Monday, 27 August 2012

Asian Stocks Fall On Japan Growth Downgrade, Fed Policy

By Jonathan Burgos - Aug 28, 2012 8:06 AM GMT+0400

Asian stocks fell, with the regional benchmark index heading for a three-week low, after Japandowngraded its assessment of the world’s third-biggest economy and as investors await indications of policy direction from the Federal Reserve.
Shikoku Electric Power Co. (9507) sank 8.5 percent in Tokyo after Credit Suisse Group AG rated the stock underperform. China Southern Airlines Co. fell 4.2 percent in Hong Kong as Asia’s biggest carrier by passenger numbers reported first-half profit tumbled. Newcrest Mining Ltd. slipped 3 percent in Sydney after saying production at its Lihir gold mine in Papua New Guinea was suspended amid a dispute with landowners.
The MSCI Asia Pacific Index (MXAP) dropped 0.6 percent to 119.14 as of 1:04 p.m. in Tokyo, heading for its lowest close since Aug. 6. About two shares fell for each that rose on the gauge. The measure climbed 10 percent from a June low through yesterday on bets the U.S., Europe and China will take action to propel economic expansion. Investors are awaiting Federal Reserve Chairman Ben S. Bernanke’s speech on Aug. 31 at an annual economic symposium in Jackson Hole, Wyoming.
“There’s no fundamental basis in doing another quantitative easing,” said Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees about $8 billion. “The U.S. economy has pretty good momentum.”
Spending by U.S. consumers probably climbed in July by the most in five months, easing concern the biggest part of the economy is backsliding, economists said before a report on Aug. 30. Revised second-quarter gross domestic product to be released tomorrow by the Commerce Department may show the world’s biggest economy grew faster than initially estimated.

Japanese Economy

Japan’s Nikkei 225 Stock Average (NKY) lost 0.6 percent, reversing earlier gains of as much as 0.6 percent. The government lowered its assessment of the Japanese economy, cutting its view on personal consumption, home-building, exports, imports and industrial production, according to a monthly report released by the Cabinet Office in Tokyo today.
South Korea’s Kospi slid 0.3 percent, while Hong Kong’s Hang Seng Index fell 0.2 percent. China’s Shanghai Composite Index and Australia’s S&P/ASX 200 Index both added 0.1 percent.
Futures on the Standard & Poor’s 500 Index slid 0.2 percent today. The gauge fell 0.1 percent yesterday amid doubts the Federal Reserve will announce further economic stimulus.

Bernanke Speech

Bernanke probably won’t use his Aug. 31 speech at the Fed’s annual symposium in Jackson Hole to suggest a third round of bond buying is at hand, according to economists such asMichael Feroli at JPMorgan Chase & Co. and James O’Sullivan at High Frequency Economics.
The MSCI Asia Pacific Index fell 7.1 percent from this year’s high on Feb. 29 through yesterday. Stocks on Asia’s benchmark index were valued at 12.5 times estimated earnings on average, compared with 13.7 for the S&P 500 and 11.7 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Shikoku Electric lost 8.5 percent to 1,021 yen. Kyushu Electric Power Co. declined 7.4 percent to 640 yen. Credit Suisse rated both utilities underperform in new coverage of the shares.
China Southern Airlines retreated 4.2 percent to HK$3.45 as first-half profit slumped 85 percent.
Newcrest Mining, Australia’s largest gold producer, lost 3 percent to A$26.41. A dispute with the Lihir Mining Area Landowners Association required the plant to be suspended until differences are resolved, Newcrest said today in a statement.
Aozora Bank Ltd. (8304) surged 16 percent to 243 yen, the most since November 2008, after the lender said it plans to repay public funds.
To contact the reporter on this story: Jonathan Burgos in Singapore at
To contact the editor responsible for this story: Nick Gentle at