Tuesday, 1 October 2013

Asian Stocks Rise as Investors Weigh Shutdown, Sales Tax

By Jonathan Burgos & Yoshiaki Nohara - Oct 1, 2013 12:17 PM GMT+0400
Asian stocks rose, paring yesterday’s slump that was the biggest in a month, as investors weighed the impact of a U.S. government shutdown and Japan’s decision to proceed with asales-tax increase.
NSK Ltd., a Japanese bearings maker, jumped 3.3 percent after boosting its net-income forecast by 13 percent. Ube Industries Ltd., a chemical maker, soared 6 percent in Tokyo. Kalbe Farma Tbk. led gains on the Asian benchmark index, with the Indonesian drugmaker surging 7.6 percent after plunging 9.2 percent yesterday.
Oct. 1 (Bloomberg) -- Martin Lakos, a Sydney-based director at Macquarie Private Wealth, talks about Reserve Bank of Australia monetary policy. He also discusses the outlook for global financial markets as investors awaited a potential shutdown of the U.S. government. He speaks with Susan Li on Bloomberg Television's "First Up." (Lakos spoke before the House voted 228-201 to pass its third version of a short-term extension of government funding in the past 10 days. Source: Bloomberg)
The MSCI Asia Pacific Index rose 0.3 percent to 139 as of 4:45 p.m. in Tokyo, with all but two of the 10 industry groups advancing. The measure yesterday fell 1.6 percent, the most since Aug. 20. Japan will raise its sales tax in April to 8 percent from 5 percent, Abe said today. U.S. lawmakers passed a midnight deadline without reaching a compromise to keep funding the government. Both sides of U.S. politics also are still in dispute over raising the nation’s $16.7 trillion debt ceiling.
“Abe showed his leadership with the sales-tax decision, removing one uncertain factor,” said Ayako Sera, Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd. “But I don’t think the reaction will last long, as the tax increase was expected. A bigger issue is the U.S. Congress. The government has started a shutdown, making it hard for investors to make a move.”

Sales Tax

Japan’s Topix index fell 0.1 percent, after earlier rising as Abe confirmed the first sales tax increase since 1997. The prime minister told reporters he will unveil stimulus measures later today to counteract the impact on the economy. The Nikkei 225 Stock Average added 0.2 percent.
The Bank of Japan reported today its quarterly Tankan index for large manufacturers rose to 12 in September, the highest since 2007, from 4 in June, exceeding the reading of 7 expected by economists surveyed by Bloomberg News.
Australia’s S&P/ASX 200 Index fell 0.2 percent as the central bank kept its key interest rate at a record low. South Korea’s Kospi index rose 0.1 percent and Singapore’s Straits Time Index gained 0.5 percent. Taiwan’s Taiex index and New Zealand’s NZX 50 Index both rose 0.2 percent. Financial markets in Hong Kong and China are closed today.
China’s official gauge of manufacturing, the Purchasing Managers’ Index, climbed to 51.1 in September from 51 in August, the National Bureau of Statistics reported today, rising less than economists had forecast.

September Advance

The MSCI Asia Pacific Index advanced 6.4 percent in September, pushing valuations on the regional gauge to 13.5 times estimated earnings yesterday from 12.7 in August, according to data compiled by Bloomberg. That compares with 15.3 for the Standard & Poor’s 500 Index and 14.2 for the Stoxx Europe 600 Index, the data show.
Futures on the S&P 500 index added 0.4 percent today after the gauge declined 0.6 percent yesterday. The U.S. government began a partial shutdown at midnight Washington time for the first time in 17 years, putting as many as 800,000 federal employees out of work, closing national parks and halting some public services.
“Politicians seem to believe that there’s political capital to be gained from causing the government to shut down, and that they’ll be able to gain more when it comes to the debt-ceiling debate,” John Baur, Boston-based portfolio manager at Eaton Vance Management, which oversees $261 billion globally, said in an interview in Singapore. “The debt-ceiling debate is the real deal that we need to be worried about.”

Telcos, Tepco

The telecommunication services sector gained the most among the 10 industry groups of the MSCI Asia Pacific Index while utilities led declines. True Corp. Pcl, a Thai telecommunications provider, gained 4.5 percent to 8.1 baht. SK Telecom Co. added 2.5 percent to 224,000 won inSeoulTokyo Electric Power Co., the owner of the crippled Fukushima Dai-Ichi nuclear power plant, declined 4.1 percent to 586 yen, leading the drop among utilities.
NSK gained 3.3 percent to 1,034 yen after boosting forecasts for sales, earnings and its dividend. Ube Industries Ltd. soared 6 percent to 196 yen after Citigroup Inc. said the company’s cut to its profit forecast was within expectations.
Kalbe Farma surged 7.6 percent to 1,270 Indonesian rupiah, rising the most on the MSCI Asia Pacific measure. The shares plunged 9.2 percent yesterday, the biggest decline since September 2011.
To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net
To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net