Asian Stocks Pare Best Weekly Gain Since July as Topix Declines

  • MSCI Asia Pacific Index’s valuation near June 2015 high
  • Gauge of Chinese mainland shares in Hong Kong halt 5-day gain

Asian stocks fell for the first time in six days, with the regional benchmark gauge paring the biggest weekly advance since July, as Japanese exporters retreated and a rally in Hong Kong equities lost steam. 

The MSCI Asia Pacific Index dropped 0.2 percent to 142.00 as of 4:10 p.m. in Hong Kong, halting a five-day increase. The measure has advanced 3.6 percent this week. The Topix index lost 0.2 percent as Japanese markets resumed trading following a holiday on Thursday and the yen firmed against the dollar after the Bank of Japan didn’t move deeper into negative interest-rate territory. Moves by the Federal Reserve to scale back its tightening plans and the BOJ’s decision to tweak its stimulus this week helped ease concerns that central banks might taper efforts to stimulate global growth.

“There’s a very bullish case for equities considering that the Fed is now expecting only two rate hikes in 2017," said James Woods, a strategist at Rivkin Securities in Sydney. “There are uncertainties that could shake up some volatility in the market, including the U.S. elections in November. But given where valuations are, I’d be a little cautious.”

Shares on the MSCI Asia Pacific Index traded at 13.8 times projected earnings for the next 12 months, near the highest level since June 2015, according to data compiled by Bloomberg.

The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong sank 1 percent, paring the steepest weekly increase in two weeks, as banks and brokerages declined. The H-share index has rallied 12 percent this quarter to outperform the Shanghai Composite by the most since 2011 as mainland investors flocked to Hong Kong stocks amid cheaper valuations, a stable currency and the imminent start of a second exchange link with China. The Hang Seng Index and Shanghai Composite Index dropped at least 0.3 percent.

Thailand’s SET Index retreated 1.1 percent, trimming a second weekly advance. The Philippine Stock Exchange Index fell 0.5 percent., while the Jakarta Composite Index slipped 0.3 percent. New Zealand’s S&P/NZX 50 Index lost 0.2 percent. 

Australia’s S&P/ASX 200 Index climbed 1.1 percent to the highest close since Aug. 31 as phone companies and health-care shares advanced. South Korea’s Kospi index added 0.2 percent, Taiwan’s Taiex index gained 0.5 percent and Singapore’s Straits Times Index added 0.3 percent.

Toyota Motor Corp. dropped 3.2, pacing losses among Japanese exporters, after the yen strengthened to an almost one-year high on Wednesday before paring gains the past two days. Dentsu Inc. slumped 4.8 percent after the Financial Times said the advertising agency is holding talks with more than 100 clients to minimize damage after revelations it may have overcharged companies including Toyota. Fortescue Metals Group Ltd. fell 3.9 percent in Sydney after Stephen Pearce resigned as chief financial officer of world’s fourth-largest iron ore producer.

Futures on the S&P 500 Index lost 0.1 percent. The U.S. equity benchmark index climbed 0.7 percent on Thursday, erasing losses for the month, as commodity producers, industrial and consumer-staples companies advanced.

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