Asian Stocks Decline After Plane Shot Down, Gaza Invasion

Asian stocks fell for the first time in five days after a Malaysia plane was shot down over Ukraine and Israel sent troops into Gaza, spurring demand for haven assets.

Malaysian Airline System Bhd. (MAS) sank 11 percent in Kuala Lumpur. Toyota Motor Corp. fell 0.7 percent in Tokyo, accounting for the largest drag on the regional benchmark index. Asciano Ltd., which provides transport services to the mining industry, surged 3.8 percent in Sydney after saying it’s in talks to sell part of its logistics unit.

The MSCI Asia Pacific Index declined 0.3 percent to 146.79 as of 8:07 p.m. in Hong Kong as all of its 10 industry groups retreated, paring this week’s advance to 0.6 percent. The regional gauge followed losses in Europe and the U.S. after Ukraine’s government claimed pro-Russia rebels shot down the passenger jet over disputed territory, killing all 298 people on board. Equities in New York extended a retreat in the last hour of trading as Israel sent ground forces into Gaza.

“Geopolitical risks have resurfaced, sparking a selldown in global share markets and a flight to quality assets,” said Matthew Sherwood, Sydney-based head of investment markets research at Perpetual Ltd., which manages about $29 billion. “At present, details remain scarce with pro-Russian and Ukrainian forces subsequently blaming each other for the attack.”

Regional Gauges

Japan’s Topix index slid 0.8 percent. Toyota fell 0.7 percent to 6,006 yen. Taiwan’s Taiex index, New Zealand’s NZX 50 Index and South Korea’s Kospi index all lost 0.1 percent. Australia’s S&P/ASX 200 Index gained 0.2 percent. The FTSE Bursa Malaysia KLCI Index dropped 0.5 percent. Singapore’s Straits Times Index rose 0.1 percent.

Hong Kong’s Hang Seng Index fell 0.3 percent and the Hang Seng China Enterprises Index (HSCEI) of mainland Chinese stocks lost 0.3 percent. The Shanghai Composite Index advanced 0.2 percent.

Malaysian Air flight 17 was en route to Kuala Lumpur from Amsterdam when it disappeared from radar and crashed in eastern Ukraine, near the Russian border. Russian President Vladimir Putin blamed the Ukrainian government for the jet crash, while Kiev said pro-Russian rebels were behind the attack. The separatists denied the accusation.

Israel moved troops and tanks into Hamas-controlled Gaza, accompanied by heavy artillery shelling, marking the first significant Israeli ground operation in the area since 2009. It follows intensified aerial attacks in which more than 200 Gaza residents were killed. Palestinians launched some 1,250 rockets into Israel, killing one person, with many attacks intercepted by missile defenses.

Negative Sentiment

“We expect this negativity to continue throughout the Asian trading day and into the European session tonight,” said Evan Lucas, a market strategist at IG Ltd. in Melbourne. “How hard the fall amounts to will depend on the reaction of Europe, Russia and the U.S. over the coming week.”

The MSCI Asia Pacific Index (MXAP) yesterday traded at 13.5 times estimated earnings, touching the highest since December, according to data compiled by Bloomberg. That compares with 16.5 for the Standard & Poor’s 500 Index.

Profit at members of the S&P 500 probably rose 4.5 percent in the three months through June, while sales gained 3.1 percent, analyst estimates compiled by Bloomberg show.

Futures on the S&P 500 added 0.1 percent today after the U.S. equities benchmark gauge retreated 1.2 percent yesterday, the most in three months.

Investment Climate

“Certainly, today’s news of the aeroplane disaster in the Ukraine, of Israel moving into Gaza, this is not conducive to the investment climate that all of us need,” Sam Walsh, chief executive officer of Rio Tinto Group, the world’s second-biggest mining company, said today at a B-20 forum of business leaders in Sydney. Rio shares fell 0.7 percent to A$64.29.

Malaysian Air lost 11 percent to 20 sen. The loss of the passenger jet follows the disappearance of another of the carrier’s flights on March 8. The Bloomberg World Airlines Index fell 0.3 percent, following a 2 percent tumble yesterday amid speculation the crash will deter fliers.

Asciano gained 3.8 percent to A$5.96 in Sydney after saying it’s in discussions with third parties in relation to a potential sale of a non-controlling interest in its terminals and logistics business division.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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

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