Tuesday, 3 December 2013

Asian Stocks Outside Japan Fall on Fed Tapering Outlook

By Jonathan Burgos & Jasmine Ng - Dec 3, 2013 12:49 AM PT

Asian stocks fell, with the equity gauge excluding Japan heading for its first drop in eight days, as signs the U.S. economy is strengthening fueled speculation that the Federal Reserve will soon start tapering stimulus.
Newcrest Mining Ltd. (NCM)Australia’s biggest gold producer, sank 6.7 percent as bullion traded near a five-month low. Hyundai Motor Co., South Korea’s top carmaker, lost 4.2 percent as November sales fell. Sekisui Chemical Co. surged 7.5 percent inTokyo on a report it developed a material that triples the capacity of electric-vehicle batteries.
Dec. 3 (Bloomberg) -- Jack Ablin, the chief investment officer at BMO Private Bank in Chicago, talks about Federal Reserve policy, its implications for U.S. stocks, and investment strategy. He speaks with Mia Saini on Bloomberg Television's "First Up." (Source: Bloomberg)
The MSCI Asia Pacific ex-Japan Index dropped 0.6 percent to 471.85 as of 5:34 p.m. in Tokyo. The broader regional gauge lost 0.2 percent to 141.34, with eight of its 10 industry groups falling. More than $8 trillion has been added to the value of global equities this year, the most since 2009, as central banks took steps to shore up economies worldwide. U.S. stocks slid yesterday as investors weighed the impact stronger manufacturing data will have on Fed bond buying.
“Economic data over the past few weeks have been progressively coming in better and markets are now in the mood to put good economic news as bad news because that will bring forward any reduction in central-bank support,” Matthew Sherwood, head of investment markets research at Perpetual Ltd., which manages about $25 billion, said by telephone. “There might be a little bit of downward pressure this month.”

Regional Gauges

Hong Kong’s Hang Seng Index retreated 0.5 percent. South Korea’s Kospi index dropped 1.1 percent. Australia’s S&P/ASX 200 Index lost 0.4 percent, while New Zealand’s NZX 50 Index declined 0.2 percent. Taiwan’s Taiex index fell 0.3 percent.
Japan’s Nikkei 225 Stock Average rose 0.6 percent to the highest close since December 2007, while the Topix index gained 0.4 percent. Shares climbed as the yen fell to a six-month low against the dollar.
The FTSE Bursa Malaysia Index (FBMKLCI) gained 0.3 percent, heading for a record close. Tenaga Nasional Bhd. jumped by most in five years after the government allowed the electricity producer to raise prices. Singapore’s Straits Times Index rose 0.1 percent.
China’s Shanghai Composite Index advanced 0.7 percent. The nation’s non-manufacturing purchasing managers’ index fell to 56 last month from 56.3 in October, according to a report released today by the National Bureau of Statistics and the China Federation of Logistics and Purchasing. A reading above 50 indicates expansion.
Australia retail sales increased 0.5 percent in October from the previous month, beating economists estimates, while the current-account deficit for the third quarter widened more than forecast. The Reserve Bank of Australia kept its benchmark rate at a record-low 2.5 percent today, in line with the consensus view of all 30 economists surveyed byBloomberg News.

Relative Value

The Asia-Pacific equity index jumped 9.5 percent this year through yesterday amid signs the global economy is recovering. It traded at 14 times estimated earnings, the highest level since May, according to data compiled by Bloomberg. That compares with 16.3 on the Standard & Poor’s 500 Index last week and 15.2 for the Stoxx Europe 600 Index.
Futures (SPA) on the S&P 500 Index were little changed today. The U.S. equities benchmark index dropped 0.3 percent yesterday amid data that showed manufacturing unexpectedly climbed last month and retail spending fell on the weekend after Thanksgiving for the first time since 2009.
The U.S. Institute for Supply Management’s manufacturing index rose to 57.3 in November, a report yesterday showed, after economists surveyed by Bloomberg called for a drop to 55.1. Four of five investors surveyed last month saying they expect Federal Reserve policy makers to put off cuts to their $85 billion-a-month in bond purchases until March 2014 or later.

Gold Miners

Gold producers dropped after the bullion fell yesterday to the lowest close since June 27 and headed for for its first annual decline in 13 years. Newcrest dropped 6.7 percent to A$7.25. Zijin Mining Group Co., China’s largest producer of the precious metal, dropped 1.7 percent to HK$1.76 in Hong Kong.
Hyundai Motor sank 4.2 percent to 239,000 won in Seoul as falling car sales dampened the outlook for fourth-quarter earnings. Hyundai unit Kia Motors Corp. dropped 5.2 percent to 56,500 won.
Sekisui Chemical rose 7.5 percent to 1,298 yen in Tokyo. The Nikkei newspaper reported that the company developed a cheaper and longer-lasting material for lithium-ion batteries used in electric vehicles.
Tenaga Nasional surged 11 percent to 10.94 ringgit, heading for its biggest advance since June 2008. The government allowed the utility to increase electricity tariffs by an average 15 percent in Peninsular Malaysia.
To contact the reporters on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Jasmine Ng in Singapore at jng299@bloomberg.net
To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net