Asian stocks declined, with a regional gauge heading for a one-week low, as Chinese shares tumbled the most since the depths of this year’s rout as some of the largest brokerages disclosed regulatory probes and the nation’s industrial profits fell.
The MSCI Asia Pacific Index slipped 0.9 percent to 133.34 at 4:41 p.m. Hong Kong time, heading for the lowest close since Nov. 18 and a 0.9 percent decline this week. The Shanghai Composite Index sank 5.5 percent, the most since August, as China’s biggest brokerages Citic Securities Co. and Haitong Securities Co. plunged amid investigations for alleged rule violations. The crackdown in the finance industry comes as the government widens an anti-corruption campaign and seeks to assign blame for a $5 trillion stock-market plunge.
“The sharp decline will raise questions whether the authorities’ confidence that we are seeing stability in the Chinese markets may be a tad premature,” said Bernard Aw, a strategist at IG Asia Pte in Singapore. “The rally since the August collapse was not fundamentally supported. The removal of restrictions for large brokers to sell and the IPO resumptions may not have been announced at an opportune time.”
Citic Securities said it received a notice from the China Securities Regulatory Commission on Thursday saying it will be investigated because it allegedly violated regulations on the supervision and administration of securities firms, while Haitong Securities Co. is also being probed, according to people with knowledge of the matter.
China’s economy is still showing a muted response to waves of monetary and fiscal easing as of the half-way mark for the last quarter of the year, some of the earliest November indicators suggest. Profit’s at the country’s industrial companies declined 4.6 percent in October from a year ago, data released by the National Bureau of Statistics today showed.
“With regards to China, our sense is that there are still significant risks to the global economy but on the other side, that they’ve got the policy ammunition to dampen that risk,” said Chris Green, director of economics and strategy in Auckland at First NZ Capital Group Ltd.
Japan’s Topix index dropped 0.5 percent. The Nikkei 225 Stock Average slid 0.3 percent, falling from a three-month high. The nation’s consumer prices excluding fresh food fell 0.1 percent in October from a year earlier, in line with economists’ estimates, according to a report released before the stock market opened Friday. A measure of inflation that also excludes energy rose 0.7 percent. The jobless rate fell to 3.1 percent, the lowest since 1995.
Hong Kong’s Hang Seng Index sank 1.9 percent. South Korea’s Kospi index lost 0.1 percent. Taiwan’s Taiex fell 1 percent. Singapore’s Straits Times Index declined 0.7 percent. Australia’s S&P/ASX 200 Index slipped 0.2 percent, while New Zealand’s S&P/NZX 50 Index added 0.2 percent.
Futures on the Standard & Poor’s 500 Index added 0.3 percent from Wednesday’s close. U.S. equity markets reopen Friday after Thursday’s Thanksgiving holiday for a shortened trading day. Traders are now pricing in a 74 percent probability that the Federal Reserve will increase borrowing costs at its December meeting.
Next week sees policy decisions from the Reserve Bank of Australia and European Central Bank, before the U.S. reports payrolls figures for November. The International Monetary Fund’s board meets on whether to grant the yuan reserve-currency status, and members of the Organization of Petroleum Exporting Countries will gather in Vienna.
“Traders still need to take into consideration that the investment landscape could change significantly next week," said Chris Weston, the chief markets strategist at IG Ltd., in an emailed note. “Moves in the U.S. dollar hold the key for all risk assets."