Most Asian Stocks Drop Before China Meeting; HSBC ClimbsAdam Haigh
Most Asian stocks dropped ahead of a meeting of China’s top party officials this weekend. HSBC Holdings Plc gained after Europe’s largest lender posted higher earnings.
Industrial & Commercial Bank of China Ltd. paced declines among mainland lenders listed in Hong Kong. Nissan Motor Co. sank 10 percent, the most since 2008, after the Japanese carmaker cut its profit forecast. Kubota Corp. rose 7.9 percent in Tokyo as the tractor maker reported profit that topped estimates. HSBC Holdings Plc added 1.5 percent in Hong Kong after third-quarter pretax profit increased 30 percent.
The MSCI Asia Pacific Index was little changed at 141.10 as of 5:21 p.m. in Tokyo, having swung between gains of as much as 0.5 percent and losses of 0.2 percent. Hong Kong’s Hang Seng Index lost 0.7 percent. China’s leaders meet in Beijing Nov. 9-12 to map out reforms as the world’s second-largest economy heads for its slowest growth in more than two decades.
“All eyes are on the third party plenum,” Tim Moe, a Hong Kong-based strategist at Goldman Sachs Group Inc., told Bloomberg TV. “The market has priced in a fair amount of expectation about this and therefore from a tactical standpoint, the market is vulnerable to profit taking.”
Taiwan’s Taiex Index declined 1.1 percent and South Korea’s Kospi index slid 0.6 percent. India’s S&P BSE Sensex index dropped 1 percent. The Philippine Stock Exchange Index lost 0.4 percent.
Australia’s S&P/ASX 200 Index added 0.8 percent, maintaining gains after the central bank held its benchmark rate at a record-low 2.5 percent. That matched the prediction of all 31 economists surveyed by Bloomberg News, with 13 forecasting an increase by the fourth quarter of next year.
China’s Shanghai Composite Index added 0.4 percent, reversing losses of as much as 1.2 percent. Singapore’s Straits Times Index climbed 0.1 percent. New Zealand’s NZX 50 Index advanced 0.6 percent to close at a record high. Malaysian and Indonesian markets are shut today.
Japan’s Topix index slid less than 0.1 percent on reopening from a three-day weekend. More than 500 companies on the 1,746-member Topix release earnings this week, according to data compiled by Bloomberg.
Of the companies on the MSCI Asia Pacific Index that have reported quarterly results this season and for which Bloomberg compiles estimates, about half exceeded analysts’ estimates on profit, while 53 percent posted better-than-expected revenue.
The euro rebounded from a six-week low versus the dollar yesterday as expanding manufacturing in the euro region fueled speculation the European Central Bank won’t cut interest rates this week. A HSBC and Markit Economics China services index released today showed expansion in October, after an official non-manufacturing gauge rose to the highest level this year. The Institute for Supply Management issues its U.S. non-manufacturing index today.
“The global economy continues to improve and that’s supporting a profit upswing,” Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has about $130 billion under management, said by telephone. “We’ve still got very easy monetary conditions and lots of investors sitting on the sidelines in cash still getting very low returns. Equities remain the place to be.”
The MSCI Asia Pacific Index climbed the past two months, pushing valuations on the measure to 13.6 times estimated earnings as of yesterday, up from a multiple of 12.7 at the end of August, according to data compiled by Bloomberg. That compares with a current multiple of 16 for the Standard & Poor’s 500 Index and 14.9 on the Stoxx Europe 600 Index, the data show.
Futures on the S&P 500 slipped 0.1 percent. The equity index gained 0.4 percent yesterday as Exxon Mobil Corp. and U.S. Steel Corp. led a rally in commodity shares while investors awaited data on employment and economic growth. The S&P 500 has advanced 24 percent in 2013, poised for its best yearly rally in a decade, and is up more than 161 percent from the bear-market low reached in 2009.
Chinese lenders listed in Hong Kong fell. ICBC, as the nation’s biggest lender is known, lost 1.3 percent to HK$5.34. China Construction Bank Corp. declined 1 percent to HK$6.02.
Nissan slumped 10 percent to 861 yen. At a time when the weaker yen is supposed to be bolstering Japanese exporters’ earnings, Nissan last week cut its full-year net income forecast by 15 percent after demand in emerging markets slowed and recall costs mounted. Analysts at Deutsche Bank AG, Goldman Sachs Group Inc. and Credit Suisse Group AG cut their investment ratings on the stock.
Doosan Infracore Co., South Korea’s largest construction equipment company, declined 8.3 percent to 13,250 won in Seoul after a report of a possible $400 million depositary-receipt sale sparked concern shareholdings would be diluted.
Kubota surged 7.9 percent to 1,550 yen after its first-half preliminary net income rose to 67 billion yen, topping its own previous forecast of 50 billion yen ($509 million).
HSBC gained 1.5 percent to HK$86.35 after reporting results. Chief Executive Officer Stuart Gulliver said the lender saw “reasons for optimism” amid a broadening economic recovery. Mizuho Securities Asia Ltd. raised its rating on HSBC to buy from neutral.