Asian Stocks Drop as Investors Watch U.S. Debt Limit, Shutdown

Asian Stocks Drop as Investors Watch U.S. Debt Limit, Shutdown

Asian stocks fell, with the regional benchmark index extending last week’s drop, as U.S. lawmakers wrangle over the debt limit and partial government shutdown.

Blumont Group Ltd. and Asiasons Capital Ltd. shares each fell by records on resuming trading after the Singapore Exchange Ltd. imposed restrictions on investors in their stocks. Sun Hung Kai Properties Ltd. declined 2.4 percent on a report the developer offered to sell some of the remaining units at a Hong Kong residential project at a discount. Tokyo Electric Power Co., the owner of the crippled Fukushima Dai-Ichi nuclear power plant, sank 7.4 percent, leading a decline among utilities.

The MSCI Asia Pacific Index fell 0.9 percent to 137.91 as of 1:53 p.m. in Tokyo, with all but one of its 10 industry groups dropping. The gauge lost 1.2 percent last week, the first weekly drop in more than a month, as the partial U.S. government shutdown stoked concern lawmakers won’t be able to agree on raising the nation’s $16.7 trillion borrowing limit later this month.

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“The U.S. situation is clearly abnormal and the uncertainty doesn’t make things easier for investors in risk assets,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which oversees about 11.2 trillion yen ($115 billion) in assets. “If the U.S. defaults and misses paying its bills even just for a few days, the market will turn chaotic.”

U.S. Speaker John Boehner said yesterday the House can’t pass an increase to the debt ceiling without packaging it with other provisions — a nonstarter for President Barack Obama.

Regional Gauges

Japan’s Topix index fell 1.2 percent, extending the longest losing streak since July 2012. Financial markets in China are closed for a holiday today. South Korea’s Kospi index lost 0.1 percent. New Zealand’s NZX 50 Index slid 0.1 percent. In Australia, where many businesses are closed for Labour Day, the S&P/ASX 200 Index fell 1 percent on trading volumes about half the 30-day average for this time of day.

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Hong Kong’s Hang Seng Index (HSI) slipped 0.7 percent. Singapore’s Straits Times Index was little changed and Taiwan’s Taiex index lost 0.3 percent.

Futures on the Standard & Poor’s 500 Index slumped 0.6 percent today. The gauge dropped for a second week last week as the first partial government shutdown in 17 years began.

Default Risk

Treasury Secretary Jacob J. Lew said Congress needs to pass a debt-ceiling increase by Oct. 17 or the U.S. will be “dangerously low” on cash and risk defaulting on its payments. Federal Reserve Bank of San Francisco President John Williams estimated a two-week government halt would shave 0.25 percentage point off fourth-quarter economic growth.

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The shutdown delayed the release of the Labor Department’s monthly payrolls report, which was due Oct. 4.

“Markets need to be aware that the impasse on Capitol Hill is far from being resolved,” Evan Lucas, Melbourne-based market strategist at IG Ltd. said in a note today. “The shutdown stalemate continues to ebb and flow and is disruptive.”

The MSCI Asia Pacific Index traded at 13.4 times estimated earnings as of Oct. 4, compared with 15.2 for the S&P 500 and 14.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

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Blumont, which invests in minerals and energy, slumped 73 percent to 24 Singapore cents, extending a 56 percent decline on Oct. 4. The plunge also prompted the company to scrap a deal to buy Australia’s Cokal Ltd. for S$146 million. Asiasons, which last month bought a stake in U.S.-based oil and gas producer Black Elk Energy Offshore Operations LLC, tumbled 74 percent to 27 Singapore cents, adding to a 61 percent plunge on Oct. 4.