Inside Financial Markets

Asian Stocks Fall While Credit Risk Climbs With Gold, Yen

asian markets1Asian Stocks Fall While Credit Risk Climbs With Gold, Yen

Asian stocks dropped, with a regional index headed for its biggest loss in six weeks, and credit risk increased after a gauge of China’s service industries fell. The yen climbed with gold while emerging-market currencies weakened.

The MSCI Asia Pacific Excluding JapanIndex lost 1.2 percent at 11:41 a.m. inHong Kong, while the Hang Seng China Enterprises Index tumbled 2.4 percent.Standard & Poor’s 500 Index (SPX)futures were little changed after U.S. equity gauges sank from records yesterday.Indonesia’s rupiah slid 0.6 percent versus the dollar, trading near the lowest level since 2008, while the yen jumped 0.5 percent. The cost of insuring sovereign and corporate bonds in Asia outside Japan rose to a three-week high and gold added 0.6 percent.

China’s non-manufacturing gauge fell to a four-month low in December, after data earlier this week showed two measures of factory output in the world’s second-largest economy declined. Physical demand for gold is rising after the precious metal tumbled 28 percent in 2013, the worst annual retreat since 1981. Federal Reserve Chairman Ben S. Bernanke speaks today and euro region money supply figures are also due.

“You cannot count on China to contribute to global growth now as the economy is still under structural adjustment,” said Dai Ming, a money manager at Hengsheng Hongding Asset Management Co. in Shanghai. “There’s no excitement in the macroeconomy and in this case it’s difficult for the stock market to have good performance.” China Slowdown

About five shares fell for each one that rose on the MSCI Asia Pacific Excluding Japan Index. Equity gauges in China, South Korea and Indonesia all declined more than 1 percent. Australia’sS&P/ASX 200 Index (AS51) dropped 0.5 percent.

China’s non-manufacturing purchasing managers’ index fell to 54.6, the lowest since August, from 56 in November. Data Jan. 1 showed the official gauge for factory output dropped more than economists projected, also to a four-month low. An HSBC Holdings Plc and Markit Economics Ltd. index of Chinese manufacturing published yesterday slipped to 50.5 from 50.8 in November, matching the median estimate in a Bloomberg survey.

The world’s second-biggest economy may expand 7.5 percent in 2014, the Shanghai Securities News reported yesterday, citing an interview with Zhu Baoliang, head of the StateInformationCenter’s economic forecasting department. Chinese leaders last year unveiled the largest expansion of economic freedoms since the 1990s as they seek to boost domestic consumption.

Gold Rally

Japan’s currency climbed to 104.28 per dollar and strengthened 0.6 percent against the euro. The won weakened 0.5 percent versus the dollar after gaining 1.4 percent last year, the only currency among major Asian peers along with China’s yuan to strengthen versus the greenback in 2013. The ringgit slipped for a second day, declining 0.3 percent.

Silver rose 0.3 percent, extending yesterday’s 3.4 percent jump, while platinum added 0.5 percent. Bullion for immediate delivery gained as much as 1 percent to $1,237.03 an ounce, the highest level since Dec. 18.

“There were many investors waiting to enter after the price dropped below $1,200,” said Mark To, the head of research at Wing Fung Financial Group, a Hong Kong-based trader and refiner. “Lower prices should help physical demand but gains will be limited as many people will be looking to get out of gold completely and find other places to put their money.”

The Markit iTraxx Asia index of credit-default swaps on 40 investment-grade borrowers outside Japan increased 1 basis point to 130.5 basis points, prices from Australia & New Zealand Banking Group Ltd. show. The benchmark, on track to advance 3.5 basis points this week, is set for its highest close since Dec. 10, after rising 16 basis points in 2013, according to CMA.


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)