Asian Stocks Drop Led by Energy Shares as October Rally Halts

  • More than $4 trillion added to global stocks' value this month
  • MSCI Asia Pacific Index heads for best month in five years

Asian stocks fell, paring the benchmark regional equities gauge’s biggest monthly rally in five years, as energy and material shares led losses and casino stocks trading in Hong Kong slumped.

BHP Billiton Ltd., the world’s largest mining company, slipped 2.9 percent in Sydney as commodity companies extended Monday losses. Wynn Macau Ltd. sank 0.9 percent in Hong Kong as gaming revenue at Macau casinos dropped. Gold futures dropped the most this month, dragging Newcrest Mining Ltd. down 5.1 percent in Sydney. Tokyo Electric Power Co. tumbled 4.5 percent in Tokyo as NHK reported that Japan’s Health Ministry said for first time that leukemia in an employee who worked at its Dai-Ichi power plant resulted from the March 2011 nuclear disaster.

The MSCI Asia Pacific Index slipped 0.1 percent to 133.93 as of 8:33 p.m. in Tokyo. The gauge surged 8.3 percent this month through Monday, on course for its best monthly advance since September 2010, as Chinese shares rallied and traders pushed back expectations on the timing of the Federal Reserve’s first interest-rate increase. The global stock rebound in October has restored more than $4 trillion in equity value.

“The three-week recovery is approaching an exhaustion point,” said Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion. “Valuations have expanded and 2016 earnings have not been upgraded.”

October Surge

The October surge pushed valuations on the MSCI Asia Pacific index this month back above their five-year average, Bloomberg data show. The index trades at 13.6 times estimated earnings, the data show. Equity gains came after last quarter’s volatility triggered by China’s surprise decision to devalue the yuan in August.

Hong Kong’s Hang Seng Index declined 0.4 percent and the Hang Seng China Enterprises Index of mainland firms listed in the city also retreated 0.4 percent. Financial markets in Hong Kong will be closed on Wednesday for a public holiday. The Shanghai Composite Index advanced 1.1 percent as small-company shares advanced.

Raw-materials shares extended Monday’s losses as data showed China’s economy grew last quarter at the slowest pace since the global financial crisis.

Financial Inquiry

Australia’s S&P/ASX 200 Index dropped 0.7 percent. The nation’s banking regulator will take additional steps by the end of 2016 to ensure Australia’s lenders have strong capital levels, the government said Tuesday in its response to the Financial System Inquiry.

Commonwealth Bank of Australia, the nation’s biggest, fell 0.9 percent and Westpac Banking Corp. retreated 1.6 percent.

South Korea’s Kospi index advanced 0.5 percent and New Zealand’s S&P/NZX 50 Index rose 1 percent. Singapore’s Straits Times Index slipped 0.2 percent and India’s S&P BSE Sensex Index retreated 0.2 percent.

Japan’s Topix index gained 0.3 percent. Investors offered to buy shares in Japan Post Holdings Co.’s banking and insurance units for more than their initial public offering prices, a sign of appetite for the nation’s biggest privatization in almost three decades.

Japan Post Insurance

Buyers were willing to pay 2,350 yen a share for Japan Post Insurance Co. as of 3 p.m. in Tokyo in the so-called gray market, according to Churchill Capital Ltd. That was 6.8 percent above the IPO price of 2,200 yen. Japan Post Bank Co. was bid at 1,550 yen, compared with its official price of 1,450 yen. Churchill Capital Ltd. said the bank was bid at 1,510 yen, while investors offered to buy the insurer for 2,290 yen. Both brokerages said no trades were made as nobody agreed to sell the shares.

E-mini futures on the Standard & Poor’s 500 Index slipped 0.2 percent. The underlying gauge closed little changed on Monday at the highest level since Aug. 20, rising above a level where past rallies since the summer selloff have lost momentum. International Business Machines Corp. fell in late trading as quarterly revenue missed estimates.

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