Asian Stocks Fall as Japanese Shares Drop Amid Strengthening Yen

  • Biggest week for yen since 2009 pressures Japan exporters
  • Chinese shares pare best weekly advance since December

Asian stocks fell, with the regional benchmark index heading for a weekly loss, after Japanese shares declined as the strengthening yen pressured major exporters.

The MSCI Asia Pacific Index lost 0.3 percent to 120.83 as of 4:04 p.m. in Hong Kong. The measure is poised for a 0.5 percent decline this week as Japan’s Topix index erased its gains from last Friday’s Bank of Japan stimulus and the yen headed for its biggest weekly advance since 2009. Investors are awaiting Friday’s U.S. monthly payrolls report after data showed factory orders fell in December.

“The Bank of Japan has done what they should, but what they could do had its limits,” Juichi Wako, a senior strategist at Nomura Holdings Inc. in Tokyo, said by phone. “Until now, the view on the U.S. economy was that it was recovering, but the pace wasn’t as fast as hoped. Now there’s some concern in the market that it may actually be contracting.”

Japan’s Topix index dropped 1.4 percent, bring losses this week to 4.4 percent. The index has wiped out a 5.1 percent rally following the Bank of Japan’s stimulus boost. The yen traded at 116.77 per dollar after rising in the past four days.

The stronger yen dragged down Japan’s exporters, with Nissan Motor Co. slumping 3.3 percent. Mazda Motor Corp. sank 4.8 percent after reporting net income fell. Toshiba Corp. plunged 11 percent to a 36-year low after widening its loss outlook to a record 710 billion yen ($6 billion) as the industrial group continues restructuring in the wake of an accounting scandal.

China’s Shanghai Composite Index declined 0.6 percent, paring this year’s biggest weekly gain to 1 percent, its best performance since December, ahead of the week-long lunar new year holiday. Mainland Chinese markets are closed all week with Taiwan, while Hong Kong is shut for the first three days, resuming Thursday.

Lacking Strength

“We’ve had a bit of a bounce but it’s been a really weak one,” Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors Ltd., which oversees about $120 billion, said by phone. “It lacks strength which gets me a little bit concerned that there might still be a lot of downside to come before we can see the bottom.”

The People’s Bank of China injected 330 billion yuan ($50 billion) into the banking system this week, adding to last month’s injection of 2 trillion yuan as policy makers moved to ease a cash shortage before the holidays starting on Feb. 8. The yuan in Hong Kong is set for its fourth weekly gain, the longest run of advances since October 2014. China relaxed restrictions on foreign funds as policy makers seek to gain entry to MSCI Inc.’s global stock indexes and bolster the nation’s financial markets after record capital outflows.

Regional Gauges

Australia’s S&P/ASX 200 Index fell 0.1 percent. New Zealand’s benchmark added 0.3 percent. South Korea’s Kospi index gained 0.1 percent. Hong Kong’s Hang Seng Index rose 0.6 percent, increasing for a second day.

Singapore’s Straits Times Index climbed 2.3 percent, with Singapore Telecommunications Ltd. surging 6 percent, the most since 2009. Shares on the benchmark index trade at about the value of its companies’ net assets, the cheapest among markets in Southeast Asia.

The Jakarta Composite Index rallied 2.6 percent, heading for its highest close since Aug. 6, after the nation’s economic growth beat analyst estimates as the government stepped up measures to boost state spending and lure foreign investment.

E-mini futures of the Standard & Poor’s 500 Index were little changed. The U.S. equity benchmark index rose 0.2 percent on Thursday amid a rally in raw-material and industrial shares, as the dollar’s weakness boosted commodity prices and optimism for profits at multinational companies.

Patchy U.S. economic data ignited the dollar’s retreat this week, as concern grows over the vulnerability of the American economy to outside forces. The fixed-income market is all but pricing in zero rate hikes from the Fed this year, as central banks from Asia to Europe have mixed success with their efforts to stymie the turmoil that’s roiled markets in 2016.

While a weaker dollar makes commodities cheaper, and therefore more appealing in other currencies, oil remains an entity unto its own, reverting to losses Thursday as investors focused on the fact U.S. crude supplies are at their highest in more than 80 years.

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