By Shiyin Chen - Nov 24, 2011 1:10 PM GMT+0700
Nov. 24 (Bloomberg) -- Pranay Gupta, chief investment officer for Asia Pacific at ING Investment Management in Hong Kong, talks about the European debt crisis and its implications for global stock markets. Gupta also discusses the U.S. economy and budget deficit. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
Nov. 24 (Bloomberg) -- George Feiger, chief executive offer of Contango Capital Advisors Inc., a San Francisco-based wealth management firm, talks about the impact of the eurozone crisis on U.S. financial markets and his investment strategy. Feiger speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
The yen rose against most of its major peers, while Asian stocks and South Korea’s won declined after a German bund auction fell short of its target and companies including HTC Corp. cut their outlook on earnings.
Japan’s currency added 0.2 percent to 77.14 per dollar at 3 p.m. in Tokyo on speculation the nation’s investors will sell higher-yielding assets. The won slid to a six-week low. The MSCI Asia Pacific Index dipped 0.5 percent and the Nikkei 225 Stock Average fell 1.9 percent. Standard & Poor’s 500 futures rose 0.2 percent, following a six-day slump in the benchmark U.S. stocks gauge. The Markit iTraxx Asia index of debt-default risk headed for the highest close since Oct. 7.
German 10-year yields jumped yesterday after bids at a sale of securities repayable in January 2022 fell 35 percent short of the 6 billion euros ($8 billion) on offer. Data today may show a gauge of business confidence in Europe’s largest economy dropped for a fifth month. HTC, the largest seller of smartphones in the U.S., cut its revenue forecast as much as 23 percent and Hanwha Chemical (009830) Corp. said quarterly profit fell 24 percent.
Investors are “grouping together all euro-area bonds in the same basket,” Pranay Gupta, chief investment officer in Hong Kong at ING Investment Management, said in a Bloomberg Television interview. “Asian earnings expectations still have to come down substantially. There is still another 10 or 20 percent downside in Asia.”
The yen appreciated against 12 of its 16 most actively traded counterparts. It pared gains against the dollar after Standard & Poor’s said Japanese Prime Minister Yoshihiko Noda’s administration hasn’t made progress in tackling the public debt burden, an indication it may be preparing to lower the nation’s sovereign grade.
Germany’s Economy
The euro climbed 0.1 percent to $1.3359, recouping some of the 1.2 percent slump yesterday, when German yields climbed 23 basis points and the cost to insure European government debt rose to a record.
The Ifo institute’s business climate index for Germany fell to 105.2 in November, according to the median forecast of economists in a Bloomberg News survey. Figures yesterday showed European services and manufacturing output contracted for a third month.
“Germany may be the safest economy but it’s also the only deep pocket in Europe and as the crisis rises it becomes clearer and clearer that the Germans are going to have to pay up,” George Feiger, chief executive officer of Contango Capital Advisors Inc., said in a Bloomberg Television interview from San Francisco. “It’s not surprising that we’re seeing a sell-off and it could well continue for some time.”
Won, Bond Risk
The won retreated 0.6 percent to 1,158.80 per dollar, after touching 1,160.50 earlier, the lowest level since Oct. 14. Taiwan’s dollar declined 0.1 percent to NT$30.438 against its U.S. counterpart, also a fifth day of losses.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan increased nine basis points to 234 basis points, according to Royal Bank of Scotland Group Plc prices. The gauge is on course for the highest close since Oct. 7, according to data provider CMA. The Markit iTraxx Australia index advanced 10 to 222, which will be the highest level since Oct. 6, according to RBS and CMA.
MSCI’s Asia Pacific Index earlier dropped as much as 0.7 percent, reaching the lowest intraday level since Oct. 6. The gauge tumbled 1.8 percent yesterday, when Japan’s markets were closed for a holiday.
Canon Inc. dipped 1.2 percent in Tokyo, pacing a drop among exporters to Europe. JFE Holdings Inc. retreated 1.7 percent after the Nikkei newspaper reported the steelmaker is reducing its production target. HTC (2498) sank 6.9 percent to a 16-month low in Taipei after the company said revenue this quarter will be little changed from a year earlier. The smartphone maker had earlier forecast growth of 20 percent to 30 percent. Hanwha Chemical dropped 4.7 percent.
China’s Policies
China’s Shanghai Composite Index (SHCOMP) was little changed after six days of declines. The central bank said it is lowering reserve requirements for more than 20 rural cooperative banks by half a percentage point.
“Europe’s debt crisis is still worsening and that’ll pressure local sentiment by scaring investors away from risk assets,” said Zhang Ling, general manager at Shanghai River Fund Management Co. “China’s policies are in the process of being loosened gradually and there won’t be further tightening. But an overall relaxation is still unlikely.”
S&P 500 futures expiring in December signal U.S. stocks (MXAP) may halt a six-day slump that dragged the benchmark index down to the lowest level since Oct. 7. The market will be closed today for the Thanksgiving holiday and trading will end at 1 p.m. tomorrow. Economic data yesterday showed U.S. durable goods orders fell and jobless claims topped forecasts.
To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
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