Asian Stocks Fall After HSBC China Manufacturing Drops

Asian stocks outside Japan fell for the first time in nine days after a private gauge of Chinese manufacturing dropped more than economists forecast.

China Shenhua Energy Co., the nation’s biggest coal producer by market capitalization, erased early gains to decline 1.5 percent in Hong Kong. Gambling firm Tatts Group Ltd. slumped 5.8 percent in Sydney after profit missed estimates. Dainippon Screen Manufacturing Co. jumped 3.4 percent in Tokyo after Mitsubishi UFJ Morgan Stanley Securities Co. advised buying shares of the semiconductor-equipment maker.

The MSCI Asia Pacific excluding Japan Index slid 0.6 percent to 509.71 as of 4:04 p.m. in Hong Kong, with two shares falling for each that rose. The measure closed yesterday at a more than six-year high. Japan’s Topix index bucked the trend, climbing 0.9 percent, after the yen slumped yesterday.

“China is still in a recovery mode, but the momentum has slowed,” Wang Tao, a Hong-Kong based head of China economic research at UBS AG told Bloomberg TV. “The summer rebound is taking a breath. The recovery is still on track, but it is not that strong.”

The preliminary Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was at 50.3 in August, trailing all 22 estimates in a Bloomberg News survey of economists and missing the 51.5 median forecast. The measure dropped from July’s 51.7 and was at a three-month low. Numbers above 50 indicate expansion.

Regional Gauges

South Korea’s Kospi index fell 1.4 percent. Hong Kong’s Hang Seng Index lost 0.7 percent as China Shenhua retreated 1.5 percent to HK$22.95. The Hang Seng China Enterprises Index of mainland stocks traded in the city dropped 1 percent. The Shanghai Composite Index and Taiwan’s Taiex index retreated 0.4 percent.

Australia’s S&P/ASX 200 Index and India’s S&P BSE Sensex Index rose 0.1 percent. Singapore’s Straits Times Index was little changed. New Zealand’s NZX 50 Index gained 0.2 percent.

The drop in the Chinese manufacturing follows a slump in credit expansion and slowing growth in investment spending in July. While the People’s Bank of China has signaled it will maintain a “prudent” policy stance, any further deterioration this quarter may force a looser setting.

“There’s no question the market was looking for something better, so that’s disappointing on a one-month basis,” Martin Lakos, a Sydney-based division director at Macquarie Private Wealth, said by phone. “We’re not overtly concerned about week-by-week or month-by-month numbers. Holding above 50 is still expansionary, but probably not necessarily where we’d want it to be. The longer-term trend on PMIs is still very positive.”

Fed Minutes

The Federal Reserve yesterday released minutes of its July meeting in which officials raised the possibility they may end aggressive stimulus sooner than anticipated while acknowledging continued slack in the jobs market. The Fed is on pace to end its monthly bond purchases in October, and intends to keep the benchmark interest rate low for a “considerable time” after that.

Futures on the Standard & Poor’s 500 Index advanced 0.1 percent today after the gauge yesterday rose 0.3 percent to close within two points of a record high.

Traders saw a 52 percent chance the Fed will increase its benchmark interest rate to at least 0.5 percent by July 2015, futures contracts showed. That compared with a 48 percent likelihood the previous day. The rate has been near zero since December 2008.

Jackson Hole

Weak wage growth and low inflation have given the Fed room to hold rates near zero for longer even as growth shows signs of accelerating. There was no discussion of the timing of a rate increase in the Fed minutes, though officials have forecast that it would occur some time next year.

Fed Chair Janet Yellen will address global central bankers this week in Jackson Hole, Wyoming. Policy makers including European Central Bank President Mario Draghi will also speak.

The MSCI Asia Pacific Index traded at 13.6 times estimated earnings at the last close, compared with 16.6 for the S&P 500 and 15.2 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Tatts retreated 5.8 percent to A$3.41. Profit and the final dividend missed forecasts, dragging the shares down by the most since February 2012.

Dainippon Screen gained 3.4 percent to 577 yen. Mitsubishi UFJ Morgan Stanley raised its recommendation on the stock to outperform from neutral.

AMP Ltd. climbed 4.2 percent to A$5.75 as Australia’s largest life insurer said it is focused on reducing costs.

ZTE Corp. rose 2.4 percent to HK$17.10 in Hong Kong after China’s second-largest maker of phone-network equipment reported increased first-half profit.