Asian Stocks Fall as Chinese Shares Tumble, Yen Strengthens

  • Shanghai Composite index sinks while Japan erases gain
  • Nissan shares surge in Tokyo trading on buyback plans

SocGen's Lawson on G-20, RBA Rates, Asia Markets

Asian stocks fell as a gauge of Chinese equities in Shanghai approached a 15-month low and a stronger yen weighed on Japanese shares. Utilities and energy companies led losses.

The MSCI Asia Pacific Index slid 0.4 percent to 119.19 as of 5:55 p.m. in Tokyo. Investors are looking for clues as to the strength of the global economy after finance chiefs from the world’s top economies failed to assuage calls to boost global growth amid mounting concerns over the potency of monetary policy.

“Holding cash for the time being is probably not a bad idea,” Toby Lawson, Sydney-based head of global markets at Societe Generale SA, told Bloomberg TV. “It’s been incredibly volatile. Where is the growth going to come from? That’s the biggest concern. Who is going to lead us out of this malaise -- that’s what’s really worrying investors at the moment.”

The Shanghai Composite Index dropped 2.9 percent at the close as some investors were disappointed by a lack of specific measures to boost growth during the Group of 20 meetings in Shanghai. The stock gauge dropped as much as 4.6 percent, close to the lowest level since November 2014. The measure has tumbled 24 percent this year, the worst performer among 93 global equity indexes.

Investors had hoped China would announce measures to bolster the economy over the weekend, according to JK Life Insurance Co., after People’s Bank of China Governor Zhou Xiaochuan said on Friday there is room for more easing. Hong Kong’s Hang Seng Index fell 1.3 percent, while the Hang Seng China Enterprises Index of mainland firms listed in the city dropped 1.5 percent.

Asia’s benchmark index is down 9.7 percent in 2016, compared with a 4.7 percent slide in the S&P 500. Slumping commodities prices, a surprise devaluation of the yuan and a move into negative rates from the Bank of Japan roiled equity markets at a time the Federal Reserve is considering how fast it can lift U.S. interest rates without choking off the economic recovery.

Consult Closely

That fueled calls for finance ministers to do more to stoke demand and bolster growth. The G-20 members reaffirmed they will refrain from competitive devaluations, and -- in new language -- agreed to consult closely on currencies.

"There is little coming out of the G-20 to suggest major improvements in the policy mix of the most systemically important countries," Mohamed El-Erian, chief economic adviser at Allianz SE, wrote in a Bloomberg View column published Monday. "With little hope for major policy changes, global economic growth will continue to struggle, the trifecta of national inequality (of income, wealth and opportunity) will worsen, and financial volatility will increase."

Chinese manufacturing data due Tuesday and the monthly U.S. jobs report Friday are just two of a string of closely watched economic data points scheduled to be released this week.

Yen Gains

Japan’s Topix index lost 1 percent on volume 11 percent below average. The yen climbed 0.9 percent to 112.94 per dollar after falling 0.9 percent Friday. South Korea’s Kospi index slipped 0.2 percent and Australia’s S&P/ASX 200 Index closed little changed. New Zealand’s S&P/NZX 50 Index climbed 0.1 percent. Taiwan is closed for a holiday.

Nissan Motor Co. surged 5.5 percent in Tokyo after announcing plans to buy back 400 billion yen ($3.52 billion) worth of shares.

Indian stocks rose, with the benchmark S&P Sensex reversing an intraday loss, after the government’s pledge to retain a plan to narrow the budget gap spurred optimism that the central bank may lower borrowing costs. 

The fiscal deficit will narrow as planned to 3.5 percent of gross domestic product in the year starting April 1, the smallest gap since 2008, Finance Minister Arun Jaitley told lawmakers on Monday. The move may help Prime Minister Narendra Modi win another rate cut as low global oil prices are forecast to keep inflation near next year’s target.

Futures on the Standard & Poor’s 500 Index retreated 0.6 percent. The S&P 500 fell 0.2 percent Friday in New York, after rising as much as 0.6 percent. Higher growth and inflation readings helped spur a stronger dollar, sending some companies with significant overseas business lower.

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