Asian Stocks Decline for Fifth Day Amid Stimulus Uncertainty

Three Key Themes Emerging in Asian Markets
  • Indonesian shares slide most in Asia with Malaysian equities
  • Consumer discretionary and industrials biggest drag on index

Asian stocks headed for the longest losing streak in four months as fund managers hoarded cash amid uncertainty over the trajectory of central bank stimulus globally.

The MSCI Asia Pacific Index sank 0.7 percent to 136.21 as of 5:10 p.m. in Tokyo, with Indonesian and Malaysian equities leading the drop. The gauge fell for a fifth day after valuations this month reached the highest in more than a year and investors adjusted portfolios and forecasts to reflect the prospect of less monetary stimulus globally. The Topix index lost 0.6 percent after the Nikkei newspaper said the Bank of Japan is considering delving deeper into negative interest rates, a move that hurt bank shares earlier this year.

Traders sold Chinese stocks before holidays on Thursday and Friday as investors counted down to meetings of the BOJ and the Federal Reserve next week. Fund managers overseeing $579 billion upped their average cash holdings to levels near to the highest since 2001, a Bank of America Corp. survey showed. The Asian stock gauge on Wednesday dipped below its 50-day moving average for the first time since June as its 10-day volatility climbed for a fourth day to a two-month high.

“Investors are waking up to the fact that valuations are high and these record-low interest rates won’t be with us forever,” Mark Lister, head of private wealth research at Craigs Investment Partners in Wellington, which manages about $7.2 billion, said by phone. “There’s a lot of event risk coming up with the U.S. election, several central bank meetings and oil prices are still looking shaky. Markets had become dangerously reliant on central bank support and this is a bit of a wake-up call that this won’t always be the case.”

Stock markets have been whipsawed in recent weeks amid opposing views from Fed officials, who meet next week. Japan’s central bank is also scheduled to meet next week, with just over half of economists surveyed by Bloomberg forecasting an expansion of monetary stimulus. Others point to November, December and next year. The central bank will place further negative interest rates at the focus of policy, now that its expansion of asset buying is reaching a limit, the Nikkei newspaper reported, without attribution.

Japan’s Topix posted a sixth day of declines, as banks tumbled on Wednesday. Hong Kong’s Hang Seng Index declined 0.1 percent and the Shanghai Composite Index sank 0.7 percent before markets shut for the remainder of the week for a holiday.

Casinos advanced, with Sands China Ltd. climbing 1.2 percent after Chairman Sheldon Adelson said Macau’s gambling industry has hit a bottom. Parkson Retail Group Ltd. surged as much as 68 percent after saying it’ll sell a Chinese subsidiary whose main asset was a loss-making department store in Beijing.

Thailand Gains

Indonesia’s Jakarta Composite Index fell 1.4 percent and the FTSE Bursa Malaysia KLCI Index declined 1 percent. Australia’s S&P/ASX 200 Index added 0.4 percent and New Zealand’s S&P/NZX 50 Index declined 0.5 percent. Thailand’s SET Index rose 0.4 percent. Markets in South Korea are closed for the remainder of this week for holidays.

Platinum Asset Management Ltd. surged 9.6 percent after the Australian money manager said it will buy back up to 10 percent of its shares. That’s the biggest one-day climb since August 2009 and the largest increase of any stock on the MSCI Asia Pacific index.

Suppliers to Apple Inc. rallied after reports iPhone 7 orders at some U.S. carriers surged past prior models. Alps Electric Co. rose 4 percent in Tokyo, while Lens Technology Co. surged 5.6 percent in Shanghai and Catcher Technology Co. jumped 5.4 percent in Taipei.

E-mini futures on the S&P 500 added 0.1 percent after the underlying gauge slumped 1.5 percent on Tuesday. The CBOE Volatility Index surged 18 percent to the highest since June.

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