Inside Financial Markets

Asian Stocks Fall as China Producer Prices Extend Decline

asian stocksAsian Stocks Fall as China Producer Prices Extend Decline

Asian stocks fell as China’s factory-gate prices extended the longest streak of declines since the Asian financial crisis and Federal Reserve minutes showed officials saw diminishing benefits from bond buying.

Canon Inc. lost 1.8 percent in Tokyo on a report operating profit at the world’s biggest camera maker probably missed its own forecast. Belle International Holdings Ltd., China’s No. 1 seller of footwear, fell 2.3 percent after surging 13 percent yesterday. Daiei Inc. slumped 7.3 percent in Tokyo as the supermarket operator cut full-year forecasts.

The MSCI Asia Pacific Index lost 0.5 percent to 139.16 as of 11:26 a.m. in Tokyo, with about five stocks falling for every three that rose. The measure gained 1 percent yesterday, the biggest advance since Nov. 18. The index maintained losses as data showed China’s inflation rate slowed last month by more than economists forecast and the producer-prices index recorded its 22nd straight drop from a year earlier.

China’s “producer prices have been a huge concern,” Jackson Wong, vice president of Tanrich Securities in Hong Kong, said by telephone. “At industrial levels, no-one is making money in a negative environment.”

Japan’s Topix (TPX) index fell 0.7 percent and South Korea’s Kospi index slipped 0.1 percent as the central bank left its key interest rate unchanged. Australia’s S&P/ASX 200 Index fell 0.2 percent, while New Zealand’s NZX 50 Index gained 0.7 percent. Singapore’s Straits Times Index advanced 0.6 percent and Taiwan’s Taiex index was little changed.

China Data

Hong Kong’s Hang Seng Index (HSI) and the Hang Seng China Enterprises Index of mainland shares traded in the city both fell 0.2 percent. China’s Shanghai Composite Index added 0.1 percent.

China’s consumer-price index rose 2.5 percent in December from a year earlier, the National Bureau of Statistics said in Beijing. That compares with a 2.7 percent median estimate of analysts surveyed by Bloomberg News and a 3 percent increase in November. The producer-price index fell 1.4 percent from a year earlier to record its longest series of losses since the Asian financial crisis in 1997.

Futures on the Standard & Poor’s 500 Index were little changed today. The equity gauge closed little changed yesterday. Fed officials saw diminishing economic benefits from their bond-buying program and voiced concern about future risks to financial stability during their last meeting, when they began to cut the pace of purchases.

Next Step

Policy makers will gather Jan. 28-29 to consider the next step in their strategy of gradually reducing the pace of bond buying as the economy strengthens. The minutes didn’t describe a set schedule for reductions, although “a few” officials mentioned the need for a “more deterministic path.”

“I don’t think you need to worry much because fundamentals are strong,” said Takashi Miyazaki, general manager of strategic research at Mitsubishi UFJ Asset Management Co., a unit of Japan’s biggest bank. “While policy makers go with tapering, they are keeping risks to the financial market in mind. The U.S. will raise rates eventually after tapering stimulus.”

Companies in the U.S. boosted payrolls by 238,000 in December, figures from ADP Research Institute in Roseland, New Jersey, showed yesterday. The median forecast of economists surveyed by Bloomberg called for a 200,000 advance.

The Labor Department will announce tomorrow figures for new hiring and the unemployment ratefor last month.

The Asia-Pacific gauge traded at 13.2 times estimated earnings as of yesterday, compared with 15.5 for the S&P 500 and 13.8 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

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)