Asian Stocks Drop, Heading for Biggest Weekly Decline in a Month

  • Equities erase gains as Hong Kong, Taiwan gauges close lower
  • Japan’s Topix index rises as yen halts five-day advance

Equities Outlook: Are Markets Set for a Pullback?

Asian stocks fell, erasing earlier gains and sending the regional gauge toward its biggest weekly drop in a month, as shares in Hong Kong and Taiwan declined.

The MSCI Asia Pacific Index dropped 0.2 percent to 139 as of 4:41 p.m. in Hong Kong, reversing an advance of as much as 0.4 percent. The measure is down 0.7 percent this week, the most since the period ended July 8. Japan’s Topix index rose 0.4 percent as the yen halted a five-day rally to trade at 100.18 against the dollar. The Hang Seng Index slipped 0.4 percent, retreating from a nine-month high, as casino shares slumped.

“The market lacks momentum,” said Margaret Yang, an analyst at CMC Markets in Singapore. “The market has been driven by liquidity arising from loose monetary policies by central banks around the world, rather than improving economic fundamentals. Besides the rally in oil, there’s nothing that could push share prices higher.”

Policy Support

Asian stocks have rallied 23 percent from a February low through Thursday, with the regional benchmark index touching a one-year high last week, as lackluster data from the world’s biggest economies fueled speculation central banks will continue to support them with stimulus and loose monetary policy. The Fed minutes released Wednesday showed officials saw little risk of a sharp uptick in inflation, helping drive the odds of a rate increase this year back below 50 percent.

Japanese shares fell 2.1 percent for the week as the yen reached the strongest level since November 2013. Authorities are watching closely for speculative moves in the exchange rate because it’s been volatile, Vice Finance Minister Masatsugu Asakawa said Thursday.

“The BOJ is really in a tough spot,” said James Woods, a strategist at Rivkin Securities in Sydney. “They’re fighting an uphill battle against the market given the strengthening yen. That’s creating a lot of headwinds for Japanese exporters.”

World-Beating Rally

Hong Kong stocks pared a third weekly advance. Sands China Ltd. and Swire Pacific Ltd. slumped after analysts downgraded their shares, while Cathay Pacific Airways Ltd. headed for its biggest weekly loss in a year after the carrier reported Wednesday that profit slumped. The Shanghai Composite Index added 0.1 percent on Friday.

Taiwan’s Taiex index fell 1 percent, its first weekly drop this month. The Jakarta Composite Index slipped 0.7 percent and the Philippine Stock Exchange Index lost 0.3 percent. India’s S&P BSE Sensex declined 0.2 percent, while South Korea’s Kospi index closed little changed. Australia’s S&P/ASX 200 Index gained 0.3 percent and New Zealand’s S&P/NZX 50 Index rose 0.3 percent to a record.

Yanzhou Coal Mining Co. fell 4.8 percent in Hong Kong, pacing declines among Chinese coal producers on concern the government may intervene after the commodity’s price climbed to a 17-month high this week. Medibank Private Ltd. dropped 4.7 percent in Sydney after the health insurer said it will continue losing market share through 2017. Fujitsu Ltd. jumped 9.3 percent in Tokyo after JPMorgan Chase & Co. upgraded its rating on the computermaker to overweight.

Futures on the S&P 500 Index fell 0.4 percent. The U.S. equity benchmark index gained 0.2 percent on Thursday.

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