Asian stocks slide to three-month low before Fed policy meeting

TOKYO, Dec 16 — Asian stocks fell for a fourth day, reaching a three-month low, after a gauge of Chinese manufacturing fell and as investors awaited a Federal Reserve meeting starting tomorrow to gauge the timing of stimulus cuts.

Toyota Motor Corp., Asia’s largest carmaker, slid 1.9 per cent, as Japanese exporters dropped as the yen advanced against the dollar. Senex Energy Ltd. sank 8.4 per cent after its A$752 million (RM2.2 billion) initial takeover proposal for AWE Ltd. was rejected by the oil and gas explorer. AWE shares surged 7.2 per cent. Tokyo Electric Power Co. gained 1 per cent on a report the government plans to double interest-free loans to the utility.

The MSCI Asia Pacific Index lost 0.7 per cent to 136.95 as of 7:32pm in Hong Kong, for its lowest close since September 9. The measure dropped 1.1 per cent last week, a second week of declines, as improving US economic data spurred bets stimulus will be reduced. The Fed will start paring US$85 billion of monthly bond purchases this week, according to 34 per cent of economists surveyed December 6 by Bloomberg. Futures on the Standard & Poor’s 500 Index added 0.4 per cent today.

“The market is very divided on whether the Fed will announce any changes,” Stewart Richardson, who helps oversee about US$100 million as chief investment officer at RMG Wealth Management LLP in London, said in an e-mail. “Equity markets seem to be behaving a little more bearishly in the run-up to this meeting compared to September.”

Manufacturing data

China’s Shanghai Composite Index slipped 1.6 per cent. A Chinese manufacturing index unexpectedly fell to a three-month low as output gains eased and employment weakened, suggesting the world’s second-largest economy is vulnerable to a slowdown.

The HSBC Holdings Plc/Markit Economics preliminary manufacturing purchasing managers’ index for China fell to 50.5 in December, missing the 50.9 estimate in a Bloomberg survey after coming in at 50.8 in November. Readings above 50 signal expansion. China set a economic growth target of about 7.5 per cent for 2014, the same as this year’s goal, Caixin reported on its website, citing a decision from the central economic work conference ended Dec. 13.

Hong Kong’s Hang Seng Index slid 0.6 per cent, while the Hang Seng China Enterprises Index declined 0.9 per cent. Singapore’s Straits Times Index fell 0.4 per cent, and Taiwan’s Taiex Index lost 0.8 per cent.

Japan’s Topix index slid 1.3 per cent. Australia’s S&P/ASX 200 Index fell 0.2 per cent, while New Zealand’s NZX 50 Index rose 0.4 per cent. South Korea’s Kospi index added 0.1 per cent.

Japan’s Tankan

Japan’s quarterly Tankan index for large manufacturers rose to the highest since 2007, climbing to 16 from 12 in September, according to the Bank of Japan, beating estimates for a reading of 15 in a Bloomberg poll. Positive figures indicate optimists outnumber pessimists.

India’s S&P BSE Sensex Index fell 0.3 per cent, its fifth day of losses. The nation’s wholesale inflation was faster than economists estimated in November, reaching a 14-month high and adding pressure for a further increase in the benchmark interest rate this week to quell price pressures.

The MSCI Asia Pacific Index has gained 5.9 per cent this year as central banks added stimulus to shore up growth globally. The Asia-Pacific gauge trades at 13.5 times estimated earnings, compared with 16 for the S&P 500 and 14.7 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

The Topix rose 42 per cent this year, the most among 24 major developed markets tracked by Bloomberg, amid unprecedented stimulus by the Bank of Japan in support of Prime Minister Shinzo Abe’s efforts to end 15 years of deflation.

US economy

The Fed has said it won’t cut stimulus until it sees signs of sustainable economic recovery. Unemployment has since fallen to a five-year low and third-quarter GDP growth was stronger than expected.

“There won’t be any move until 2014” to reduce stimulus, Richard Gibbs, global head of economics at Macquarie Group Ltd., told Bloomberg TV in Sydney. “The underlying resilience of the US labour market is not as strong as a lot of commentators would have you believe.”

Exporters dropped. Toyota Motor slid 1.9 per cent to ¥6,060. Honda Motor Co., which gets almost half its revenue in North America, dropped 2.8 per cent to ¥4,060.

Askul Corp. tumbled 6.7 per cent to ¥3,050 in Tokyo after profit at the seller of office equipment dropped 70 per cent.

CP Lotus Corp., a Chinese operator of hypermarkets, dropped 4.3 per cent to 20.2 Hong Kong cents after competitor Wumart Stores Inc. said it won’t proceed with plans to buy stores from CP Lotus just two months after the companies announced the deal. Wumart closed unchanged at HK$10.94 after falling as much as 7.7 per cent earlier.

Sensex bid

AWE surged 7.2 per cent to A$1.27. Brisbane-based Senex offered the equivalent of A$1.44 a share, 22 per cent more than the closing price of A$1.185 last week. Senex, which withdrew its bid according to a separate statement, lost 8.4 per cent to 70.5 Australian cents.

Tokyo Electric Power gained 1 per cent to ¥524. The government plans to increase interest-free loans to the owner of the crippled Fukushima Dai-Ichi nuclear power plant to as much as ¥10 trillion. — Bloomberg