Asia Stocks Fall Amid Ukraine Tension, China Economy Data

04-Mar-2014 Intellasia | Bloomberg | 6:00 AM Print This Post

Asian stocks fell and measures of equity volatility surged amid escalating geopolitical tension over Ukraine and after an official gauge of Chinese manufacturing dropped to an eight-month low.

BHP Billiton Ltd (BHP), the world’s largest mining firm, lost 1.1 percent in Sydney as raw-materials shares posted the largest drop among the regional index’s 10 industry groups. Mazda Motor Corp., an automaker that gets 73 percent of sales overseas, tumbled 4.1 percent in Tokyo as the yen touched an almost one-month high against the dollar. China’s Shanghai Composite Index (SHCOMP) rose for a fourth day amid speculation lawmakers will announce measures to reform state-owned companies during an annual meeting this week.

The MSCI Asia Pacific Index slid 1 percent to 136.52 as of 12:16 p.m. in Hong Kong. Futures on the Standard & Poor’s 500 Index lost as much as 1.1 percent, the biggest decline in a month, after the equity gauge rose to a record at the end of February. US Secretary of State John Kerry said he is preparing to visit Kiev as Russia seized control of Ukraine’s Crimea region, intensifying one of the most serious standoffs since the Cold War ended.

“The immediate concern for markets is the possibility of escalation,” Ric Spooner, Sydney-based chief analyst at CMC Markets, said in an e-mail. “While most consider it unlikely that the West will be drawn into this conflict other than diplomatically, some hedging and de-risking of portfolios is not unusual in these situations.”

China Manufacturing

Asian shares last week posted a third week of gains, completing the first monthly advance since October, as company profit forecasts and takeover speculation in the technology industry outweighed concern that the region’s biggest economy is slowing. China’s Purchasing managers’ Index fell to 50.2, the lowest since June, the National Bureau of Statistics and China Federation of Logistics & Purchasing said March 1 in Beijing.

Japan’s Topix index lost 1.7 percent as the yen rose 0.4 percent to 101.42 per dollar. Mazda slid 4.1 percent to 469 yen, while Nissan Motor Co. declined 2.2 percent to 891 yen.

Australia’s S&P/ASX 200 Index (AS51) fell 0.5 percent and New Zealand’s NZX 50 Index gained 0.1 percent. South Korea’s Kospi index dropped 0.8 percent, while Hong Kong’s Hang Seng Index slid 0.7 percent. Singapore’s Straits Times Index declined 0.8 percent, and Taiwan’s Taiex Index lost 0.5 percent.

Gauges of equity volatility surged across the region. The HSI Volatility Index, which measures the cost of options on Hong Kong’s Hang Seng Index, rose 5.9 percent, poised for the biggest increase in a month. Japan’s Nikkei Stock Average Volatility Index gained 10 percent, the biggest intraday advance since January 30.

Ukraine Crisis

A situation in Ukraine has deteriorated as Russian President Vladimir Putin won parliamentary backing to send troops into its southern neighbour. Crimea, where Russian speakers comprise the majority, has become the focal point of Ukraine’s crisis after an uprising that triggered last month’s overthrow of President Viktor Yanukovych. Ukraine has put its forces on combat readiness and US President Barack Obama warned Russia not to intervene.

Gold producers climbed as investors sought assets considered a haven. Bullion for immediate delivery climbed as much as 1.4 percent to $1,344.87 an ounce. Newcrest Mining Ltd gained 5.3 percent to A$11.94. Zijin Mining Group Co. advanced 1.2 percent to HK$1.71.

The MSCI Asia Pacific Index climbed 5.9 percent from this year’s low on February 4 through last week, leaving the gauge trading at 13 times the estimated earnings of its constituent companies, compared with 15.8 for the S&P 500 and 14.6 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

People’s Congress

The Shanghai Composite Index rose 0.8 percent, with volume 36 percent above its 30-day average for this time of day, ahead of the National People’s Congress annual meeting beginning March 5. The latest meeting of the legislature, the first to be overseen by President Xi Jinping and Premier Li Keqiang, comes as leaders pledge to give markets a “decisive” role in the economy.

Investors will be watching the NPC meeting for clues to the next steps to fix local-government finances, charge market prices for natural resources, rein in shadow-banking risks, free up deposit rates and open up state businesses to private investment.

“There is speculation the upcoming NPC meetings will announce reforms,” said Wu Kan, a money manager at Dragon Life Insurance Co., which oversees about $3.3 billion.

The China PMI reading of 50.2 for February compared with January’s 50.5 reading and the 50.1 median analyst estimate in a Bloomberg News survey. A number above 50 signals expansion. A private gauge released today showed manufacturing contracting for a second month in February.

G-8 Meeting

The US, the UK and Canada are suspending preparations for a meeting of the Group of Eight industrial nations in Russia in June. Russia may lose its membership of the G-8, while the US is considering imposing sanctions, Secretary of State Kerry said yesterday.

Sun Hung Kai Properties Ltd, Hong Kong’s second-largest developer, dropped 2.6 percent to HK$96.70 after saying it may raise as much as HK$22.2 billion ($2.9 billion) from issuing convertible warrants.

Sun Art Retail Group Ltd climbed 6.7 percent to HK$9.41 after China’s largest hypermarket operator posted a 15 percent gain in full-year profit, leading gains on the MSCI Asia Pacific Index today.


Category: FinanceAsia

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