Asian Stocks Plunge on U.S. Manufacturing, Extending Global Rout

Feb 04, 2014 6:41 am ET

Feb. 4 (Bloomberg) -- Asian stocks fell, with the regional benchmark index dropping the most since June, after data showing weaker-than-expected growth in U.S. manufacturing helped extend a rout that wiped about $2.9 trillion from the value of global equities this year.

Toyota Motor Corp., a carmaker that gets about a third of sales in North America, sank 5.7 percent after the yen strengthened against the dollar and the company’s U.S. sales fell more than forecast. Japan’s Topix index slumped 4.8 percent, capping a 13 percent slump from a Jan. 8 high. Newcrest Mining Ltd. rose 4.7 percent after gold advanced, boosting precious-metal producers.

The MSCI Asia Pacific Index lost 2.8 percent to 130.22 as of 7:05 p.m. in Hong Kong, its lowest close since Aug. 30. All 10 industry groups on the gauge declined and volumes were more than 50 percent larger than usual in most major markets. The measure dropped 4.6 percent in January for its worst start to a year since 2009 as economic data from China missed estimates and emerging-market currencies slumped.

“After a few poor data points, markets may well decide to weaken here for a few more days or weeks,” Angus Gluskie, who helps oversee about $550 million as a fund manager at White Funds Management in Sydney, said by phone. “There might be some further nerves out there. People are alert to some of the risks in China and some emerging economies, but at this stage very few people are concluding that it is going to run away too far.”

Regional Gauges

Japan’s Nikkei 225 Stock Average plunged 4.2 percent as all but two stocks on the measure fell. The gauge lost 8.5 percent last month for the biggest drop among 24 developed markets tracked by Bloomberg. It surged 57 percent last year, the steepest annual gain since 1972, as Prime Minister Shinzo Abe and the Bank of Japan took action to combat deflation. Volume on the Nikkei 225 was 59 percent above the 30-day average.

The Tokyo Stock Exchange Mothers Index of smaller Japanese companies sank 10 percent, extending a two-day slump to 17 percent. Toyota shares slid 5.7 percent to 5,500 yen.

Hong Kong’s Hang Seng Index fell 2.9 percent with volume 61 percent above the 30-day average. The index entered a correction after completing an 11 percent decline from its highest level of 2013 reached in December. The Hong Kong China Enterprises Index sank 3.1 percent today as both gauges resumed after Lunar New Year holidays.

South Korea’s Kospi index fell 1.7 percent. Singapore’s Straits Times Index declined 0.8 percent and New Zealand’s NZX 50 Index dropped 1 percent. Markets in mainland China, Taiwan and Vietnam were closed for holidays.

Australian Rates

Australia’s S&P/ASX 200 Index lost 1.8 percent as the nation’s central bank left its key interest rate at a record low of 2.5 percent. The decision was predicted by all 32 economists in a Bloomberg survey.

Of the companies on the MSCI Asia Pacific Index that have reported quarterly earnings since the beginning of January and for which estimates are available, 52 percent beat analyst estimates for profit, according to data compiled by Bloomberg.

Futures on the S&P 500 rose 0.4 percent today. The gauge fell 2.3 percent yesterday in New York, the lowest close since Oct. 17, as all but nine stocks on the measure retreated. The Dow Jones Industrial Average lost 2.1 percent. Data showed factory activity in the U.S. expanded in January at the weakest pace in eight months as orders slumped, a sign manufacturing cooled at the start of the year along with the weather.

Factory Index

The Institute for Supply Management’s factory index decreased to 51.3 from 56.5 the prior month, the Tempe, Arizona- based group’s report showed. The median forecast of 85 economists surveyed by Bloomberg called for a decrease to 56. Readings above 50 indicate expansion.

There are “fresh concerns about the strength of the global economy,” Matthew Sherwood, who helps manage about $25 billion as Sydney-based head of investment markets research at Perpetual Ltd., said by e-mail. “The risk-off sentiment is now well entrenched across the globe. U.S. manufacturing data disappointed even the most pessimistic economist and this suggests that we are not at the end of this recent bout of market volatility.”

Record Tumble

Nippon Paint Co. plunged 21 percent to 1,337 yen after saying it would sell about 102 billion yen ($1 billion) in shares. That’s the biggest tumble for the paintmaker since at least 1974. It posted the largest drop on the Asia-Pacific equities index.

Lenovo Group Ltd. sank 16 percent to HK$8.41 after five brokerages from Morgan Stanley to UBS AG cut their ratings on the world’s largest maker of personal computers, which announced $5 billion of deals last month to bolster its server and smartphone businesses.

Among shares that rose, Newcrest gained 4.7 percent to A$10.16. Beadell Resources Ltd. climbed 0.7 percent to 74.5 Australian cents. Gold climbed as much as 1.8 percent to $1,266.41 an ounce yesterday.

REA Group Ltd. surged 5 percent to A$43.78 as profit and sales at the online property website owner climbed more than analysts had forecast.

--With assistance from Yoshiaki Nohara in Tokyo. Editors: John McCluskey, Sarah McDonald