Asian Stocks Fall as China Factory-Gate Prices Extend Decline

Jan 09, 2014 8:04 am ET

Jan. 9 (Bloomberg) -- Asian stocks fell as China’s factory- gate prices extended the longest streak of declines since the Asian financial crisis and Federal Reserve minutes showed officials saw diminishing benefits from bond buying.

Great Wall Motor Co., a mainland producer of sport-utility vehicles and pickups, slumped 8.5 percent in Hong Kong after forecasting sales growth would slow this year. Belle International Holdings Ltd., China’s No. 1 seller of footwear, fell 4.2 percent in Hong Kong after surging 13 percent yesterday. Daiei Inc. slumped 7.3 percent in Tokyo as the supermarket operator cut its operating-profit forecast.

The MSCI Asia Pacific Index lost 0.7 percent to 138.88 as of 9:53 p.m. in Tokyo, with about two stocks falling for each that rose. The measure gained 1 percent yesterday, the biggest advance since Nov. 18. The index maintained losses as data showed China’s inflation rate slowed last month by more than economists forecast and an index of producer prices recorded its 22nd straight drop from a year earlier.

China’s “producer prices have been a huge concern,” Jackson Wong, vice president of Tanrich Securities in Hong Kong, said by telephone. “At industrial levels, no one is making money in a negative environment.”

Japan’s Topix index fell 0.7 percent as earnings season began this week in Japan, with about 90 companies listed on the Topix reporting through Friday, data compiled by Bloomberg show.

South Korea’s Kospi index slipped 0.7 percent as the central bank left its key interest rate unchanged for an eighth straight month. Australia’s S&P/ASX 200 Index added 0.2 percent, while New Zealand’s NZX 50 Index gained 0.7 percent. Singapore’s Straits Times Index lost 0.2 percent and Taiwan’s Taiex index slid 0.5 percent.

China Data

Hong Kong’s Hang Seng Index lost 0.9 percent and the Hang Seng China Enterprises Index of mainland shares traded in the city fell 1.7 percent. China’s Shanghai Composite Index dropped 0.8 percent.

China’s consumer-price index rose 2.5 percent in December from a year earlier, the National Bureau of Statistics said in Beijing. That compares with a 2.7 percent median estimate of analysts surveyed by Bloomberg News and a 3 percent increase in November. The producer-price index fell 1.4 percent from a year earlier to record its longest series of losses since the Asian financial crisis in 1997.

Futures on the Standard & Poor’s 500 Index gained 0.3 perrcent today. The equity gauge fell less than 0.1 percent yesterday. Fed officials saw diminishing economic benefits from their bond-buying program and voiced concern about future risks to financial stability during their last meeting, when they began to cut the pace of purchases.

Next Step

Policy makers will gather Jan. 28-29 to consider the next step in their strategy of gradually reducing the pace of bond buying as the economy strengthens. The minutes didn’t describe a set schedule for reductions, although “a few” officials mentioned the need for a “more deterministic path.”

“I don’t think you need to worry much because fundamentals are strong,” said Takashi Miyazaki, general manager of strategic research at Mitsubishi UFJ Asset Management Co., a unit of Japan’s biggest bank. “While policy makers go with tapering, they are keeping risks to the financial market in mind. The U.S. will raise rates eventually after tapering stimulus.”

Companies in the U.S. boosted payrolls by 238,000 in December, figures from ADP Research Institute in Roseland, New Jersey, showed yesterday. The median forecast of economists surveyed by Bloomberg called for a 200,000 advance.

The Labor Department will announce tomorrow figures for new hiring and the unemployment rate for last month.

Great Wall

Great Wall declined 8.5 percent to HK$39.35. The company said it’s targeting a 17 percent increase in sales to 880,000 units this year after sales rose 21 percent to 754,000 units in 2013.

Belle International declined 4.2 percent to HK$9.53, paring yesterday’s surge, after a HSBC Holdings Plc report said the rally showed “irrational exuberance.”

Daiei lost 7.3 percent to 329 yen, the biggest decline since April, after forecasting an operating loss of 6 billion yen, compared to its previous projection for 1 billion yen in operating profit.

Nintendo Co., the maker of Wii U game consoles, lost 2.7 percent to 15,420 yen in Tokyo. The shares surged yesterday to their highest close since July 2011 after China reversed course on a nationwide ban of video-game consoles.

Sony Corp., the maker of Xperia handsets, jumped 3.8 percent to 1,894 yen in Tokyo after Chief Executive Officer Kazuo Hirai said the company will maintain growth in smartphone shipments.

The Asia-Pacific stocks gauge traded at 13.1 times estimated earnings compared with 15.5 for the S&P 500 and 13.8 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

--Editors: Sarah McDonald, Tom Redmond