Asian Stocks Head for First Weekly Loss in Nine Weeks

Asian stocks fell, with the regional benchmark index on course to snap its longest streak of weekly gains in more than two years, as concern about financial risks in Europe spurred a rally in the yen.

The MSCI Asia Pacific Index slid 0.3 percent to 146.05 as of 4:27 p.m. in Hong Kong, with seven of its 10 industry groups declining. About two shares fell for every one that rose. The gauge is heading for a 1.1 percent drop this week, the first such decline in nine weeks after equity valuations touched the highest this year. Japan’s Topix index posted its steepest weekly retreat since April.

European and U.S. shares slid overnight amid concern over missed debt payments by a company linked to Portugal’s second-largest lender. Portugal’s central bank said Banco Espirito Santo SA is protected after its parent didn’t make the payments on short-term paper. U.S. Treasuries rallied with gold and the yen touched a 1 1/2-month high against the dollar.

“The very benign attitude to risk that we’ve seen in markets recently was an accident waiting to happen,” Chris Green, director of economics and strategy in Auckland at First NZ Capital Ltd., said by phone. The Portugal situation “is not a sufficient enough catalyst to provoke a significant reassessment but it is a shot across the bow. It highlights the risks inherent in the euro zone’s vulnerabilities.”

The Topix fell 0.3 percent, extending this week’s decline to 2.3 percent. South Korea’s Kospi index and Taiwan’s Taiex Index both dropped 0.7 percent. Australia’s S&P/ASX 200 Index (AS51) gained 0.4 percent as iron-ore producers advanced. New Zealand’s NZX 50 Index declined 0.5 percent. Singapore’s Straits Times Index advanced 0.6 percent. Markets in Thailand are closed for a holiday today.

Honda, AAC

Japanese exporters slid. Honda Motor Co., which gets about 84 percent of its revenue abroad, fell 1.6 percent to 3,515 yen. Mitsubishi UFJ Financial Group Inc., Japan’s largest bank that makes more than 30 percent of sales overseas, slipped 1 percent to 599 yen, capping a 4.9 percent weekly slump.

AAC Technologies (2018) Holdings Inc., which supplies speakers to Apple Inc., dropped 4.9 percent in Hong Kong after BNP Paribas SA reduced its rating on the stock. Canon Inc. gained 2.4 percent in Tokyo after the Nikkei newspaper reported the printer maker will report second-quarter profit of about 110 billion yen ($1.1 billion), higher than analyst expectations.

Hong Kong’s Hang Seng Index (HSI) was little changed at 23,233.45 and the Hang Seng China Enterprises Index of mainland Chinese stocks listed in the city rose 0.1 percent. The Shanghai Composite Index rose 0.4 percent.

Futures on the Standard & Poor’s 500 Index rose 0.2 percent after the gauge declined 0.4 percent yesterday.

Relative Value

The U.S. equity benchmark hasn’t posted a decline of 10 percent from a peak since 2011, and has not fallen by more than 1 percent on a closing basis since April. Raymond James & Associates Inc. this week said equities are vulnerable and Citigroup Inc. cited concerns for a “severe” pullback.

The MSCI Asia Pacific Index (MXAP) traded at 13.4 times estimated earnings today, compared with 16.6 on the S&P 500 yesterday, according to data compiled by Bloomberg.

Evolution Mining Ltd. led iron-ore producers higher, rising 5.5 percent to 87 Australian cents in Sydney. Spot iron ore at the Chinese port of Tianjin port climbed for a third day yesterday and is heading for a fourth straight weekly gain. Northern Star Resources Ltd. gained 2.5 percent to A$1.62 and BHP Billiton Ltd. advanced 0.5 percent to A$37.58.

AAC Technologies retreated 4.9 percent to HK$47.55, the lowest in a month, as BNP Paribas cut the audio-equipment maker’s rating to hold and said all positives for the stock are already reflected in the price.

Canon gained 2.4 percent to 3,338 yen after the Nikkei said the camera-maker will report second-quarter profit of about 110 billion yen ($1.1 billion), higher than the 86.6 billion average estimate of eight analysts surveyed by Bloomberg.

HyComm Wireless Ltd. surged 146 percent to HK$3.45 after China Qingdao International Holding Co. offered to buy the text-messaging service.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net; Emma O’Brien in Wellington at eobrien6@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Tom Redmond, Jim Powell

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