Asian Stocks Swing Between Gains, Losses on Syria Outlook

Asian Stocks Swing Between Gains, Losses on Syria Outlook

Asian stocks swung between gains and losses after President Barack Obama pulled the U.S. from the brink of a military strike against Syria. Energy producers led declines.

Rio Tinto Group, (RIO) the world’s second-biggest mining company, gained 1.6 percent in Sydney after copper futures climbed. Yakult Honsha Co., a maker of fermented milk products, added 1.6 percent in Tokyo after JPMorgan Chase & Co. raised its rating to overweight. Inpex Corp., Japan’s biggest energy explorer, sank 2.8 percent after crude oil fell as prospects for a diplomatic solution over Syria eased concern shipments from the Middle East will be disrupted.

The MSCI Asia Pacific Index was little changed at 137.08 as of 1:14 p.m. in Tokyo, having swung between gains of as much as 0.4 percent and losses of 0.1 percent. The measure advanced 6.2 percent in the past nine days as factory output in China accelerated to a 17-month high. The rally drove the gauge’s 14-day relative strength index, an indicator of trading momentum, to 66 yesterday, near a threshold of 70 that signals to analyst shares may have risen too far.

“People are taking profits,” Naoki Fujiwara, Tokyo-based chief fund manager at Shinkin Asset Management Co., which oversees about $6.5 billion. “Syria’s situation was much more unclear last week and investors couldn’t take a position, but now things have turned and they are willing to take more risks. But uncertainties around Syria do remain”

‘Cautiously Optimistic’

Obama said in a live broadcast from Washington today that he had asked Congress to delay a vote authorizing the use of military force while pursuing a diplomatic solution that would have Syria surrender its chemical weapons.

“We’re still cautiously optimistic,” Daphne Roth, Singapore-based head of Asian equity research at ABN Amro Private Banking, which oversees about $207 billion, said in a telephone interview. “Asia is very polarized and I prefer countries that are running current account surpluses such as China. Liquidity will be withdrawn out of Asia as Fed tapering materializes. That will have a big impact.”

The Federal Reserve has said any reduction in stimulus will be tied to a sustained recovery in U.S. employment. The central bank will decide to cut its $85 billion in monthly bond purchases this month, according to 65 percent of economists surveyed by Bloomberg from Aug. 9-13. The Federal Open Market Committee holds a two-day meeting on Sept. 17-18.

Regional Gauges

China’s Shanghai Composite Index advanced 0.6 percent. Japan’s Topix index gained 0.3 percent and Australia’s S&P/ASX 200 Index rose 0.5 percent. New Zealand’s NZX 50 Index and South Korea’s Kospi index both fell 0.1 percent. Taiwan’s Taiex index lost 0.7 percent and Singapore’s Straits Times Index slipped 0.3 percent.

The Topix index surged 38 percent this year through yesterday, with Japanese equities performing the best among developed markets tracked by Bloomberg. Shares have jumped amid optimism Prime Minister Shinzo Abe and the Bank of Japan can lead the country out of deflation with stimulus and reforms.

The Hang Seng China Enterprises Index (HSCEI) of mainland Chinese companies traded in Hong Kong dropped 0.4 percent, erasing gains of as much as 0.8 percent. The gauge yesterday climbed 21 percent from a June 25 low, entering what some investors consider a bull market. Hong Kong’s Hang Seng Index fell 0.1 percent.

U.S. Futures

“Markets probably won’t shoot much higher unless we have more positive catalysts,” said Shinkin Asset’s Fujiwara. “They will take a breather from time to time.”

Futures on the Standard & Poor’s 500 Index slipped 0.1 percent today. The equity gauge advanced 0.7 percent in New York yesterday, extending gains for a sixth day, as reports showed China’s economy is improving and amid signs of easing tensions over Syria.

The MSCI Asia Pacific Index climbed 6 percent this year through yesterday. Shares on the Asia-Pacific gauge traded at 13.4 times estimated earnings, compared with 15.2 times for the S&P 500 Index and 14.1 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.