Asian Stocks Post Biggest Retreat Since June on Growth Concern

Jan 27, 2014 6:17 am ET

Jan. 27 (Bloomberg) -- Asian stocks declined, with the region’s benchmark index posting its biggest loss since June, as concern that the global economic recovery is faltering spurred investors to sell riskier assets.

Sony Corp. fell 3 percent in Tokyo, pacing losses among Japanese exporters. Tata Motors Ltd., India’s largest automaker by revenue, tumbled 6 percent in Mumbai after Managing Director Karl Slym died in Bangkok. GCL-Poly Energy Holdings Ltd., the world’s largest maker of polysilicon, declined 6.3 percent in Hong Kong after China set a lower-than-expected target for installed solar-energy capacity this year.

The MSCI Asia Pacific Index dropped 2.2 percent to 134.62 at 7:59 p.m. in Tokyo to its lowest level since Sept. 6. The gauge declined for the past four weeks. Japan’s Topix index sank 2.8 percent today. Global stocks tumbled the most since June on Jan. 24 as a selloff in emerging-market currencies prompted investors to seek havens.

“Optimism among global stock investors is waning,” said Tetsuo Seshimo, a Tokyo-based portfolio manager at Saison Asset Management Co., which oversees about $791 million. “Markets are losing momentum after rising a lot toward the end of last year.”

The Asia-Pacific equity gauge is headed for its biggest monthly decline since May after a private gauge of China’s manufacturing dropped to a six-month low in January, adding to signs growth in the world’s second-largest economy is slowing.

‘Elevated’ Valuations

“There are real reasons to be cautious since market valuation is still relatively elevated,” Chris Weston, chief strategist at IG Ltd. in Melbourne, said by phone. “We’ve got numerous issues out of China, with manufacturing beginning to contract.”

The Hang Seng China Enterprises Index of mainland Chinese companies listed in Hong Kong sank 2.2 percent to its lowest level in five months, while the city’s benchmark Hang Seng Index dropped 2.1 percent. China’s Shanghai Composite Index slipped 1 percent.

Trading volume on the Hang Seng Index was 56 percent greater than the 30-day average, while volume was 23 percent above average on the Topix and 70 percent higher on Singapore’s benchmark index, data compiled by Bloomberg show.

South Korea’s Kospi Index fell 1.6 percent to its lowest close since August. Taiwan’s Taiex Index lost 1.6 percent. Singapore’s Straits Times Index declined 1.1 percent. New Zealand’s NZX 50 Index decreased 0.4 percent. Australian markets were closed for a holiday.

Thai Election

Thailand’s SET Index dropped 2 percent. A Thai protester was shot and killed as groups seeking to block early voting for a Feb. 2 election clashed with government supporters, prompting the Election Commission to repeat calls for the ballot to be delayed.

Japan reported a record annual trade deficit for last year as energy shipments and weakness in the yen pumped up the nation’s import bill. The shortfall was 11.5 trillion yen ($112 billion), almost double the previous year’s 6.9 trillion yen, a finance ministry report showed in Tokyo today. Imports rose 25 percent in December from a year earlier and exports gained 15 percent, leaving a monthly deficit of 1.3 trillion yen.

Futures on the S&P 500 added 0.2 percent today. The equity gauge tumbled 2.1 percent Jan. 24 and has declined 3.1 percent this year.

Emerging-Market Volatility

Volatility in emerging-market equities jumped the most in two years last week, with the Chicago Board Options Exchange Emerging Markets ETF Volatility Index climbing 40 percent to 28.26, according to data compiled by Bloomberg. Bearish bets outnumbered bullish ones on the underlying exchange-traded fund by the most since July, with about 60 percent more puts than calls.

Japanese exporters declined after the yen rose 0.9 percent against the dollar on Jan. 24. A stronger currency reduces the overseas income of the nation’s electronics manufacturers and carmakers when repatriated.

Sony fell 3 percent to 1,711 yen. Toyota Motor Corp., the world’s biggest carmaker, slipped 2.1 percent to 6,039 yen. Canon Inc., the largest camera maker worldwide, dropped 2.5 percent to 3,089 yen.

Advantest Corp., a maker of semiconductor-testing devices and electronic measuring instruments, slid 6.1 percent to 1,207 yen on a Nikkei newspaper report that it probably had an operating loss for the nine months ended Dec. 31.

Tata Motors decreased 6 percent to 348.25 rupees in Mumbai. Thailand police said they’re investigating the death of Slym, head of the carmaker’s Indian operations, who fell from the Shangri-La hotel in Bangkok and died.

‘Negative Surprise’

GCL-Poly Energy sank 6.3 percent to HK$2.53 in Hong Kong. China, the world’s biggest solar market, plans to add 10 gigawatts of solar power in 2014, the same as last year’s target, according to a National Energy Administration statement posted on Jan. 24. That’s less than the 14-gigawatt figure reported this month by state television.

“This announcement was a big, negative surprise to the solar sector,” Michael Parker, a senior analyst at Sanford C. Bernstein & Co. in Hong Kong, said in a report today. “If China is able to constrain the market to 10 gigawatt in 2014, that would be an unambiguous negative for the sector.”

China Coal Energy Co. slid 2 percent to HK$3.93 after the nation’s second-largest coal producer said net income last year probably slumped between 55 percent and 65 percent, citing a continuing decline in coal prices. China is seeking to cut its reliance on the fuel as part of an effort to ease air pollution in the country.

--Editors: Sarah McDonald, Richard Frost