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Asian Stocks Extend January Rout After China Factory Data

By Adam Haigh
February 03, 2014 1:21 AM EST 11 Comments
Pedestrians walk past an electronic stock board outside a securities firm in Tokyo. Japan’s Nikkei 225 Stock Average, which slid 8.5 percent last month for the biggest drop among 24 developed markets tracked by Bloomberg, retreated 0.9 percent today.
Photographer: Tomohiro Ohsumi/Bloomberg
Pedestrians walk past an electronic stock board outside a securities firm in Tokyo. Japan’s Nikkei 225 Stock Average, which slid 8.5 percent last month for the biggest drop among 24 developed markets tracked by Bloomberg, retreated 0.9 percent today.

Asian stocks fell, with Japan’s Nikkei 225 Stock Average extending its slump from its close on the final day of 2013 to 10 percent, after a slowdown in Chinese manufacturing growth added to concern the global economic recovery is faltering.

Hokkaido Electric Power Co. (9509) slumped 9 percent, leading losses on the MSCI Asia Pacific Index, as the Japanese utility forecast a full-year loss. Treasury Wine Estates Ltd. sank 3.6 percent in Sydney, extending last week’s 20 percent decline after the maker of Penfolds Grange wine said earnings fell. Fanuc Corp. advanced 3.3 percent in Tokyo after orders at the factory-robotics maker topped projections.

The MSCI Asia Pacific Index lost 1.1 percent to 133.30 at 3:11 p.m. in Tokyo, heading for the lowest close since Sept. 5. More than three shares fell for each that rose. The measure dropped 4.6 percent in January for its third straight monthly decline. A global rout wiped about $1.9 trillion from the value of listed equities last month, spurred by weaker-than-expected economic data from China and a selloff in emerging-market currencies.

“We’re seeing the contagion coming through,” said Steve Brice, chief investment strategist at Standard Chartered Plc in Singapore. “There certainly isn’t going to be a crisis but the short-term weakness looks likely to continue for now.”

Regional Gauges

Japan’s Nikkei 225 sank 2 percent, to a level 10 percent below its six-year high reached on Dec. 30. The gauge lost 8.5 percent last month for the biggest drop among 24 developed markets tracked by Bloomberg. That comes after the measure surged 57 percent last year, the biggest annual gain since 1972, as Prime Minister Shinzo Abe and the Bank of Japan took action to combat deflation.

The broader Topix index also retreated 2 percent today and the Kospi index in South Korea, where markets were shut on the final two days of last week, declined 1.1 percent. Singapore’s Straits Times Index sank 1.1 percent, poised for the lowest close since November 2012. Australia’s S&P/ASX 200 Index was little changed and New Zealand’s NZX 50 Index dropped 0.5 percent.

Markets in China, Hong Kong, Malaysia, Taiwan and Vietnam are closed today amid the Chinese New Year holidays.

Of the 190 companies on the MSCI Asia Pacific Index that have reported earnings since the beginning of January and for which estimates are available, half missed analyst estimates for profit, according to data compiled by Bloomberg.

The MSCI Asia Pacific index traded at the end of last week at 12.7 times estimated earnings, compared with a multiple of 15.2 for the Standard & Poor’s 500 Index and 13.7 for the Stoxx Europe 600 Index.

China Data

China’s Purchasing Managers’ Index was at 50.5, the National Bureau of Statistics and China Federation of Logistics and Purchasing said Feb. 1 in Beijing. That matched the median estimate of analysts surveyed by Bloomberg News and compared with December’s 51 reading. Numbers above 50 signal expansion.

The survey showed jobs and export orders shrinking, amplifying risks of a deeper slowdown as Communist Party leaders clamp down on the $6 trillion shadow-banking industry and interbank borrowing costs rise. A separate private manufacturing gauge released by HSBC Holdings Plc and Markit Economics on Jan. 30 pointed to the first contraction in six months.

Futures on the S&P 500 were little changed. The gauge last week completed a third straight loss, the longest slump since 2012, after the Fed cut stimulus even as a rout in emerging markets spurred concern about the global economy.

Utilities declined. Hokkaido Electric sank 9 percent to 984 yen, the biggest drop among the power producers. The utility forecast a full-year net loss of 77 billion yen ($754 million) and said it won’t pay a dividend.

Kansai, Kyushu

Kansai Electric Power Co. (9503) slumped 7.8 percent to 1,024 yen after its forecast of a 98 billion yen net loss was wider than analysts expected. Kyushu Electric Power Co. slid 4.5 percent to 1,134 yen after projecting a 125 billion yen net loss for the year.

There may be short-term share weakness for utilities including Hokkaido Electric after disappointing earnings, Citigroup Inc. analysts Takashi Miyazaki and Takayuki Naito wrote in a report dated Jan. 31.

Treasury Wine slid 3.6 percent to A$3.51, the lowest close since February 2012. The company said last week that profit before interest, tax and other items dropped to between A$42 million and A$46 million in the six months ended Dec. 31, from A$73.4 million a year earlier, as China’s crackdown on official gift-giving curbed demand for premium vintages. The announcement prompted its shares to fall by a record.

Daiwa Securities Group Inc. fell 4.9 percent to 923 yen, the most in more than seven months, as a slump in Japanese stock prices threatens to crimp trading commissions and curtail earnings growth at the nation’s second-biggest brokerage.

Fanuc rose 3.3 percent to 17,315 yen. Orders increased 19 percent for the quarter, more than a projection by Credit Suisse Group AG analyst Shinji Kuroda.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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