Asian Stocks Fall as Oil’s Decline Signals Slowing China Economy

Updated on
Commodity Rout Hits Major Players Hard

Asian stocks fell a fourth day as a deepening commodities selloff raised concern growth may be slowing in China, and as investors await clues from the Federal Reserve on the timing of a U.S. interest-rate increase.

Galaxy Entertainment Group Ltd. sank 4.4 percent as the Macau casino operator said quarterly earnings plunged 46 percent. Seek Ltd. tumbled 11 percent in Sydney after the Australian website operator said revenue growth will slow. Daiichi Sankyo Co. slumped 5.4 percent in Tokyo after Morgan Stanley cut its rating on the drugmaker.

The MSCI Asia-Pacific Index dropped 0.6 percent to 136.08 as of 2:07 p.m. in London, extending a seven-month low. Crude oil resumed losses and copper dropped to the lowest since 2009 as concern mounted that slower growth in China will erode demand for raw materials. Minutes of the Federal Reserve’s last meeting will come under scrutiny Wednesday.

“There’s a flow-on effect of the issues given concerns over the Chinese economic slowdown,” James Lindsay, who helps manage the equivalent of about $3 billion in assets at Nikko Asset Management NZ Ltd. in Auckland, said by phone. “The consensus is the Fed will raise rates in September, but there’s a potential for that to be pushed out amid increased market volatility.”

Japan’s Topix index fell 1.4 percent. South Korea’s Kospi index declined 0.9 percent. Taiwan’s Taiex index slipped 1.9 percent. Hong Kong’s Hang Seng Index dropped 1.3 percent. Singapore’s Straits Times Index fell 0.3 percent. Australia’s S&P/ASX 200 Index jumped 1.5 percent, the most in a month. New Zealand’s NZX 50 Index climbed 0.7 percent.

Commodity Slump

The Bloomberg Commodity Index fell on Tuesday to the lowest level since February 2002. The gauge of 22 raw materials declined for a sixth day in the longest run of losses in more than a year. With China the world’s biggest consumer of industrial metals, Tuesday’s 6.2 percent slump in the Shanghai Composite Index rattled raw-material investors.

The Shanghai benchmark rose 1.2 percent, erasing earlier losses of as much as 5.1 percent, as investors weighed the level of government support for the equity market.

“The market expects the government will step in if the Shanghai Composite falls towards 3,500, but more and more people in the mainland see that the bull market is over,” said Mari Oshidari, a Hong Kong-based strategist at Okasan Securities Group Inc. “With weak sentiment, we will continue to see unstable moves in the market.”

Chinese stocks fell this week after the securities regulator said late Friday that China Securities Finance Corp., the state agency tasked with supporting share prices, will reduce buying as volatility falls. China’s richest traders are cashing out of stocks, while a record drop in yuan positions at the central bank and financial institutions last month signaled investors are moving money out of the country.

Futures on the Standard & Poor’s 500 Index slid 0.4 percent. The underlying measure fell 0.3 percent on Tuesday.

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