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Asian stocks fall most in five weeks after US equities decline

LiveMint logoLiveMint 12-06-2014 Jonathan Burgos

Singapore: Asian stocks fell, with the regional benchmark index set for its biggest decline in five weeks, as investors weighed valuations after US equities declined.

Nintendo Co. dropped 2.1%, pacing declines among Japanese exporters after the yen held gains versus major peers as the Bank of Japan (BoJ) began a two-day policy meeting. Takata Corp., a maker of airbags, lost 3.2% in Tokyo, extending Wednesday’s rout, after saying further fixes may be needed for its products. SK Hynix Inc. gained 2.2% in Seoul after Samsung Securities Co. and Woori Investment and Securities Co. raised their share-price forecast on the world’s second-largest maker of memory chips.

The MSCI Asia Pacific Index dropped 0.6% to 143.67 as of 9.47am in Hong Kong, with all of its 10 industry groups falling. The measure rebounded 11% to a six-year high through Wednesday from this year’s low in February amid signs China’s economy is stabilizing and the US recovery is intact. Shares on the gauge traded at 13.3 times estimated earnings on Wednesday, compared with a multiple of 16.4 for the Standard & Poor’s 500 Index and 15.5 for the Stoxx Europe 600 Index.

“We’re going to see a bit of a downside following a slide in US equities,” Chris Weston, chief market strategist at IG Ltd in Melbourne, said by phone. “A pullback in developed markets would be very positive as it will help bring fresh money in. Unless we see the fundamental picture dramatically changed, we are unlikely to see a huge correction.”

Regional gauges

Japan’s Topix index lost 0.8%, heading for its biggest decline in almost a month. The nation’s currency traded near a two-week high amid speculation the BoJ will refrain from expanding stimulus at a meeting that starts on Thursday, diverging from the European Central Bank (ECB) that unveiled record easing last week. The yen added less than 0.1% to 102.01 per dollar on Thursday after advancing 0.3% on Wednesday.

BOJ officials are considering maintaining a large balance sheet for the central bank even after it achieves its inflation target, reducing the risk of a surge in long-term bond yields, according to people familiar with the discussions.

South Korea’s Kospi index declined 0.2% after the nation’s central bank left its key interest rate unchanged. Taiwan’s Taiex index retreated 0.4% and Singapore’s Straits Times Index was little changed. Hong Kong’s Hang Seng Index slipped 0.5%, while China’s Shanghai Composite Index lost 0.2%.

New Zealand’s NZX 50 Index was little changed after the Reserve Bank raised interest rates for the third time this year and signalled more tightening to come. Australia’s S&P/ASX 200 Index dropped 0.5% after employment unexpectedly declined in May.

US futures

Futures on the Standard & Poor’s 500 Index were little changed on Thursday. The US equity benchmark index fell 0.4% on Wednesday, the biggest decline since 20 May, after the World Bank cut its forecast for global economic growth and as Boeing Co. sank.

Investors are also considering the long-range market repercussions after US House Majority Leader Eric Cantor lost to a Tea Party-backed candidate in Wednesday’s primary in Virginia, fuelling concern that gridlock will intensify in Washington. The seven-term House veteran was an ally for Wall Street on issues ranging from the 2008 Troubled Asset Relief Program (TARP) to defending the Export-Import Bank. Bloomberg

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