Asian Stocks Join Global Selloff as Commodity Producers Retreatby
Asian stocks joined a global selloff as concern about turmoil in the credit and commodities markets ahead of this week’s Federal Reserve meeting overshadowed a batch of better-than-expected Chinese economic data.
The MSCI Asia Pacific Index dropped 1.3 percent to 127.78 as of 4:01 p.m. in Hong Kong, falling for a fifth day in its longest stretch of declines since the measure’s August slump. The Standard & Poor’s 500 Index sank 1.9 percent on Friday as crude traded below $36 a barrel and asset managers were routed after a high-yield mutual fund suspended redemptions. Traders see a 74 percent chance the Fed will increase rates on Dec. 16, futures show.
“With the worries around the Fed rate hike, the retail investors have decided to all of a sudden pull out," said Nader Naeimi, the Sydney-based head of dynamic markets at AMP Capital Investors Ltd, referring to what caused the U.S. high-yield fund suspensions. “This negative sentiment in the bond market is spreading across other markets."
Third Avenue Management last week said it will liquidate a $788.5 million credit mutual fund and delay distribution of investor money so it can avoid unloading securities at fire-sale prices. Stone Lion Capital Partners suspended redemptions in its $400 million high-yield fund.
The credit-market turmoil comes on the cusp of one of the most anticipated weeks of the year for investors. Tightening policy would solidify the Fed’s divergence from other major central banks, with policy makers in Europe and Japan still emphasizing measures to support growth.
Investors are also weighing economic reports from China over the weekend that showed fresh evidence of stabilization in the world’s second-largest economy. Bloomberg’s monthly China gross domestic product tracker picked up to a 6.85 percent estimated growth pace for November, the best reading since June, after reports Saturday on industrial production, retail sales and fixed-asset investment all exceeded forecasts.
China’s biggest shipping reform failed to enthuse investors as two major companies lost about $900 million in total market value after the government proposed combining its two key ocean liner groups. China Shipping Container Lines Co. and China Cosco Holdings Co. led the declines with drops of at least 26 percent in Hong Kong. Inpex Corp. slumped 2.9 percent in Tokyo, pacing losses among the region’s energy explorers as oil extended declines from the lowest price since February 2009.
Japan’s Topix index fell 1.4 percent after the yen gained 0.5 percent against the dollar on Friday. The Tankan index of sentiment among large manufacturers held at 12 in the fourth quarter, the Bank of Japan said. Economists had expected a decline to 11.
South Korea’s Kospi index lost 1.1 percent. Australia’s S&P/ASX 200 Index retreated 2 percent, while New Zealand’s S&P/NZX 50 Index slid 0.6 percent. Taiwan’s Taiex fell 0.9 percent. Singapore’s Straits Times Index declined 1 percent. Hong Kong’s Hang Seng Index slipped 0.7 percent.
China’s stocks climbed the most in five weeks as miners rallied on the prospect of production cuts to bolster prices and data showed the world’s second-biggest economy is stabilizing. The Shanghai Composite Index advanced 2.5 percent.
E-mini futures on the Standard & Poor’s 500 Index increased 0.6 percent on Monday.