Asian Stocks Ex-Japan Retreat From October High; Topix Climbs

  • Market lacks catalyst after rallying the past six days
  • New Zealand shares advance to record on rate cut speculation

Nintendo Plays Catch-Up With Sony and Netflix

Asian stocks outside Japan fell from their highest levels in almost nine months as commodity producers led losses and investors judged the rally spurred by a global equities recovery was overdone.

The MSCI Asia Pacific Excluding Japan Index slipped 0.4 percent to 431.35 as of 4:36 p.m. in Hong Kong, set to halt a six-day advance that sent valuations to the highest level in more than a year. A gauge of Chinese shares traded in Hong Kong snapped the longest winning streak in more than a month and Korean shares declined for the first time in seven days. Tokyo shares rose after a holiday, capping their best winning streak in nine months.

“The market is taking a pause,” Tony Farnham, a strategist at Paterson Securities in Sydney, said by phone. “There isn’t much of a catalyst out there. People are starting to question if there’s still value in the market following the post-Brexit rally.”

The recent rally boosted the value of shares on the MSCI Asia Pacific Excluding Japan Index to 13.3 times its 12-month projected earnings, the most expensive since May 2015. Global equities recovered from a rout that wiped out more than $4 trillion in market value since June’s shock U.K. vote to leave the European Union amid expectations policy makers will boost growth. The S&P 500 Index closed at a record for the fifth time in six days, as investors shrugged off concerns over a thwarted coup attempt in Turkey.

Central banks remain in focus as New Zealand’s plan to curb speculation in the housing market boosted chances for an interest-rate cut, while a professor who has collaborated on research with Governor Haruhiko Kuroda said the Bank of Japan has no need to further increase monetary stimulus. The odds the Federal Reserve will tighten monetary policy this year remains low, with traders predicting 41 percent chance rates will rise in December.

‘Buying Opportunity’

“On current sentiment, it seems likely that any pullbacks will be shallow and a buying opportunity,” said Chris Weston, chief market strategist at IG Ltd. in Melbourne. “We will need to see good earnings, or the market is at risk of rolling over.”

Hong Kong’s Hang Seng Index slid 0.6 percent, halting a six-day rally that brought the benchmark index to the highest close this year on Monday. The Hang Seng China Enterprises Index of mainland stocks traded in the city declined 1.1 percent, retreating from a three-month high. The Shanghai Composite Index slipped 0.2 percent.

South Korea’s Kospi Index fell 0.2 percent. Australia’s S&P/ASX 200 Index fell 0.1 percent, sliding after gaining in the past eight days. Singapore’s Straits Times Index lost 0.7 percent. Taiwan’s Taiex index added 0.3 percent, extending a bull market. New Zealand’s S&P/NZX 50 Index advanced 0.7 percent, closing at an all-time high, while Indonesian equities climbed 0.9 percent to the highest level since June 2015.

Japanese Rally

Japan’s Topix index climbed 1.1 percent, erasing earlier losses of as much as 0.1 percent. The gauge rallied 8.9 percent last week, its best performance since 2009, as the yen dropped more than 4 percent. Equities have climbed after Prime Minister Shinzo Abe’s win in the upper-house elections raised optimism the government will act to boost growth.

BHP Billiton Ltd., the world’s biggest mining company and Australia’s largest oil producer, slipped 1.9 percent in Sydney as crude and copper futures declined. Softbank Group Corp. tumbled 10 percent in Tokyo, the most since October 2012, after agreeing to buy U.K. based ARM Holdings Plc for $32 billion. Nintendo Co. jumped 14 percent as investor frenzy over its mobile game Pokemon Go continued.

Futures on the S&P 500 Index lost 0.3 percent. The U.S. equity benchmark index gained 0.2 percent on Monday as technology shares rallied amid deal activity while corporate earnings spurred optimism that results this season will be sturdy enough to help sustain equities at record levels.

After Monday’s close, Netflix Inc. reported fewer new subscribers than predicted, sending the shares plunging. International Business Machines Corp. rose 3.1 percent in after-hours trading as its revenue beat analysts’ estimates. Goldman Sachs Group Inc. releases earnings Tuesday after Bank of America Corp. and JPMorgan Chase & Co. beat second-quarter projections.

Before it's here, it's on the Bloomberg Terminal.