By Yoshiaki Nohara - Nov 22, 2011 12:01 PM GMT+0700
Nov. 22 (Bloomberg) -- Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., talks about the outlook for global stock markets. Oliver also discusses the failure of a special debt-reduction committee in the U.S. Congress to reach an agreement, the nation's economy, and Europe's sovereign debt crisis. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
Asian stocks fell for a sixth day, the longest losing streak since August, after a congressional committee charged with reducing the U.S. deficit failed to agree on cuts.
James Hardie Industries SE (JHX), a building-materials supplier that gets 68 percent of sales from the U.S., fell 2.1 percent. China Resources Land Ltd. (1109), a state-controlled developer, declined 3.3 percent amid concern property sales are slowing. Osaka Securities Exchange Co. rose after Tokyo Stock Exchange Group Inc. agreed to acquire the bourse. OneSteel Ltd. slumped 10 percent in Australia after its chief executive officer said he won’t rule out shutting the steelmaker’s main plant.
The MSCI Asia Pacific Index fell 0.5 percent to 111.80 as of 1:40 p.m. in Tokyo after swinging between gains and losses at least six times. About two stocks fell for each that rose.
“Investors are a bit fed up with politicians generally. Politicians have been behind the curve all along, and I think the market is feeling uneasy about that,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “Quality businesses will be sold off unreasonably, and you have to be on the lookout for every opportunity you get. By the same token, in the current market, a stock rally will be quite hard as well.”
U.S. Deficit
Futures on the Standard & Poor’s 500 Index rose 0.3 percent today. The index dropped 1.9 percent in New York yesterday. The U.S. deficit-cutting congressional committee said that it failed to reach an agreement, setting the stage for automatic spending cuts in 2013 and fueling concern that economic-stimulus measures that are set to expire will not be renewed.
Standard & Poor’s and Moody’s Investors Service said they won’t lower credit ratings on the U.S. due to the committee’s failure. S&P, which stripped the U.S. of its top AAA grade in August, said the political gridlock didn’t merit another downgrade because the inaction will trigger $1.2 trillion in automatic spending cuts.
“The U.S. deficit and its ratio to economic output won’t worsen much because $1.2 trillion will be cut automatically with or without an agreement,” said Masaru Hamasaki, who helps oversee the equivalent of $24 billion as chief strategist at Toyota Asset Management Co. in Tokyo. “In terms of market sentiment, it’s a different story. It’s not good they couldn’t make a decision.”
Some exporters to the U.S. declined. James Hardie fell 2.1 percent to A$6.46. Yue Yuen Industrial Holdings Ltd., which makes shoes for Nike Inc., fell 0.9 percent to HK$21.95 in Hong Kong. Canon Inc. (7751), the world’s biggest camera maker, lost 1.4 percent to 3,295 yen.
Exporters, Yen
Japan’s Nikkei 225 (NKY) Stock Average fell 0.5 percent and Hong Kong’s Hang Seng Index lost 1 percent. Australia’s S&P/ASX 200 slid 0.7 percent, while South Korea’s Kospi Index added 0.1 percent.
China Resources Land retreated 3.3 percent to HK$9.88 and Evergrande Real Estate Group Ltd. (3333), a Guangzhou-based developer, fell 2.4 percent to HK$2.9. Real-estate sales slumped 39 percent in China’s largest cities in October from a year earlier, the Financial Times said, citing brokerage analysis using government data. Separately, Citigroup Inc. said China’s economy will moderate in coming quarters as property investment slows and export growth eases.
Tokyo Stock Exchange Group agreed to acquire Osaka Securities Exchange for a 14 percent premium in a transaction to be completed by January 2013.
Tokyo, Osaka Merger
The companies agreed to a purchase price of 480,000 yen for each Osaka Securities Exchange share, which will be acquired in a tender offer, according to a statement from the Osaka Securities Exchange distributed through the Tokyo Stock Exchange. That’s about 14 percent more than the last traded price of the Osaka bourse before the announcement. Osaka Securities rose 4.6 percent to 440,500 yen.
The MSCI Asia Pacific Index declined 18 percent this year through yesterday, compared with a 5.1 percent loss by the S&P 500 and a 19 percent drop by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.2 times estimated earnings on average, compared with 12 times for the S&P 500 and 9.8 times for the Stoxx 600.
OneSteel slumped 10 percent to 84 Australian cents after Chief Executive Officer Geoff Plummer said yesterday he won’t rule out shutting the steelmaker’s main Whyalla steel plant in South Australia should the company fail to improve performance using other measures.
Fosun International Ltd. (656), the biggest stakeholder in Focus Media Holding Ltd. according to Bloomberg data, dropped 6.5 percent to HK$4.16 in Hong Kong after Muddy Waters LLC recommended investors sell Focus Media shares.
To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
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