Monday, September 24, 2012

Asia Stocks Halt Two-Week Gain as Slowdown Overshadows Stimulus

Asian stocks halted a two-week advance as an escalating territorial dispute between the region’s two biggest economies and signs of a deeper economic slump overshadowed unexpected stimulus from the Bank of Japan.


Toyota Motor Corp. (7203) and Fast Retailing Co. were among companies that fell this week after anti-Japanese protests in China forced the closure of factories and stores.

Angang Steel Co. dropped 8.3 percent in Hong Kong as data signaled China’s manufacturing slump may continue for an 11th month. Fortescue Metals Group Ltd. surged 21 percent after Australia’s third- biggest iron-ore producer arranged to refinance loans.

The MSCI Asia Pacific Index slipped 0.1 percent to 123.49 this week after gaining 4.9 percent in the previous two weeks. The gauge has advanced 5.4 percent this quarter.

“We’re very concerned about the near-term outlook for the global economic picture,” said Peter Elston, who helps oversee $270 billion as Singapore-based head of Asia-Pacific strategy at Aberdeen Asset Management, said in a Bloomberg Television interview.

“There’s some fairly significant weakness just around the corner and that’s going to have a fairly big impact on corporates and markets.”

The MSCI Asia Pacific index (MXAP) has risen 6.5 percent since Sept. 6 after the European Central Bank started the latest wave of global easing, announcing unlimited bond purchases to curb the debt crisis.

The Bank of Japan announced more asset purchases this week following the Federal Reserve third round of quantitative easing.

Relative Value

The Asian benchmark trades at 12.8 times estimated earnings compared with 14.1 for the Standard & Poor’s 500 Index and 12.1 for the Stoxx Europe 600 Index.

Japan’s Nikkei 225 Stock Average (NKY) dropped 0.5 percent this week even after the nation’s central bank boosted asset purchases to buoy the economy.

Japanese shares slid after a finance ministry report showed the nation’s exports declined for a third month in August.

South Korea’s Kospi Index (KOSPI) slid 0.3 percent, while Australia’s S&P/ASX 200 Index rose 0.4 percent and New Zealand’s NZX 50 Index added 0.5 percent in Wellington.

Hong Kong’s Hang Seng Index gained 0.5 percent. Taiwan’s Taiex Index advanced 0.2 percent. Singapore’s Straits Times Index rose 0.3 percent.

Japanese companies that do business in China dropped, along with their mainland partners, amid demonstrations that erupted after Japan’s cabinet approved the purchase of three uninhabited islands also claimed by China.

Island Dispute

Fast Retailing slid 3.9 percent to 18,060 yen after shutting 42 Uniqlo stores in China as thousands protested in Beijing, Shanghai and other cities.

Outlets were reopened after three days. Nissan plunged 5 percent to 701 yen after rioters torched showrooms and smashed Japanese-branded vehicles, forcing the automaker to shut factories.

Dongfeng Motor Group Co., a mainland partner of Nissan Motor Co., slid 9.9 percent to HK$9.32. Japan Airlines Co., which relisted this week after emerging from bankruptcy, dropped below its initial public offering price as travel boycotts forced it to cut flights.

Stocks also fell after a preliminary purchasing managers index showed China’s manufacturing may contract an 11th month. Angang Steel dropped 8.6 percent to HK$4.08.

Hitachi Construction Machinery Co., which depends on China for about 17 percent of its sales, lost 4.3 percent to 1,316 yen.

Global Easing Asia’s benchmark stock index gained 0.9 percent on Sept. 19 after the Bank of Japan unexpectedly increased its asset- purchase fund to 55 trillion yen ($704 billion) from 45 trillion yen.

Only five of 21 analysts surveyed by Bloomberg News predicted the easing, while 11 expected action by October.

The move followed the Fed’s Sept. 13 announcement it would start a third round of large-scale asset purchase, known as quantitative easing, or QE.

“When America does QE, it puts pressure on other countries to ease because they all have to try to fight their stronger currency,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management.

“I think if America didn’t announce QE last week, the Bank of Japan probably wouldn’t have done anything.”

Among stocks that rose this week, Fortescue Metals surged 21 percent to A$3.61 after arranging $4.5 billion in new debt to refinance bank loans, easing concern the Perth-based company may need to sell assets or stock to repay debt. Trading of the shares was suspended Sept. 14 and Sept. 17.

bloomberg.com

No comments:

Post a Comment