Asian Stocks Fall Most in Three Weeks on China Services, Yen

Jan 06, 2014 3:36 am ET

Jan. 6 (Bloomberg) -- Asian stocks fell, with the regional benchmark index headed for its biggest loss in more than three weeks, as a gauge of China’s services industries dropped and Japanese shares slumped on a stronger yen.

SoftBank Corp., a Japanese mobile-phone operator, slid 3.5 percent after the rating of Sprint Corp., which SoftBank acquired last year, was cut at Cowen and Company. Fast Retailing Co., Asia’s biggest apparel chain, lost 5.8 percent in Tokyo as the Nikkei 225 Stock Average slipped from a six-year high. China Railway Group Ltd. slumped 4.1 percent in Hong Kong after China’s second-largest rail builder said its president died.

The MSCI Asia Pacific Index slipped 0.9 percent to 139.12 as of 5:18 p.m. in Tokyo, with all of its 10 industry groups falling. The gauge is headed for the biggest loss since Dec. 12. Telecommunication shares led the drop.

This year “is going to be a year of consolidation,” Matthew Sherwood, head of investment markets research in Sydney at Perpetual Investments, which manages about $25 billion, said by telephone. “China’s growth is slowing down structurally. Our expectation out of China’s economy is it will grow just over 7 percent this year.”

The Asia-Pacific gauge added 9.3 percent in 2013, rising for a second straight year, as central banks across the globe acted to spur growth. The measure traded at 13.1 times estimated earnings as of Jan. 3, compared with 15.5 for the Standard & Poor’s 500 Index and 13.7 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

Japanese Stocks

Japan’s Topix index fell 0.8 percent as the nation’s markets reopened following holidays. The JPX-Nikkei Index 400, a stock measure created to boost investment in Japanese companies that provide higher returns on equity, fell 0.8 percent on its debut today.

The Nikkei 225 dropped 2.4 percent as Fast Retailing, the heaviest-weighted stock, lost 5.8 percent to 40,900 yen. Toyota Motor Corp., the world’s biggest carmaker, fell 1.9 percent to 6,300 yen as the yen gained 0.3 percent to 104.54 per dollar.

The Nikkei 225 climbed on Dec. 30 to its highest close since November 2007. The measure capped a 57 percent rally last year, the biggest annual gain since 1972. Bank of Japan Governor Haruhiko Kuroda said the central bank won’t necessarily end or scale back its stimulus program in two years and will continue it until inflation stabilizes at 2 percent, according to an interview in the Yomiuri newspaper on Jan. 1.

“The key for 2014 from Tokyo’s perspective is going to be whether the BOJ can come in,” Sherwood at Perpetual said. “They are going to have to undertake further quantitative easing if they want to keep interest rates low.”

Regional Gauges

South Korea’s Kospi index advanced 0.4 percent, while Australia’s S&P/ASX 200 Index fell 0.5 percent and New Zealand’s NZX 50 Index lost 0.1 percent. Singapore’s Straits Times Index slid 0.4 percent and Taiwan’s Taiex index declined 0.5 percent.

Hong Kong’s Hang Seng Index slid 0.6 percent, while the Hang Seng China Enterprises Index of mainland shares traded in the city, also known as the H-share index, fell 1.4 percent.

China’s Shanghai Composite Index lost 1.8 percent. A private purchasing managers’ index of China’s services industry released today by HSBC Holdings Plc and Markit Economics fell to 50.9 last month from 52.5 in November. A number above 50 indicates expansion.

SoftBank Falls

SoftBank dropped 3.5 percent to 8,880 yen after the rating of Sprint was cut to market perform at Cowen. Cowen analyst Colby Synesael said SoftBank probably won’t purchase the remaining 20 percent of Sprint shares.

China Railway Group Ltd. slumped 4.1 percent to HK$3.75 after saying its President Bai Zhongren died. Operations remain normal as Chairman Li Changjin will assume Bai’s responsibilities before a new appointment, Beijing-based China Railway said in a statement. The company’s bigger rival China Railway Construction Corp. fell 3.8 percent to HK$7.07.

AusGroup Ltd., a mining-services company listed in Singapore, soared 27 percent to 24 Singapore cents after the Perth-based company said it plans to raise S$15.2 million ($12 million) from a share sale.

Futures on the S&P 500 added 0.1 percent today. The measure lost less than 0.1 percent on Jan. 3, falling for a second day. Fed Chairman Ben S. Bernanke said the headwinds that have held back the U.S. economy may be abating, leaving the country poised for faster growth.

U.S. central bank officials said last month they will reduce their monthly purchases of assets to $75 billion from $85 billion starting this month, citing faster-than-estimated economic growth.

--Editors: Tom Redmond, Sarah McDonald