese shares rose. Tencent Holdings Ltd. extended a record high while Qantas Airways Ltd. (QAN) dragged Australian equities lower.

The Shanghai Composite Index (SHCOMP) climbed as China Petroleum & Chemical Corp. and technology companies rallied. Tencent jumped 5.2 percent, contributing the most to the Hang Seng Index’s advance. Qantas lost 9.1 percent in Sydney, the biggest decline since Dec. 5, after Australia’s largest airline said it will cut 5,000 jobs and defer new jets. Mitsubishi Estate Co. sank 3.1 percent in Tokyo as developers led declines among the Topix (TPX) index’s 33 industry groups.

The MSCI Asia Pacific Index added 0.1 percent to 137.99 as of 7:01 p.m. in Hong Kong, having earlier lost 0.5 percent. The measure has gained 2.4 percent this month, with almost $2 trillion added to the value of stocks worldwide through yesterday as investors bet the global economic recovery is strong enough to withstand a reduction in the pace of monthly U.S. stimulus.

“The markets are in this holding pattern again, waiting for some new developments,” Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about A$170 billion ($152 billion), said by phone. “The base case is still that the global economy grows more strongly this year than it did last year but there’s certainly some risk around that. A slowdown in China, risks in other emerging markets and questions about how strong the recovery is in the U.S. are enough to keep everybody’s minds occupied.”

China Surge

China’s Shanghai Composite Index advanced 0.3 percent today. The measure yesterday halted a four-day slide that sent valuations close to record lows. Forwards in China’s yuan traded within 0.2 percent of the weakest level since November today after the central bank reduced the onshore currency’s daily fixing.

Hong Kong’s Hang Seng Index rose 1.7 percent as Tencent, Asia’s biggest Internet company, surged 5.2 percent to HK$616.50. The Hang Seng China Enterprises Index of mainland Chinese stocks listed in the city gained 1.5 percent.

Australia’s S&P/ASX 200 Index declined 0.5 percent as Qantas dropped and a report showed business investment fell the most since 2009.

Capital spending in Australia slumped 5.2 percent in the three months ended December from the previous period, when it climbed 3.6 percent, the statistics bureau said today. That compares with the median estimate for a 1.3 percent slide by economists surveyed by Bloomberg News before the report.

Japanese Developers

Japan’s Topix lost 0.7 percent. Mitsubishi Estate slid 3.1 percent to 2,420 yen. Sumitomo Realty & Development Co. declined 3 percent to 4,141 yen.

New Zealand’s NZX 50 Index fell 0.2 percent, while South Korea’s Kospi index gained 0.4 percent. Singapore’s Straits Times Index added 0.3 percent and Taiwan’s Taiex Index rose 0.5 percent.

The MSCI Asia Pacific Index climbed 6 percent from this year’s low on Feb. 4, leaving the gauge trading at 13 times the estimated earnings of its constituent companies, compared with 15.7 for the Standard & Poor’s 500 Index and 14.4 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Earnings Season

Of the 406 companies on the Asia-Pacific measure that have reported quarterly earnings since the start of the year and for which Bloomberg compiles estimates, 53 percent topped profit forecasts.

Qantas will defer delivery of three Boeing Co. 787-8 Dreamliners and eight Airbus Group NV A380s, freeze all group pay until the company returns to profit and cut more than one in seven of its full-time equivalent jobs by 2017, the company said today as it posted a A$252 million loss. Chief Executive Officer Alan Joyce argues the 93-year-old airline can’t compete in a domestic price war with Virgin Australia Holdings Ltd., whose three biggest shareholders are state-controlled foreign airlines.

Futures on the S&P 500 declined 0.5 percent amid increasing tension between Russia and Ukraine. The benchmark index for U.S. equities ended yesterday’s session little changed.

The gauge has climbed above its closing record of 1,848.38 during every trading day this week, only to retreat from that level by the end of the day. The measure rallied 5.9 percent from a low on Feb. 3 as investors speculated that severe winter weather explains the weakness in reports such as housing and hiring.

Stimulus Outlook

An unexpected rise in new U.S. home sales yesterday boosted speculation Federal Reserve Chair Janet Yellen will reiterate plans to continue stimulus cuts in Senate testimony today. Yellen said this month that the economy can weather cuts to the country’s stimulatory bond buying program, adding that only a notable change to the economic outlook would prompt the central bank to slow the pace of tapering.

“What we’ll hear from Yellen tonight is that while they are watching the effects of the weather on the data, it’s not enough to push them off their course of tapering $10 billion per meeting,” Colonial First State’s Halmarick said.

SK Holdings Co. surged 6.1 percent to 192,000 won in Seoul, to a three-month high, after the South Korean industrial conglomerate announced a share buyback plan.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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

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