BackMost Asian stocks decline as valuations approach 6-month high
Japan's Topix index fell 0.6% and Australia's S&P/ASX 200 Index added 0.2%
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Sydney:Most Asian stocks fell, dragging the regional benchmark index lower for the first time in three days, after valuations climbed to near the highest level in six months.
Honda Motor Co. slid 0.9% as the yen strengthened against the dollar, weakening the earnings prospects for Japanese carmakers. Doosan Engineering & Construction Co. slumped 15 % after the Korea Economic Daily said the Seoul-based provider of civil engineering and architectural services will sell redeemable convertible preferred shares. Perseus Mining Ltd. rose 5.5% in Sydney, leading a rebound in gold producers after the precious metal climbed.
The MSCI Asia Pacific Index slid 0.1% to 141.68 as of 11:01 am in Hong Kong, with about four shares falling for every three that advanced. The measure rose 9.6% this year through yesterday as investors bet the Federal Reserve will maintain its bond buying into 2014.
People have become a little bit blas bout the risks and that’s creating an environment where we are a little too stretched, Angus Gluskie, who helps oversee about $550 million as a fund manager in Sydney at White Funds Management, said by telephone. The market is ready for a technical pullback and we have taken some money off the table. We are now cautious.
Valuations on the MSCI Asia Pacific Index on Monday climbed to 13.9 times estimated earnings, close to the multiple of 14 reached on 18 November, the highest level since May, according to data compiled by Bloomberg. That compares with 16.3 on Monday on the S&P 500 and 15.2 for the Stoxx Europe 600 Index.
Regional gauges
Japan’s Topix index fell 0.6% and Australia’s S&P/ASX 200 Index added 0.2%. New Zealand’s NZX 50 Index lost 0.3% and South Korea’s Kospi index dropped 0.2%.
Singapore’s Straits Times Index slid 0.1% and Taiwan’s Taiex Index added 0.6%. Hong Kong’s Hang Seng Index climbed 0.1%, while China’s Shanghai Composite lost 0.3%.
Minutes of the Fed’s October meeting released 20 November showed officials may reduce their $85 billion a month of bond buying if the economy improves as anticipated. Stimulus from the Fed has helped the S&P 500 soar 166% since its March 2009 low. The index has advanced 26% this year, poised for its best annual performance in a decade.
Global poll
Four of every five investors expect the Fed will put off a decision to begin reducing monetary stimulus until March 2014 or later, according to a Bloomberg Global Poll of investors, traders and analysts who are subscribers. Just 5% are looking for a move at the central bank’s 17-18 December meeting, the 19 November poll showed.
Bank of Japan governor Haruhiko Kuroda helped drive a 45% surge in Japan’s Topix this year by maintaining unprecedented monetary easing as he and Prime Minister Shinzo Abe sought to jolt the nation out of 15 years of deflation. The Topix is the best performing index of 24 developed markets tracked by Bloomberg.
Most Bank of Japan board members agreed that inflation was likely to reach around 2% toward the latter half of the projection period of between the 2013 and 2015 fiscal years, according to minutes of the 31 October meeting released on Tuesday in Tokyo.
The yen gained 0.2% to 101.44 per dollar, dragging Japanese exporters lower. Honda fell 0.9% to 4,325 and Toyota Motor Corp. retreated 0.9% to ¥6,370.
Gold miners
Perseus Mining advanced 5.5% to 29 Australian cents, rebounding from yesterday’s 5.2% slide. Evolution Mining Ltd. added 1.7% to 61.5 cents, following its 5.5% loss on Monday. Gold rose 0.1 % to $1,253.16 per ounce.
Doosan Engineering slumped 15% to 1,855 won in Seoul. The firm is seeking to sell redeemable convertible preferred shares by year-end to repay matured debt, the Korea Economic Daily reported. Doosan separately said on Monday it will reduce capital to 285.9b won from 2.77t won to help enhance shareholder value.
China Petroleum & Chemical Corp. sank 2.3% to HK$6.67 after Chinese authorities detained seven people from the nation’s biggest refiner following the death of 55 people in a pipeline blast.
Futures on the Standard & Poor’s 500 Index rose 0.1% on Tuesday. The gauge fell on Monday, after seven consecutive weekly gains that boosted the gauge to a record, as energy shares retreated following Iran’s agreement to limit its nuclear program. BLOOMBERG
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