Asian Stocks Drop as Yen Gains After Kuroda Comments

By Adam Haigh

Asian stocks fell, with the region’s benchmark index set for its biggest weekly loss in a year, as the yen strengthened after Bank of Japan Governor Haruhiko Kuroda said the central bank had announced sufficient stimulus.

The MSCI Asia Pacific Index slid 1.7 percent to 136.29 as of 1:46 p.m. in Tokyo as Australian banks also headed for the largest weekly drop in a year. The gauge is heading for a 4.4 percent decline this week, the most since May last year. Japan’s Topix Index reversed an earlier 3.3 percent gain to fall 2.7 percent after Kuroda’s comments. It plunged 6.9 percent yesterday. Japan’s Nikkei 225 Stock Average (NKY) lost 2.8 percent after plummeting 7.3 percent yesterday.

“Investors are scared,” said Andrew Sullivan, director of sales trading at Kim Eng Securities in Hong Kong. “We have just had Kuroda speaking and all we got was a re-read of the script he used earlier in the week. They are scared that the BOJ doesn’t have a longer-term plan, which may mean that the megaphone economics of talking up a recovery is just that -- talk.”

The MSCI Asia Pacific Index, the benchmark regional equities gauge, gained 7.2 percent this year through yesterday, leaving the measure trading at 13.7 times average estimated earningscompared with 15 for the Standard & Poor’s 500 Index and 13.4 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.

U.S. Futures

Futures on the S&P 500 Index lost 0.2 percent today. The gauge yesterday fell 0.3 percent, the first back-to-back drop in a month, as a contraction in Chinese manufacturing offset American housing data and investors weighed Federal Reserve stimulus comments.

Australia’s S&P/ASX 200 Index fell 2 percent, extending this weeks drop to 4.2 percent, the most in a year, as banks declined and Morgan Stanley cut its recommendation on the country’s shares. New Zealand NZX 50 Index dropped 1.3 percent. Hong Kong’s Hang Seng Index (HSI) slid 0.2 percent, China’s Shanghai Composite Index rose 0.1 percent and South Korea’s Kospi index declined 0.3 percent. Taiwan’s Taiex Index fell 0.6 percent. Markets in Singapore, Thailand, Malaysia and Sri Lanka are closed today for holidays.

“The market run has been so skewed toward high-yielding stocks and financials in Australia, and now with worries about China, foreign investors are withdrawing,” Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages $126 billion, said by phone. “Australian shares will underperform this year. There are lots of reasons for profit taking right now. In Japan, there are still lots of challenges and structural changes that need to take place.”

Australian Banks

Commonwealth Bank of Australia, the country’s largest lender, fell 2.4 percent to A$68.07, extending this week’s decline to 7 percent. Westpac Banking Corp. (WBC) lost 3 percent to A$29.03. The S&P/ASX 200 Banks Index lost 5.1 percent this week, the most in a year. Telstra Corp. sank 3 percent to A$4.80, taking its two-day loss to 6.6 percent.

Morgan Stanley downgraded its recommendation on Australian equities to equal-weight from over-weight, citing less attractive valuations and a worsening earnings outlook, according to a report by Jonathan Garner, Hong Kong-based chief Asia and emerging-market strategist at theNew York bank.

The Chicago Mercantile Exchange Inc. is raising the margin requirements for speculators in Japanese stock futures after yesterday’s plunge. The initial margin for Nikkei 225 Stock Average futures will rise 33 percent to $3,300 per contract at the close of trading today, Chicago-based CME Group Inc. said in a statement. Initial margin is the minimum amount of cash or eligible securities investors must deposit to cover the risk of default.

To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net

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