By Nick Gentle and Jonathan Burgos
Asian stocks fell, with the regional index headed for its biggest monthly drop since May 2012, amid concern over tensions in Hong Kong and as a Chinese manufacturing gauge missed estimates. The dollar held its largest quarterly advance since the global financial crisis.
The MSCI Asia Pacific Index slipped 1.1 percent by 11:44 a.m. in Tokyo, pushing it down 5.6 percent in September. The Hang Seng Index dropped 1.4 percent as pro-democracy protests continued to choke off roads around the city. Standard & Poor’s 500 Index futures fell 0.1 percent after the U.S. gauge lost 0.3 percent. The Bloomberg Dollar Spot Index was little changed and New Zealand’s dollar was set for its worst quarter since 2008. Oil in New York slipped 0.2 percent.
Global stocks dropped for the first quarter in more than a year and sovereign bonds are beating corporate debt by the most since 2011 as speculation about Federal Reserve interest-rate increases and geopolitical tensions spur risk aversion. Leaders of Hong Kong’s protests set an Oct. 1 deadline for their demands to be met. With mainland markets poised to close for a weeklong national holiday, a China purchasing managers’ index from HSBC Holdings Pls and Markit Economics showed a slower-than-estimated expansion this month.
“There’s plenty of excuses for people to take some money off the table,” Ryan Huang, a strategist at IG Ltd. in Singapore, said by phone. “The Fed’s QE is scheduled to end next month in the U.S. and investors are wondering about the timing of interest-rate increases. China’s economy is slowing down and protests in Hong Kong only add to geopolitical concerns.”
The MSCI All-Country World Index is down 2.7 percent since the end of June, set for its first quarterly retreat since the second three months of last year, and the biggest such drop since June 2012. While MSCI’s Asia Pacific index lost 3.1 percent this quarter through yesterday, it is trading at 13.4 times estimated earnings, still close to the 13.8 level reached Sept. 3 that marked its most expensive valuation this year.
The S&P 500 trades at 16.6 times estimated earnings and the Stoxx Europe 600 Index fetches 15.3 times projected profit.
The value of global equities has climbed by about $20 trillion over the past three years as Fed measures to stimulate the U.S. economy bolstered liquidity and fueled investment in emerging markets. The central bank has been reducing its asset purchase program, known as quantitative easing, by $10 billion a month this year, putting it on track to end in October.
The Hang Seng Index yesterday erased its gain for the year and is heading for its biggest two-day drop since February. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in the city slid 1.5 percent today and is on track for the largest monthly decline since January. The Shanghai Composite Index climbed 0.1 percent today.
Hong Kong Chief Executive Leung Chun-ying, whose resignation protesters are demanding, urged people to call off the rallies and to stop spreading rumors that the People’s Liberation Army is being deployed to quell protests.
Today’s final reading for the HSBC PMI was 50.2, lower than the flash reading of 50.5 and unchanged from August. Economists surveyed by Bloomberg had projected a reading of 50.5, where numbers above 50 signal expansion. Weaker-than-expected industrial profits, output and credit have spurred economists to cut estimates for China’s gross domestic product growth this year.
Japan’s Topix index, which dropped 1.6 percent today, was up 5.9 percent from the end of June through yesterday, its second straight quarterly gain. Japanese industrial production fell 1.5 percent last month from July, data today showed, with economists predicting a 0.2 percent gain.
The Nikkei 225 Stock Average is up 6.1 percent in the quarter, set for the steepest climb among 24 developed markets tracked by Bloomberg. The Nikkei 225 fell 0.9 percent today as Toyota Motor Corp. slipped 2.1 percent amid a U.S. inquiry into inintended acceleration in its Corolla sedans.
The Kospi gauge in Seoul dropped 0.8 percent and the won weakened 0.2 percent to 1,056.26 per dollar and is poised for its biggest monthly loss since May 2012 as the greenback strengthened on prospects for higher U.S. interest rates.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major counterparts, was little changed today after rallying 6.6 percent this quarter in its best performance in six years. The Federal Reserve indicated it plans to raise borrowing costs in 2015, damping demand for emerging-market assets.
Data yesterday showed U.S. consumer spending rose by 0.5 percent last month, after being little changed in July, adding to signs the world’s largest economy is on a stronger footing.