Asian Stocks Drop for Fifth Day as Chinese Exports Disappoint

  • Japanese shares erase advance, Hong Kong equities slide
  • Fed minutes show September decision to hold was close call

China's Trade Troubles: Too Much Pressure on Yuan?

Asian stocks fell for a fifth day after Federal Reserve minutes boosted expectations U.S. interest rates will rise by year-end and as a surprise decline in China’s exports dragged Hong Kong shares lower.

The MSCI Asia Pacific Index dropped 0.9 percent to 137.51 as of 4:01 p.m. in Hong Kong, heading for its lowest close since Sept. 16. Japan’s Topix index closed little changed, erasing a gain of as much as 0.9 percent earlier after the yen rose against the dollar, sapping demand for exporters. Hong Kong’s Hang Seng Index closed down 1.7 percent, the most in almost two weeks.

China’s overseas shipments fell 5.6 percent in yuan terms in September from a year earlier to snap a six-month streak of gains, while missing economists’ forecasts for a 2.5 percent increase. Investors also weighed minutes from the Federal Open Market Committee’s September meeting, which showed several policy makers said a rate increase was needed “relatively soon.”

“Asian shares are falling on a combination of the prospect of the U.S. raising interest rates and a slowdown in global demand hurting China exports,” said Andrew Sullivan, managing director of sales trading at Haitong International Securities Group Ltd. in Hong Kong.

The Shanghai Composite Index added 0.1 percent. Chinese imports rose 2.2 percent last month, short of estimates for a 5.5 percent gain, leaving a trade surplus of 278.4 billion yuan ($41.4 billion). Lackluster trade data may increase pressure on the yuan, while new property curbs challenge the resilience of the nation’s economic recovery.

Thai assets are under pressure amid concern over the health of the king and on the prospect of a U.S. rate increase. Thailand’s benchmark equity gauge and currency have fallen every day after the royal palace said Sunday that King Bhumibol Adulyadej’s condition was unstable. The 88-year-old monarch’s health is closely watched as he is revered by many for what they say has been his unifying presence during a seven-decade reign.

The SET Index fell 3.4 percent, taking its drop this week to 9.7 percent. Thai companies including True Corp. Pcl, Thai Oil Pcl and Delta Electronics Thai Pcl were among the biggest decliners on the MSCI Asia Pacific Index, each sliding at least 5 percent.

Taiwan’s Taiex index slipped 0.4 percent and Singapore’s Straits Times Index fell 0.6 percent. The Philippine Stock Exchange Index dropped 1.6 percent, declining for a seventh day. Australia’s S&P/ASX 200 Index lost 0.7 percent and New Zealand’s S&P/NZX 50 Index added 0.2 percent.

Fed Minutes

South Korea’s Kospi index fell 0.9 percent. Samsung Electronics Co. rose 1.4 percent, its first advance in four days. The manufacturing giant said Wednesday that it now projects profit of 5.2 trillion won ($4.6 billion) instead of 7.8 trillion won in the three months ended September, after ending production of its fire-prone Galaxy Note 7 smartphones.

Cathay Pacific Airways Ltd. tumbled 4.8 percent in Hong Kong to a seven-year low after Asia’s biggest international carrier scrapped its profit outlook and said it is conducting a "critical review” of its business.

Minutes of the Fed’s September meeting showed the decision to keep rates on hold was a close call, with three committee members voting to raise. The likelihood of a hike by year-end stands at 68 percent, futures contracts show, compared with 59 percent at the end of last month. Higher U.S. rates would further amplify the country’s divergence with policy approaches in Japan and Europe.

“The market is becoming more confident that there is growth momentum in the U.S. economy finally,” Paresh Upadhyaya, a Boston-based strategist at Pioneer Investment Management Inc., which oversees about $221 billion, told Bloomberg Radio’s Daybreak Asia program. “In the minutes, it changed its language to relatively soon, sending a really strong signal that they prefer to hike in December.”

S&P 500 Index futures lost 0.7 percent. The underlying U.S. equity gauge added 0.1 percent Wednesday, near its average price during the past 100 days, after the steepest selloff in four weeks took it below that closely watched level for the first time since June.

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