Asian Stocks Drop After China Manufacturing Gauges Slide

Asian stocks dropped, with a regional benchmark index retreating from a three-week high, after gauges of manufacturing in China declined, underscoring challenges for President Xi Jinping as he tries to sustain economic momentum while rolling out reforms.

Yanzhou Coal Mining Co. sank 6.5 percent in Hong Kong, pacing declines among Chinese producers of the fuel. Hyundai Motor Co. and Kia Motors Corp. lost at least 5.1 percent after South Korea’s largest automakers forecast their weakest sales growth in eight years. BHP Billiton Ltd., Rio Tinto Group and Fortescue Metals Group Ltd., Australia’s biggest iron-ore exporters, gained at least 0.6 percent as shipments from the world’s No. 1 exporter of the commodity resumed after a cyclone.

The MSCI Asia Pacific excluding Japan Index slipped 0.6 percent to 465.32. Japanese markets are closed for a holiday. Global equities soared by more than $9 trillion in 2013 as central-bank stimulus helped the U.S. economy gain momentum and Europe recover from its longest recession.

“We’re seeing some profit-taking today following the recent rally,” Teresa Chow, a Hong Kong-based fund manager at RBC Investment (Asia) Ltd., which oversees $1.5 billion, said by telephone. “China’s reforms may bring short-term pain for the economy, but over the longer term we see a more positive story.”

China Manufacturing

China’s manufacturing purchasing managers’ index came in at 51 for December, the National Bureau of Statistics and the nation’s logistics federation said yesterday. That trailed the median economist forecast of 51.2 and was a decline from November’s 51.4 reading.

A separate manufacturing PMI gauge from HSBC Holdings Plc and Markit Economics today slipped to 50.5 from 50.8 in November, in line with the median of 17 estimates compiled by Bloomberg. Levels above 50 signal expansion.

“There’s a good long-term story for China with better quality economic growth, but the pains of the reform program are probably going to hold the markets back for the moment,” Gary Dugan, who helps oversee about $53.4 billion as the Singapore-based chief investment officer for Asia and the Middle East at Coutts & Co., the wealth management unit of Royal Bank of Scotland Group Plc, told Bloomberg TV. “People are looking for buying opportunities, but they do need a good story.”

China’s Shanghai Composite Index slipped 0.3 percent. South Korea’s Kospi Index dropped 2.2 percent, while Taiwan’s Taiex Index was little changed. Australia’s S&P/ASX 200 Index added 0.3 percent and Singapore’s Straits Times Index increased 0.2 percent. Hong Kong’s Hang Seng Index rose 0.1 percent. New Zealand’s market was closed for a holiday.

Thai Unrest

Thailand’s SET Index dropped 5.2 percent, the most since September 2011, amid growing political unrest in Southeast Asia’s second-largest economy. The nation’s Election Commission plans to meet members of the biggest political parties today to discuss ways to ease tension before a Feb. 2 vote that’s being threatened by growing anti-government protests.

The Asia-Pacific excluding Japan measure traded at a price-to-earnings ratio of 13.4 times as of Dec. 31, data compiled by Bloomberg show. That compares with an earnings multiple of 18 on the MSCI All-Country World Index, which advanced 20 percent in 2013.

The Standard & Poor’s 500 Index climbed 0.4 percent on Dec. 31 in New York, ending the year at an all-time high. The Dow Jones Industrial Average gained 0.4 percent to a record.

Chinese coal producers fell after prices for the fuel dropped by 25 yuan to 40 yuan per metric ton at the nation’s coal ports on Dec. 30. The decline was earlier than the market had expected, Standard Chartered Plc analysts led by Yan Chen wrote in a report that day. Yanzhou Coal sank 6.5 percent to HK$6.62 in Hong Kong. China Shenhua Energy Co., the nation’s biggest producer, dropped 2.3 percent to HK$23.90. China Coal Energy Co. decreased 4.1 percent to HK$4.18.

Hyundai, Kia

Hyundai Motor dropped 5.1 percent to 224,500 won in Seoul, while its affiliate Kia Motors sank 6.1 percent to 52,700 won. The South Korean automakers’ combined deliveries will increase 4 percent to 7.86 million vehicles in 2014, Chung Mong Koo, chairman of both automakers, told employees during a new year address in Seoul today. That’s the slowest growth since 2006 and falls short of a projection of 8 million units based on the average estimate of five analysts surveyed by Bloomberg News.

Australian iron-ore producers advanced as Port Hedland, the world’s largest ore-export terminal, restarted shipments on Dec. 31 as tropical Cyclone Christine waned. BHP Billiton, the world’s biggest mining company, gained 0.6 percent to A$38.20. Rio Tinto rose 0.8 percent to A$68.71. Fortescue Metal climbed 1.9 percent to A$5.93.

(Corrects index level in third paragraph of story published yesterday.)
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