BackAsia stocks fall as investors weigh timing of Fed stimulus cut
The MSCI Asia Pacific Index slides 0.6% to 139.87, with nine of 10 industry groups falling
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Sydney: Asian stocks fell, with the regional benchmark gauge sliding for the first time in three days, as investors weighed the timing of a reduction in the US Federal Reserve’s unprecedented stimulus.
OZ Minerals Ltd slumped 14% to the lowest close since 2002 after the Australian copper miner forecast production will be lower than estimates. Mazda Motor Corp., a car maker that gets 30% of sales in North America, slipped 1% as the yen gained. China Coal Energy Co., the nation’s No. 2 coal producer, dropped 3.9% in Hong Kong after the government said it plans to curb consumption of the fuel in some areas. Mixi Inc. slumped 17% after the Japanese social-network operator was downgraded at Goldman Sachs Group Inc.
The MSCI Asia Pacific Index slid 0.6% to 139.87 as of 6:44pm in Hong Kong, with nine of 10 industry groups falling. Of economists surveyed by Bloomberg on 6 December, 34% expect the US central bank will begin paring its $85 billion in monthly bond purchases when it meets next week.
“A wave of risk aversion has swept through markets," Matthew Sherwood, Sydney-based head of investment markets research at Perpetual Ltd, which manages about $25 billion, said in an email. “The taper debate is the sole focus of the market at present. I still believe Janet Yellen is unlikely to reduce stimulus until a couple of months into her new role."
Yellen, the current Fed vice-chairman and the nominee to succeed chairman Ben S. Bernanke when his term ends 31 January, has said premature tapering will put the recovery at risk. 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.
Relative value
The MSCI Asia Pacific Index has gained 8.1% this year to trade at 13.8 times estimated earnings, compared with multiples of 16.2 for the S&P 500 and 14.8 for the Stoxx Europe 600 Index as of Tuesday, data compiled by Bloomberg show. The Asia-Pacific benchmark fell 1.8% last week.
Japan’s Topix index dropped 0.5% on Wednesday as the yen extended Tuesday’s advance against the dollar. Mazda lost 1% to 478 yen. Tokyo Electron Ltd, a maker of industrial electronics that gets 24% of sales in the US, fell 2.2% to 5,380 yen.
Australia’s S&P/ASX 200 Index fell 0.8%, declining for a fifth day. New Zealand’s NZX 50 Index slipped less than 0.1%. South Korea’s Kospi index slid 0.8%. Singapore’s Straits Times Index dropped 0.7%, and Taiwain’s Taiex index lost 0.1%.
Hong Kong’s Hang Seng Index fell 1.7%, and China’s Shanghai Composite Index retreated 1.5% as investors speculated the government may cut growth targets at an economic policy meeting this week. India’s S&P BSE Sensex index lost 0.4%.
US budget
S&P 500 futures fell less than 0.1% as a US budget accord was reached to ease the long-criticized automatic spending cuts for the next two years, remove the risk of a government shutdown and cut the deficit by $23 billion.
The US equity measure dropped 0.3% from a record high on Tuesday, as investors weighed the budget negotiations and a report showed US job openings climbed to a five-year high in October, spurring concern the Federal Reserve will cut stimulus sooner than expected.
OZ Minerals tumbled 14% to A$2.65, the lowest since 2002. Copper production in 2014 will be 75,000 metric tons to 80,000 metric tonnes, the company said on Wednesday in a statement.
China Coal Energy dropped 3.9% to HK$4.73. “China will have regional coal consumption control plans for some key areas," Xie Zhenhua, vice-chairman of the National Development and Reform Commission, said at a meeting on Tuesday, according to a statement posted on NDRC website.
China mobile
China Mobile Ltd fell 3.2% to HK$81.40, the biggest drop since 22 October, after Bank of America Corp. Merrill Lynch said it expects demand for iPhones on the carrier’s fourth-generation mobile network to be modest. The stock was also downgraded at Barclays Plc.
Mixi slumped 17% to 7,560 yen at the close after being untraded throughout the day. Goldman Sachs cut Mixi’s rating to sell from neutral, saying the shares have risen too high. The stock surged 661% from 19 November through Tuesday.
Gree Inc. climbed 2.3% to 1,165 yen, paring gains of as much as 20%, after Goldman Sachs raised its outlook on the Japanese mobile-gaming company on wider-than-expected cost cuts. Bloomberg
Anna Kitanaka and Yoshiaki Nohara in Tokyo contributed to this story.
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