Asian Stocks Drop on China Concern as Industrial Profits Fall

  • Regional gauge down about 15% this quarter on Fed, China
  • China's industrial profits drop in August by most since 2011

Asian stocks fell after the biggest drop in China’s industrial profits since at least 2011 underscored the slowdown in the world’s second-largest economy.

Toyota Motor Corp. and Sony Corp. were among the largest drags on the regional benchmark equity gauge as more than 1,000 Japanese companies traded without the right to the upcoming dividend. Markets in Hong Kong, Taiwan and South Korea are closed for holidays Monday, while mainland China will be shut from Thursday for a week-long break. In Australia, M2 Group Ltd. surged 13 percent after Vocus Communications Ltd. agreed to buy M2 in a A$1.93 billion ($1.35 billion) deal.

The MSCI Asia Pacific Index slid 0.3 percent to 124.65 as of 7:07 p.m. in Tokyo. The regional gauge has slumped about 15 percent since the end of June, heading for its worst quarter since 2011, as the Federal Reserve prepares to raise interest rates with financial markets rattled by concern over China’s economic outlook.

“Sure, there’s been plenty of policy stimulus noise coming through in recent months, but it’s not really yet getting enough traction to deliver much of a boost to growth” to the Chinese economy, Richard Jerram, chief economist at Bank of Singapore, told Bloomberg TV. “Even after Yellen’s comments last week we’re not really any closer to understanding what they need to see before they raise rates.”

Chinese industrial companies’ profits dropped 8.8 percent to 448.1 billion yuan ($70.3 billion) last month from a a year earlier, the National Bureau of Statistics said on its website. That’s the steepest loss since at least October 2011, when the government began releasing monthly data. Profits in coal mining plunged 64.9 percent, while oil and gas profits tumbled 67.3 percent, according to the report.

The Shanghai Composite Index climbed 0.3 percent as a rally among technology companies overshadowed the economic data. The gauge has slumped 28 percent since June, the worst quarter since March 2008.

Japan’s Topix index lost 1 percent. More than 1,000 Topix members traded ex-dividend Monday, equating to a 10.8 point drag on the measure, data compiled by Bloomberg show.

India’s S&P BSE Sensex Index dropped 1 percent. Australia’s S&P/ASX 200 Index gained 1.4 percent and New Zealand’s NZX 50 Index rose 0.2 percent. Volume in Japan and Australia was at least 24 percent lower than the 30-day average, Bloomberg data show.

E-mini futures on the Standard & Poor’s 500 Index fell 0.4 percent. A 2.7 percent slump in health-care stocks left the U.S. benchmark index down 0.1 percent on Friday.

U.S. House Speaker John Boehner will resign from Congress at the end of October, following clashes with conservative members of his Republican conference. For some traders, the move reduces the likelihood of a government shutdown as soon as October, while raising the specter of a stalemate later in 2015.

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