Photographer: Hitoshi Yamada/NurPhoto/Sipa USA

Asian Stocks Outside Japan Decline as Hong Kong Shares Retreat

  • Hang Seng Index drops by most in three weeks on valuation
  • Investors await Fed Chair Yellen’s speech in Jackson Hole

Asian stocks outside Japan fell as Hong Kong shares retreated and investors grew cautious before Federal Reserve Chair Janet Yellen’s speech this week. Japanese equities gained as exporters rallied.

The MSCI Asia Pacific Excluding Japan Index dropped 0.4 percent to 447.11 as of 4:19 p.m. in Hong Kong. The Hang Seng Index slid the most in three weeks on speculation recent gains were overdone. Japan’s Topix index increased 0.7 percent as the yen traded at 100.15 against the U.S. dollar. The S&P 500 Index closed near a record high as reports showing a surge in American new home sales and a slowdown in manufacturing brought into question the hawkish tone of recent comments from Fed officials.

“While recent U.S. data has been mixed, the base case for the Fed is probably to increase rates in the absence of any compelling reason not to,” Michael McCarthy, chief market strategist in Sydney at CMC Markets, said by phone. “The Fed is aware that there’s a substantial risk that if economic conditions deteriorate, they have very little room to move. Given this, the central bank wants to normalize rates as soon as they can.”

Asian stocks have fluctuated this month as investors scrutinize economic data and comments from Fed officials to assess the prospects for higher U.S. rates. Investors are waiting for Yellen’s speech later this week at Jackson Hole, Wyoming. There’s a 28 percent chance of a rate hike in September, data compiled by Bloomberg based on Fed fund futures show.

Best Performers

Hong Kong’s Hang Seng Index dropped 0.8 percent, the most since Aug. 3, as property companies and banks paced losses. The benchmark gauge and shares of Chinese companies traded in the city are among the world’s best performers this month as the approval of an exchange trading link with Shenzhen and bets that central banks will add to stimulus boosted demand for the city’s shares. The Shanghai Composite Index lost 0.1 percent.

“Good news including the Shenzhen stock link has all been priced in and investors are holding back from buying ahead of Friday’s speech by Yellen,” said Ronald Wan, chief executive of Partners Capital International Ltd., a brokerage in Hong Kong.

The Philippine Stock Exchange Index slipped 0.9 percent to a six-week low, Taiwan’s Taiex index lost 0.2 percent and South Korea’s Kospi index slipped 0.3 percent. New Zealand’s S&P/NZX 50 Index fell 0.8 percent, retreating from an all-time high. Australia’s S&P/ASX 200 Index added 0.1 percent and Singapore’s Straits Times Index gained 0.6 percent.

Shimamura, Qantas

Shimamura Co. slumped 8.1 percent in Tokyo after the retail chain reported the biggest decline in same-store sales since April 2015. PT XL Axiata fell 7.7 percent in Jakarta, heading for the steepest two-day decline in more than six years, following downgrades from Nomura Holdings Inc. and Daiwa Securities Group Inc. Qantas Airways Ltd. rose 1.5 percent in Sydney after the carrier reported record profits and announced its first dividend in seven years.

Futures on the S&P 500 were little changed after the U.S. equity benchmark index rose 0.2 percent on Tuesday. American equities showed signs of breaking out of a torpor, with Monsanto Co. leading a rally in raw-material shares as it’s said to be closer to a merger with Bayer AG. Chipmakers boosted the technology group, and Best Buy Co. surged 20 percent after surprising earnings.

Oil fell as industry data showed U.S. crude stockpiles expanded, adding to a global glut of supply. West Texas Intermediate crude slipped 1.6 percent after climbing 1.5 percent on Tuesday.

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