Asian Stocks Fall Amid China Concerns, Europe Debt Crisis
Asian stocks fell as Chinese services industries expanded at the weakest pace since at least March 2011 and Spain’s prime minister said that a bailout request isn’t imminent.
Chow Tai Fook Jewellery Group Ltd. (1929), a Hong Kong-based chain with more revenue than Tiffany & Co., dropped 3.1 percent, pacing declines among Chinese retailers. Canon (7751) Inc., the world’s No. 1 camera maker that gets 31 percent of sales from Europe, declined 1.9 percent. PT Bumi Resources slid 4.2 percent after Indonesia’s biggest thermal coal exporter said it may sell a unit and issue shares to raise cash and repay debt.
The MSCI Asia Pacific Index (MXAP) slipped 0.3 percent 121.68 as of 6:04 p.m. in Tokyo, with almost three shares falling for every two that rose on the gauge. The regional index is heading for a third week of declines on concern political discord will prevent Europe from resolving its debt crisis. Spain’s Prime Minister Mariano Rajoy said yesterday a bailout request is not imminent, disappointing investors.
“There are a lot of issues in Europe because it’s not easy to execute austerity programs,” said Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees about $8 billion. “Spain needs financial aid, but there are always political and social considerations. Austerity is tough. China will introduce additional stimulus measures in their own time.”
Australian Rate Cut
Japan’s Nikkei 225 Stock Average (NKY) slid 0.5 percent and Taiwan’s Taiex Index fell 0.4 percent. Hong Kong’s Hang Seng Index (HSI) gained 0.2 percent as it resumed trading following a long weekend. Markets in China and South Korea are closed today for holidays.
Australia’s S&P ASX 200 Index gained 0.1 percent, closing at the highest level since August 2011, as traders raised bets that Reserve Bank of Australia Governor Glenn Stevens will follow yesterday’s rate cut with another reduction on Nov. 6.
Traders are pricing in a 75 percent chance of a quarter- point reduction next month, according to swaps data compiled by Bloomberg. That would match the 50-year low of 3 percent at the height of the 2008-2009 global financial crisis.
Chinese retailers dropped after mainland non-manufacturing industries expanded at the weakest pace since at least March 2011 as officials struggle to reverse a slowdown in the world’s second-biggest economy.
Chow Tai Fook declined 3.1 percent to HK$10.70 in Hong Kong. China Dongxiang Group Co., a sportswear retailer, sank 6 percent to 78 Hong Kong cents. Anta Sports Products Ltd. (2020) slipped 2.9 percent to HK$5.79.
Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The gauge added 0.1 percent yesterday in New York as a rebound in Apple Inc. overshadowed disappointment after Rajoy said a bailout request from Spain isn’t imminent.
Companies that do business in Europe dropped. Canon slid 1.9 percent to 2,555 yen in Tokyo. Cosco Pacific Ltd., which operates a port in Greece, slipped 1.3 percent to HK$10.70.
The MSCI Asia Pacific Index gained 6.9 percent this year as policy makers boosted stimulus measures to counter a global economic slowdown. Stocks in the Asian benchmark are valued at 12.8 times estimated earnings on average, compared with 13.8 times for the Standard & Poor’s 500 Index and 12 times for the Stoxx Europe 600 Index.
The Asian Development Bank cut the region’s inflation and growth forecasts amid Europe’s debt crisis and economic slodown in the U.S. and China. Asia excluding Japan will expand 6.1 percent this year, the slowest pace since 2009, the Manila-based lender reported today.
Bumi Resources declined 4.2 percent to 680 rupiah. The company is considering the sale of PT Fajar Bumi Sakti, Corporate Secretary Dileep Srivastava said yesterday at a Jakarta briefing where President Director Ari Hudaya said it may also sell stock. An investigation initiated by shareholder Bumi Plc, founded by Nathaniel Rothschild, prompted concern it may struggle to repay debts.
Palm-oil producers slumped after the price of the commodity plunged by the most since October 2008 yesterday. Sime Darby Bhd., the world’s biggest supplier, fell 3.4 percent to 9.41 ringgit in Kuala Lumpur. First Resources Ltd. dropped 5.4 percent to S$1.94 in Singapore.
Daiichi Sankyo Co. sank 5.4 percent to 1,191 yen in Tokyo. A panel of scientific advisers recommended an early end to the trial of a lung-cancer medicine the Japanese pharmaceutical company is developing with ArQule Inc., a Massachusetts-based maker of experimental drugs.
APN News & Media Ltd. fell 3.5 percent 41.5 Australian cents after the publisher of the New Zealand Herald said it has nothing to announce about its asset revenue following a record surge yesterday.
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