Asian Stocks Drop Fourth Week Amid China Growth Slowdown Concern
Asian stocks fell this week, posting the longest streak of weekly losses in more than 18 months amid concern growth is slowing in China, the world’s second-largest economy.
Cnooc Ltd. (883) slumped 8.7 percent in Hong Kong after an output growth forecast from China’s biggest offshore oil and gas producer fell short of its five-year average target. Industrial & Commercial Bank of China Ltd. fell 2.5 percent as investors in a troubled trust product distributed by the lender met officials, demanding their money amid concern of a default. Newcrest Mining Ltd., a gold producer, climbed 3.2 percent in Sydney as the precious metal capped a fifth week of gains.
The MSCI Asia Pacific Index slid 1.4 percent to 137.64 this week. The gauge fell a fourth straight week as a survey from HSBC Holdings Plc and Markit Economics indicated Chinese factory output will shrink this month. The measure’s 5.1 percent advance from the end of August pushed valuations on the gauge to 13 times estimated earnings, above the average multiple during the past three years.
“There will be a correction of 10 percent or more,” Monty Guild, chief investment officer of Los Angeles-based Guild Investment Management Inc., which manages $143 million in global equity funds, said by e-mail about stocks globally. “We see China as an unattractive place to invest.”
Japan’s Topix index fell 2.5 percent this week and the Nikkei 225 Stock Average declined 2.2 percent as the yen strengthened against the dollar. South Korea’s Kospi index lost 2.4 percent and New Zealand’s NZX 50 Index declined 0.4 percent. Singapore’s Straits Times Index slid 2.3 percent and Taiwan’s Taiex Index was little changed.
Australia’s S&P/ASX 200 Index (AS51) retreated 1.2 percent on the week. JPMorgan Chase & Co. and Westpac Banking Corp. (WBC) pushed back their forecasts for when Australia’s central bank will lower interest rates, with the strongest inflation in two years offsetting rising joblessness.
Hong Kong’s Hang Seng Index slid 2.95 percent and the Hang Seng China Enterprises Index (HSCEI), known as the H-share gauge of mainland firms listed in the city, slipped 1.5 percent. One-third of investors surveyed in a Bloomberg Global Poll this month said China’s economic slowdown is the world’s major risk, up from 26 percent in November.
The preliminary reading of 49.6 for a Purchasing Managers’ Index by HSBC Holdings Plc and Markit Economics on Jan. 23 compares with a final figure of 50.5 in December and a 50.3 median estimate of 19 analysts in a Bloomberg News survey. A number below 50 indicates contraction.
China’s Shanghai Composite Index will probably bottom out within days and begin to rebound, said Tom DeMark, a developer of market-timing indicators who predicted the measure’s rally from a four-year low in June.
The gauge may slip to as low as 1,952, or 4.4 percent below its Jan. 23 close, and then rally “sharply,” DeMark wrote in an e-mailed response to questions from Bloomberg News Jan. 23. The Shanghai Composite, which touched an intraday low of 1,984.82 on Jan. 20, has lost 2.9 percent this year.
Thailand’s SET Index rose 1.5 percent, a third week of gains, even as bombings and shootings threaten to derail elections scheduled for Feb. 2. The Bank of Thailand cut this year’s growth forecast to about 3 percent from a November prediction of 4 percent after holding its policy rate at 2.25 percent this week. The nation’s stocks gauge is down 10 percent in the past year.
Cnooc lost 8.7 percent to HK$12.66 this week. The Beijing-based energy explorer said it will produce 422 million to 435 million barrels of oil equivalent, or a 5.6 increase from a year earlier. The company maintained its 6 percent to 10 percent average annual production growth target from 2011 to 2015 with the proviso that key offshore projects start on time.
ICBC slid 2.5 percent to HK$4.76 as investors in a trust product that it distributed demanded their money back. Individuals were asked to sink at least 3 million yuan ($496,000) in the 3 billion-yuan Credit Equals Gold No. 1 product amid guarantees that it was “100 percent safe,” said Fang Ping, one of 20 investors who went into the branch. The product, which comes due on Jan. 31, raised funds for a coal mining company that collapsed after its owner was arrested.
Newcrest gained 3.2 percent to A$9.48. Zijin Mining Group Co. rose 1.8 percent to HK$1.71. Gold climbed 1 percent this week.
Lenovo Group Ltd. (992) surged 4 percent to HK$10.44 after agreeing to buy International Business Machines Corp.’s low-end server business for $2.3 billion. The deal price includes about $2 billion of cash, with the rest coming in shares of Beijing-based Lenovo. The transaction now faces regulatory scrutiny, including a likely national-security review that could slow or scuttle the purchase.
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