Most Asian Stocks Decline as U.S. Manufacturing Shrinks

Most Asian stocks fell after U.S. manufacturing unexpectedly shrank and American lawmakers grappled with new budget proposals. Losses were limited as China’s Shanghai Composite rebounded from the lowest in almost four years.

James Hardie Industries SE, the building materials suppliers that counts the U.S. as its biggest market, slid 1.2 percent in Sydney. SJM Holdings Ltd., Asia’s biggest casino company, sank 5.8 percent in Hong Kong as China arrested junket operators. Guangzhou Automobile Group Co., the partner of Toyota Motor Corp. in China, climbed 3.1 percent as sales of Japanese automakers started to recover from the impact of the territorial dispute between the two nations.

The MSCI Asia Pacific Index rose 0.08 point, or less than 0.1 percent, to 124.74 as of 7:43 p.m. in Tokyo, with seven shares falling for every six that rose. The measure advanced 14 percent through yesterday from this year’s low on June 4 as central banks added stimulus to spur economic growth and data showed China’s slowdown may be ending.

This manufacturing data is a “setback to the U.S. economic recovery,” said Cameron Peacock, a market strategist at IG Markets Ltd. in Melbourne. “Once again, there were few tangible signs of any material progress on the fiscal cliff, the single biggest issue in markets right now and one that will influence how all asset classes trade into year-end.”

Interest Rates

Australia’s S&P/ASX 200 Index dropped 0.6 percent. The nation’s home-building approvals declined more than economists forecast in October, a sign that lower borrowing costs have yet to boost housing demand. The Reserve Bank of Australia lowered its overnight cash rate at its policy meeting today, in line with economists estimates.

South Korea’s Kospi Index and Japan’s Nikkei 225 Stock Average both lost 0.3 percent. Singapore’s Straits Times Index slipped 0.1 percent. Hong Kong’s Hang Seng Index added 0.2 percent.

China’s Shanghai Composite Index climbed 0.8 percent, rebounding from the lowest close since January 2009. The gauge will rally 48 percent within nine months after its decline below 1,960 signaled selling has climaxed, according to Tom DeMark, the creator of indicators to show turning points in securities.

The index will advance to 2,900 after its decline produced a buy signal on the Sequential and Combo charts, designed to identify market tops and bottoms, said DeMark, who has spent more than 40 years developing market-timing indicators.

‘Last Seller’

“Everyone is negative on SHCOMP index, absolutely everyone,” DeMark wrote in an e-mail, referring to the Chinese benchmark gauge’s ticker symbol. “And now is the perfect environment to make a low and be positive as the last seller, figuratively speaking, has sold.”

Futures on the Standard & Poor’s 500 Index dropped 0.1 percent today. The S&P 500 lost 0.5 percent yesterday as an unexpected contraction in manufacturing added to concern about the potential economic toll from the so-called fiscal cliff, which would trigger more than $600 billion of automatic tax increases and spending cuts next year if lawmakers fail to come up with a budget deal.

The Institute for Supply Management’s U.S. factory index fell to 49.5 in November from 51.7 a month earlier, the Tempe, Arizona-based group said today. Economists in a Bloomberg survey projected a reading of 51.4, according to the median of 83 forecasts. A number below 50 indicates a contraction.

Republican Proposal

House Republicans, rejecting President Barack Obama’s demand for tax-rate increases, proposed $1.4 trillion in spending cuts and $800 billion in new revenue by limiting tax breaks and capping deductions for top earners. The proposal was contained in a letter yesterday to Obama from House Speaker John Boehner and other Republican leaders.

U.S. Treasury Secretary Timothy F. Geithner said Republicans in Congress will be responsible for hurting the economy if they refuse to raise tax rates on the highest-income earners as part of a deal.

Exporters to the U.S. declined. James Hardie slipped 1.2 percent to A$9.06 in Sydney. Yue Yuen Industrial Holdings Ltd., a maker of shoes for Nike Inc., dropped 1.7 percent to HK$26.55 in Hong Kong. LG Electronics Inc., a South Korean electronics maker that gets about 30 percent of sales in North America, decreased 1.8 percent to 75,800 won.

Advantest Corp., the biggest producer of memory-chip testers, dropped 3.6 percent to 1,060 yen. Credit Suisse cut its rating to underperform from outperform and lowered its share-price forecast to 900 yen from 1,100 yen.

Casino Operators

Macau casino operators dropped. China arrested people from the Macau’s biggest junket operators, which provide financing to high-stakes gamblers, according to The Wall Street Journal. Gambling revenues from the world’s biggest gaming venue increased less than analysts estimates last month.

SJM Holdings sank 5.8 percent to HK$17.24. Sands China Ltd. decreased 4.4 percent to HK$31.35. Galaxy Entertainment Group Ltd., founded by billionaire Lui Che-Woo, slid 4.5 percent to HK$27.55.

Japanese paper manufacturers dropped after Bank of America Merrill Lynch downgraded their investment ratings, citing declining prices of printing paper and packaging products. Hokuetsu Kishu Paper Co. slipped 2.9 percent to 432 yen. Oji Holdings Corp. slid 3.5 percent to 250 yen.

Chinese Automakers

The MSCI Asia Pacific Index advanced last week amid optimism U.S. lawmakers would agree on a budget deal to avert the fiscal cliff and as the front-runner to become the next Japanese prime minister repeated calls for stimulus. The gauge traded at 13.8 times estimated earnings, compared with 13.6 times for the S&P 500 and 12.5 times for the Stoxx Europe 600 Index.

Chinese automakers advanced as the decline in Japanese car sales in the world’s biggest economy narrowed last month, signaling a recovery from the impact of a territorial dispute between the two nations. Guangzhou Automobile climbed 3.1 percent to HK$6.26 in Hong Kong. Dongfeng Motor Group Co., which makes cars for Nissan Motor Co., jumped 5.4 percent to HK11.28.

Olam International Ltd. gained 2.2 percent to S$1.61 in Singapore. The supplier of agricultural commodities said it will offer $750 million in bonds and as much as $500 million in warrants to existing shareholders. The city-state’s Temasek Holdings Pte, Olam’s second-largest shareholder, agreed to buy any rights not taken up by other investors, Olam said.