The MSCI Asia Pacific Index fell after the biggest rally in a month yesterday as data showed slowing U.S. factory activity and investors weighed prospects of recession in Russia.
The MSCI Asia Pacific Index fell less than 0.1 percent to 134.30 as of 7:32 p.m. in Tokyo after rising as much as 0.2 percent. The gauge rose 1.2 percent yesterday, the steepest advance since Feb. 21. Banks warned Russia’s economy is at risk as the world’s leading industrial powers threaten further sanctions to deter it from invading other parts of Ukraine after the annexation of Crimea.
The U.S. factory data “is a little bit weaker, but nothing changed much,” said Donald Williams, Sydney-based chief investment officer who helps manage about $1.6 billion at Platypus Asset Management Ltd. in Sydney. “It’s a grinding recovery and some of the data are better than expected and some are worse.”
Cosco Pacific Ltd. and Yashili International Holdings Ltd. slid after their earnings missed estimates. Sekisui House Ltd. dropped 1 percent after saying it found defects in a Tokyo residential complex being built by Taisei Corp. Tingyi (Cayman Islands) Holding Corp. rose 2.2 percent in Hong Kong after UBS AG upgraded the noodle maker.
Hong Kong’s Hang Seng Index slid 0.5 percent, while the Hang Seng China Enterprises Index of mainland shares traded in the city was little changed after rising as much as 0.9 percent. The Shanghai Composite Index gained less than 0.1 percent. Taiwan’s Taiex index rose 1 percent, while Singapore’s Straits Times Index fell 0.3 percent.
Futures on the Standard & Poor’s 500 Index rose 0.2 percent today after the equity gauge declined 0.5 percent yesterday. A Markit Economics Ltd. preliminary index of U.S. manufacturing fell to 55.5 in March from 57.1 a month earlier, the London-based group said yesterday. Analysts had expected a reading of 56.5. A level above 50 indicates expansion and this month’s reading was the second-highest since January 2013.
China’s factory activity weakened a fifth straight month, a preliminary Purchasing Managers’ Index from HSBC Holdings Plc and Markit showed yesterday. Signs of faltering manufacturing in the world’s two biggest economies come as U.S. policy makers rein in stimulus and as Chinese lawmakers pledge to maintain growth while curbing shadow banking and credit expansion.
Sanctions imposed by the U.S. and the European Union are pushing Russia toward a recession as the intensity of their economic penalties increases after the annexation of Crimea earlier this month.
Banks including state-run VTB Capital say the world’s ninth-biggest economy will shrink for at least two quarters as penalties for annexing Crimea rattle markets, curb investment and raise borrowing costs. Sanctions that have so far focused on individuals with visa bans and asset freezes may be expanded to target specific areas of the economy.
The Group of Seven major powers decided to hold a summit in Brussels in June instead of a planned G-8 meeting in Sochi in the latest sanction against Russia. U.S. President Barack Obama and his fellow G-7 leaders met in The Hague to agree on the next steps in the crisis, amid growing concern that Russia is building up its forces on the border with Ukraine.
“Military skirmishes, even though major powers are involved in this particular case, they tend to be relatively short-lived events,” said Williams at Platypus Asset Management. “Even if it escalates and markets correct more significantly, that will just be a buying opportunity.”
Cosco Pacific lost 2.4 percent to HK$9.96 after reporting full-year net income of $702.7 million, below analysts’ estimate of $710.7 million.
Yashili plunged 10 percent to HK$3.66 after reporting full-year profit of 437.6 million yuan ($71 million), compared with analyst projections for 520 million yuan.
Tingyi rose 2.2 percent to HK$20.80 after UBS recommended the stock. The company’s high-end steamed noodles with improved ingredients will be a major breakthrough for the industry and the company, analyst Christine Peng wrote in a note.
Sekisui House fell 1 percent to 1,197 yen. The home builder last month found about 20 out of 34 posts were missing some reinforcing metals in the building, which will be 30 stories, Keiji Kobayashi, a Tokyo-based spokesman at Sekisui, said in a phone interview yesterday. Taisei is fixing the defects at the project sold by Sekisui, he said. Taisei slid 2.9 percent to 441 yen.
Tongda Group Holdings Ltd., a maker of casings for notebook computers, slumped 9.5 percent to HK$1.15 in Hong Kong after selling 600 million new shares.
The Asia-Pacific gauge traded at 12.6 times estimated earnings, compared with 15.8 for the S&P 500 and 14.3 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
To contact the reporter on this story: Yoshiaki Nohara in Tokyo at email@example.com