By Adam Haigh - Nov 5, 2012 8:47 AM GMT+0400
Asian stocks fell as Hyundai Motor Co. and Kia Motors Corp. (000270) slid on findings they overstated claims about gas mileage. Trading volume in the region was below average before tomorrow’s U.S. presidential election.
Hyundai and Kia slumped more than 6 percent in Seoul after saying they will compensate U.S. customers for overstating the fuel efficiency of their latest cars. Rival Toyota Motor Corp. gained 2.1 percent in Tokyo. Foxconn International Holdings Ltd. surged 34 percent in Hong Kong on speculation it will win orders to manufacture parts for Apple Inc.’s iPhone 5.
The MSCI Asia Pacific (MXAP) Index slid 0.4 percent to 122.07 as of 1:05 p.m. in Tokyo. Almost two shares dropped for each that rose on the gauge.
“Many people are not convinced on the rebound in equities of the last few months and you can see this with disappointing volumes,” said Benjamin Tam, who helps manage about $1.5 billion at IG Investment Ltd. in Hong Kong. “I don’t see there being significant change until the political situation stabilizes in China and the U.S., and Europe is still a worry.”
Asia’s benchmark gained 7.6 percent this year through the end of last week as central banks added stimulus to counter a global economic slowdown and the European debt crisis. Shares on the measure trade at 13.2 times average estimated earnings, compared with 13.7 for the Standard & Poor’s 500 Index and 12.3 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Futures on the S&P 500 rose 0.1 percent today. The gauge dropped 0.9 percent even as U.S. payroll growth showed the labor market is recovering.
U.S. Jobs
The Labor Department said 171,000 workers were added to payrolls last month, surpassing the most optimistic forecast in a Bloomberg survey in which the median called for an advance of 125,000. President Barack Obama is leading Republican challenger Mitt Romney by 3 points, according to an Oct. 31-Nov. 3 Pew Research Center survey.
Japan’s Nikkei 225 Stock Average (NKY) lost 0.6 percent today, halting a three-day advance. South Korea’s Kospi slid 0.8 percent, with trading volume 34 percent below the 30-day intraday average. Australia’s S&P/ASX 200 Index gained 0.2 percent.
Hong Kong’s Hang Seng (HSI) retreated 0.4 percent from its highest close this year. The Hang Seng China Enterprises Index of mainland companies lost 0.5 percent. The measure entered a so-called bull market on Nov. 2, rising more than 20 percent from a Sept. 5 low, on speculationChina’s economy is stabilizing.
China’s Transition
The Shanghai Composite Index slipped 0.3 percent, erasing gains after the HSBC Services purchasing managers’ index dropped to 53.5 in October from 54.3 a month earlier.
China’s Communist Party starts its 18th Congress on Nov. 8, when 2,270 delegates meet over several days to pick a new leader. Xi Jinping will probably replace Hu Jintao as general secretary of the party that’s ruled China since 1949.
Hyundai, South Korea’s No. 1 carmaker, lost 7.9 percent to 198,000 won. Kia Motors, the country’s second biggest, slid 7.3 percent to 56,100 won. The companies will have to re-label the window stickers on their cars and trucks for the error of overstating the fuel efficiency of latest models, the U.S. Environmental Protection Agency said Nov. 2.
‘Reputational Loss’
“This could be a game-changing event in Hyundai’s success story,” said James Yoon, a Seoul-based analyst at BNP Paribas SA. “The financial loss is immaterial compared to the potential reputational loss” to its brand.
Japanese carmakers benifitted from the stumble. Toyota gained 2.1 percent to 3,205 yen in Tokyo. Honda Motor Co. advanced 0.7 percent to 2,485 yen.
Singapore Airlines Ltd., the world’s third-largest carrier by market value, lost 1.2 percent to S$10.45 as profit tumbled on a wider loss at its cargo unit. The company plans to pare cargo capacity as it contends with slower trade and competition from Middle East carriers.
Samsung Electronics Co. gained 1.4 percent to 1.35 million won. The smartphone maker may release its next Galaxy S (005930) as early as the second quarter of next year, Maeil Business reported, citing industry officials. Separately, Citigroup Inc. said global smartphone shipments will beat estimates by as much as 30 percent next year.
Foxconn International soared 34 percent to HK$3.67 in Hong Kong, the most in at least seven years. There’s a “high chance” shareholder Hon Hai Precision Industry Co. will allocate iPhone 5 orders to Foxconn, Daiwa Securities Co. analyst Chia-Lin Lu said in a phone interview.
To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
