Asian Stocks Are Little Changed Near Six-Year High as Aeon Drops

Jul 07, 2014 6:53 am ET

July 7 (Bloomberg) -- Asian stocks were little changed, as the region’s benchmark index traded just below its highest level in six years, as Aeon Co., shipbuilding and health-care companies retreated.

Aeon sank 5.1 percent in Tokyo, the largest loss on the regional index, after the supermarket operator’s first-quarter profit plunged. Daewoo Shipbuilding & Marine Engineering Co. slid 4.5 percent in Seoul as a brokerage cut its estimate on the shares, citing slowing new orders. TPK Holding Co., a maker of computer screens, fell 4.5 percent in Taipei. Astellas Pharma Inc. paced losses as health-care shares declined.

The MSCI Asia Pacific Index lost less than 0.1 percent to 147.56 as of 6:51 p.m. in Hong Kong as six of its 10 industry groups fell. Futures on the Standard & Poor’s 500 Index slid 0.2 percent, with U.S. trading resuming today after a holiday. International Monetary Fund Managing Director Christine Lagarde signaled a cut in the institution’s global economic growth forecasts, saying investment is still weak and that risks remain in the U.S. even as its rebound accelerates.

“Investors are in a wait-and-see mood,” after Lagarde’s comments, said Yutaka Miura, a senior technical analyst at Mizuho Securities Co. in Tokyo. “There’s a lack of catalysts to buy.”

Japan’s Topix index retreated 0.4 percent, with Aeon falling 5.1 percent to 1,190 yen. Australia’s S&P/ASX 200 Index slipped 0.1 percent and Hong Kong’s Hang Seng Index closed little changed. Trading volume in the region’s three largest developed markets was at least 20 percent lower than average today.

Hong Kong

The Shanghai Composite Index was little changed. South Korea’s Kospi index declined 0.2 percent, while New Zealand’s NZX 50 Index dropped 0.1 percent. Singapore’s Straits Times Index advanced 0.6 percent and Taiwan’s Taiex index rose 0.1 percent, with TPK falling 4.5 percent to NT$275. India’s S&P BSE Sensex Index added 0.5 percent.

Asian shares last week posted an eighth straight weekly gain, the longest winning streak since 2012. The S&P 500 closed at a record high and Japan’s Topix index climbed to its best close in five months. Hong Kong’s Hang Seng Index gained the most in a month last week amid signs that Chinese growth is stabilizing.

The MSCI Asia Pacific Index trades at 13.5 times estimated earnings, compared with 16.1 for the MSCI World Index, according to data compiled by Bloomberg.

While Chinese manufacturing data this month showed growth is stabilizing in the world’s second-largest economy, the IMF says the global economy may grow at a slower pace than previously forecast.

Global Threats

“The global economy is gathering speed, though the pace may be a bit less than we previously predicted because the growth potential is lower and investment” spending remains lackluster, Lagarde told the Cercle des Economistes conference in Aix-en-Provence, France.

Her remarks underline the threats to global economic growth at a time when the U.S. Federal Reserve is trimming stimulus and the European Central Bank faces inflation that is less than half its targeted level. The IMF is preparing to update its economic forecasts this month after predicting April 8 that the global economy will expand 3.6 percent this year and 3.9 percent in 2015.

“I don’t see a global slowdown,” Mark Matthews, Singapore-based head of Asia research for Bank Julius Baer & Co., which oversees about $377 billion, said in a Bloomberg TV interview. “There are enough good stories here in Asia. Money should be looking to invest here.”

Daewoo Shipbuilding lost 4.5 percent to 25,550 won in Seoul. Woori Investment analyst Yu Jae Hun cut a forecast on the shares, citing slowing new orders for offshore vessels, according to report dated today.

Wotif.com Holdings Ltd surged 25 percent to A$3.29 in Sydney after Expedia Inc., an online travel-booking service, agreed to buy the Australian travel agency for A$703 million ($658 million), seeking to expand its presence in the Asia- Pacific region.