Inside Financial Markets

Asian Stocks Drop, Led by Tech Shares, as Brent Slides on Libya

asian markets1Asian Stocks Drop, Led by Tech Shares, as Brent Slides on Libya

Asian stocks fell, with the regional benchmark index snapping its longest rally this year as SoftBank Corp. and Tencent Holdings Ltd. (700) led a slide among technology shares. Brent crude dropped as Libyan rebels agreed to open ports, while Malaysia’s ringgit advanced.

The MSCI Asia Pacific Index slipped 0.4 percent by 12:04 p.m. in Tokyo, halting an eight-day advance, with a gauge of information technology companies leading declines. Standard & Poor’s 500 Index futures fell 0.1 percent. Japan’s Topix (TPX) index lost 1 percent as the yen held gains against the dollar and euro. The ringgit jumped 0.4 percent, leading other Asian emerging-market currencies higher. Brent dropped 0.8 percent. Copper slid while zinc advanced. Chinese markets are closed.

Futures on the Nasdaq 100 Index slipped 0.1 percent today after the Nasdaq Composite Index plunged 2.6 percent on April 4 amid concern that valuations on the world’s best-performing industry have advanced too far. The Bank of Japan, which reports on monetary policy tomorrow, may double purchases of exchange-traded funds in coming months as part of a second round of easing, analysts polled by Bloomberg say. Federal Reserve Bank of St. Louis President James Bullard will speak today after a lower-than-estimated U.S. payrolls number April 4. Elections get under way in India.

“Some parts of the high-tech space were looking bubbly and overvalued, so there’s some much needed profit-taking going on,” said Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co., which oversees about 11 trillion yen ($107 billion). “The rout won’t last long, especially considering the U.S. economic recovery is firm. There may be some change where the sell-off in overvalued shares leads to flows into undervalued sectors.”

Google, Facebook

Telecommunications and information-technology shares led declines in MSCI’s Asia Pacific gauge, which hasn’t completed a daily decline since March 25. Large U.S. technology stocks plunged April 4 as investors sold off the bull market’s biggest winners. Google Inc.’s Class A shares sank 4.6 percent, while Facebook Inc.(FB:US) lost 4.6 percent, bringing its two-day slide to 9.5 percent. Yahoo! Inc. declined 4.2 percent to the lowest since November.

Tencent, China’s largest internet company, slid 3.3 percent in Hong Kong, extending two weeks of declines. SoftBank, controlled by billionaire Masayoshi Son, dropped 4.2 percent in Tokyo, followed by mobile operator KDDI Corp., which fell 2.4 percent.

Trading volume across Asia’s largest stock indexes was at least 14 percent below the 30-day average for the time of day, according to data compiled by Bloomberg.

The Hang Seng Index retreated 0.4 percent while a gauge of Chinese shares listed in the city added 0.6 percent. Australia’s S&P/ASX 200 Index decreased 0.2 percent and the Kospi index in Seoul declined 0.2 percent.

BOJ Speculation

The BOJ will boost its annual ETF purchases to 2 trillion yen ($19 billion), according to 36 analysts surveyed by Bloomberg News. The bank, which is forecast to leave its monetary-base target unchanged tomorrow at between 60 trillion yen and 70 trillion yen, may raise annual bond purchases by at least 10 trillion yen, with July the most favored time for a policy move.

Signs of inflation may deter policy makers from more ambitious plans, even as the economy slows amid this month’s sales-tax increase.

“The BOJ meeting is significant in that it’s the first to be held since they raised the consumption tax,” Sam Tuck, a senior currency strategist in Auckland at ANZ Bank New Zealand Ltd., said by phone today. “The market has an expectation for something. The general feeling from talking to people in the market is that if they’re going to do something imminently, this is the meeting to do it.”

Ringgit Exposure

Markets in Thailand and mainland China are closed for a holiday today.

The ringgit appreciated to 3.2640 per dollar in a second day of gains. Global funds held 29 percent of Malaysian government bonds excluding bills in February, compared with 16.6 percent of Thailand debt, according to the latest available data.

Declines in U.S. short-term borrowing costs relieve pressure on Malaysia’s central bank to defend the real-yield differential on ringgit-denominated assets, said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Singapore.

Indonesia’s rupiah climbed 0.3 percent to 11,284 per dollar, heading for the highest closing level since Oct. 31.

The world’s biggest election begins in India today, with voters casting ballots in northeastern India amid opinion polls tipping victory for Narendra Modi’s opposition Bharatiya Janata Party. Prime Minister Manmohan Singh’s Congress Party has seen its popularity fall as graft cases, Asia’s fastest inflation and subdued economic growth erode support.

Zinc, Copper

Zinc climbed for a fourth day, trading at $2,011 a metric ton after the biggest weekly advance for canceled warrants on the London Metal Exchange since March 2013. Lead advanced for a second day to $2,060.50 a ton.

Copper fell a third day on speculation that global demand will slow in the U.S. and China, the world’s two biggest users, amid increasing mine supplies. The contract for delivery in three months on the LME retreated as much as 0.6 percent to $6,577.50 a ton, the lowest since March 28.

Sanie Khan

Sanie Khan holds a deep knowledge of the financial markets in Pakistan. Based in Karachi, he has over 20 years of hands-on management experience in financial technologies and managing operations in the financial sector. He was the General Manager at the Pakistan Stock Exchange (PSX) for 17 years. He along-with senior members of Exchange

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)