Most Asian Stocks Gain as China Rebounds From Moody's Rating Cut

  • Shanghai Composite closes higher after sliding as much as 1.3%
  • Sigma Healthcare tumbles most since 2010 after profit warning

Why Moody's Downgraded China to A1

Most Asian stocks gained as Chinese equities erased earlier losses triggered by Moody’s Investors Service’s rating cut of the nation’s debt, and a weaker yen buoyed Japan’s shares.

The MSCI Asia Pacific Index was little changed at 151.87 as of 4:40 p.m. in Hong Kong, with two shares gaining for each one that fell. The Shanghai Composite Index closed up 0.1 percent, after slumping as much as 1.3 percent, as most investors brushed off Moody’s decision to cut China’s debt rating for the first time in almost three decades. Japan’s Topix climbed 0.6 percent as a weakening currency boosted earnings prospects, while Taiwan’s Taiex rose to a 17-year high as MediaTek Inc. and Quanta Computer Inc. led advances among electronics companies.

China’s rating was lowered to A1 from Aa3 on the likelihood of a “material rise” in economy-wide debt and its impact on state finances, Moody’s said in a statement. Crude oil futures held gains as OPEC and its allies are seen close to extending a supply cut agreement for an extra nine months.

“Moody’s rating downgrade will only have pressure on Chinese equities in the short period,” said Pornthep Jubandhu, an investment strategist at SCB Securities Co. in Bangkok. “Still, most other Asian equities remain attractive, with appealing valuations.”

Noble Group Ltd. slid 6 percent, paring an earlier drop of as much as 27 percent and erasing a gain of as much as 15 percent, as the commodity trader said it’s still in talks with potential strategic partners. Sigma Healthcare Ltd. sank 31 percent, the most in seven years, after saying profit may fall from a year earlier amid subdued trading and potential legal action.

MSCI Inc. Chief Executive Officer Henry Fernandez said the index compiler has a number of issues to solve if it is to include mainland Chinese stocks in its gauges. The decision is due June 20. The Federal Reserve is due to release minutes from its most recent meeting later Wednesday U.S. time, offering more clues on the pace of interest-rate increases.

Summary

  • Hong Kong HSI +0.1%, HSCEI little changed
  • South Korea’s Kospi +0.2%, Taiex +0.4%; India’s Sensex -0.1%
  • Singapore’s Straits Times Index +0.2%
  • Malaysia’s KLCI Index +0.4%, Indonesia’s Jakarta Composite -0.7%, Philippine Stock Exchange Index +0.3%, Vietnam’s VN Index’s +0.2%
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