Asian Stocks Fall on Europe, Scrapped Hong Kong Talks

Asian stocks fell, with the regional benchmark index headed for a six-month low after European slowdown concerns caused a rout in U.S. shares and Hong Kong’s government canceled talks with protesters.

Inpex Corp., Japan’s biggest oil explorer, led losses among energy companies as crude futures extended a drop into a bear market. Hotel Shilla Co., a retailer and resort operator, capped its biggest weekly decline since December 2008 amid speculation South Korea will allow more duty-free shops in the country. Mitsubishi Materials Corp., which processes copper and zinc, slid 2.6 percent in Tokyo after a report it missed its first-half operating profit forecast.

The MSCI Asia Pacific Index dropped 1.6 percent to 136.47 as of 4:17 p.m. in Hong Kong, heading for its lowest close since March 27 and a fifth weekly decline. European Central Bank President Mario Draghi said the central bank must lift inflation from an “excessively low” level as the recovery falters. The Standard & Poor’s 500 Index sank the most since April yesterday. Federal Reserve policy makers said in minutes of their last meeting that slowing global growth and the stronger greenback posed potential risks to the U.S. outlook.

“Europe’s still in trouble,” said Jasper Lawler, a London-based market analyst at CMC Markets. “With stock valuations at lofty levels, investors are worried about anything that could derail earnings.”

The MSCI Asia Pacific traded at 13.4 times estimated earnings as of the last close, according to data compiled by Bloomberg. That’s higher than the average over the past three years, the data show.

Back to Streets

Hong Kong’s Hang Seng Index dropped 1.9 percent. The city canceled talks with pro-democracy protesters after leaders of the movement called supporters back into the streets. The occupation by demonstrators, who are upset with Beijing demands to vet candidates for the city’s leadership, is illegal and must end, Carrie Lam, Hong Kong’s No. 2 official, told reporters.

China’s Shanghai Composite Index lost 0.6 percent. Japan’s Topix index slid 1.4 percent. South Korea’s Kospi index retreated 1.2 percent. Singapore’s Straits Times Index slipped 0.9 percent. Australia’s S&P/ASX 200 Index declined 2.1 percent, while New Zealand’s NZX 50 Index lost 0.8 percent.

ECB Strategy

Draghi said in a speech in Washington that boosting growth in the euro area will have to come through improvements in productivity. “We are accountable to the European people for delivering price stability, which today means lifting inflation from its excessively low level,” he said. “And we will do exactly that.”

Germany’s economy is on the edge of recession as exports to China and Russia sag and Chancellor Angela Merkel’s domestic policies hold back growth, according to four economic institutes. The economy, which shrank 0.2 percent in the second quarter from the previous three months, posted zero growth in the third and will expand 0.1 percent in the fourth, according to the outlook presented by the institutes.

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