Asian Stocks Drop Most This Month as Samsung Hurts Tech Shares

  • Korean electronics firm plunges 8% on Galaxy Note 7 woes
  • Energy companies gain as oil near highest in more than a year

Asian stocks fell the most this month as Samsung Electronics Co. dragged down technology shares, overshadowing an oil-driven rally in energy companies.

The MSCI Asia Pacific Index dropped 0.6 percent to 139.68 as of 4:05 p.m. in Hong Kong after climbing as much as 0.3 percent. A gauge of information-technology shares led declines, sliding 1.5 percent, while energy equities rose 0.6 percent as Brent crude stayed above $53 a barrel. Japanese stocks gained as the yen weakened for a second day.

Samsung tumbled 8 percent in Seoul after the company asked retail partners to stop sales and exchanges of its Galaxy Note 7 smartphones, the latest blow for South Korea’s largest company in the midst of a crisis over exploding batteries. Oil held gains near the highest settlement in almost 15 months as Russia and Saudi Arabia said they’re ready to cooperate to limit output, while the chances of a U.S. rate increase this year rose to 68 percent.

“We’ve had a big rally in oil and there’s more optimism around oil and commodities,” said Angus Nicholson, a markets analyst in Melbourne at IG Ltd. With a December Federal Reserve rate hike increasingly priced in there’s more negativity creeping in and what’s happening with Samsung is hurting sentiment toward tech stocks in general, he said.

Samsung-Apple Split

The technology industry’s fortunes are split between suppliers of Samsung and Apple Inc.’s iPhone. In Taiwan, shares of Radiant Opto-Electronics Corp., a Samsung supplier, plunged as much as 8.4 percent and HannsTouch Solution Inc. lost 9.8 percent. Among makers of iPhone components, Alps Electric Co. rose 0.3 percent and Japan Display Inc. climbed 3.5 percent in Tokyo. Murata Manufacturing Co. advanced 2.9 percent.

South Korea’s Kospi index fell 1.2 percent. Samsung instructed users of the original and replacement Note 7s to power down and store their devices until further notice as it investigates the cause of the latest problems. The U.S. Consumer Product Safety Commission echoed Samsung’s statement, saying consumers should stop using the Note 7 due to concerns over more incidents of overheating.

Japan’s Topix index increased 0.4 percent, closing at its highest level since June 1, as markets resumed trading following a holiday Monday. The Bank of Japan still has room to expand its monetary stimulus and doesn’t intend to reduce its bond-buying program soon, Governor Haruhiko Kuroda said in an interview over the weekend. The yen weakened 0.3 percent to 103.94 a dollar, after falling 0.7 percent Monday.

Hong Kong’s Hang Seng Index dropped 1.3 percent, its biggest decline in more than a week, as real-estate companies slumped after a number of Chinese cities imposed restrictions to curb surging property prices. Taiwan’s benchmark index fell 0.5 percent. Both markets were closed on Monday. The Shanghai Composite Index advanced 0.6 percent. Thailand’s SET Index lost 0.9 percent after a 3.2 percent plunge on Monday, which came after the royal palace said in a statement Sunday that the health of the 88-year-old king was unstable.

Oil Tailwind

Australia’s S&P/ASX 200 Index added 0.1 percent, with energy companies advancing 2.3 percent as a group. U.S. crude traded near its highest price in more than a year after Saudi Arabia expressed optimism OPEC will be able to cement a deal to curb production, and Russia said it would back such an accord. New Zealand’s S&P/NZX 50 Index increased 0.1 percent, climbing for the first time in six days.

“The fact that Russia has shown willingness to cooperate with OPEC is a tailwind for oil prices going forward,” said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities Co. in Tokyo. “In the short term, it’s positive for oil and mining shares.”

Futures on the S&P 500 Index lost 0.3 percent amid rising odds of a Fed rate hike. The benchmark index gained 0.5 percent on Monday on speculation that Republican candidate Donald Trump’s performance in the second U.S. presidential debate wasn’t strong enough to boost his chances of winning against Hillary Clinton. On Friday, the U.S. released jobs data viewed to be supportive of a near-term increase, with 156,000 workers being added to payrolls last month following a 167,000 gain in August.

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