Asia Stocks Heading for First Monthly Decline Since April

By Adam Haigh  

Photographer: Francisco Leong/AFP/Getty Images

Pro-Russian fighters stand in Troitsko-Khartsyzk, 30 Km east of Donetsk, on August 28,... Read More

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Asia’s benchmark stock gauge headed for its first monthly decline since April as investors weighed the conflict in Ukraine and company earnings. Material and consumer shares retreated.
Aluminum Corp. of China Ltd. slumped 4.6 percent in Hong Kong after China’s biggest producer of the light metal reported a wider first-half loss amid lower prices. CSPC Pharmaceutical Group Ltd. tumbled 5.7 percent after a shareholder said it would sell an 11 percent stake in the Hong Kong-based company. National Australia Bank Ltd., the nation’s largest lender by assets, gained 1.2 percent after saying it plans to sell its U.S. unit to free up
capital and focus on its domestic business.
The MSCI Asia Pacific Index (MXAP) lost 0.1 percent to 148.03 as of 4:03 p.m. in Hong Kong, poised for a 0.6 percent drop this month and a 0.3 percent weekly slide. The Standard & Poor’s 500 Index retreated below 2,000 yesterday as violence in Ukraine and disappointing retail earnings outweighed data showing the U.S. economy expanded more than previously estimated last quarter.
“Geopolitical risk reared its ugly head yet again,” said Stan Shamu, a Melbourne-based market strategist at IG Ltd. “News that Ukraine-Russia tension is flaring up again sharply spooked investors. The negative at play for Japanese equities at the moment is the fact safe-haven flows favoring the yen might put on pressure as geopolitical risk escalates.”
Japan’s Topix index slipped 0.2 percent as the nation’s currency headed for its first weekly advance in three weeks, trading at 103.81 per dollar. Core consumer prices increased 3.3 percent from a year earlier in July, holding at the same pace as June and meeting analysts’ estimates, a report showed.

Regional Gauges

Hong Kong’s benchmark Hang Seng Index (HSI) erased losses in the final hour of trading, closing little changed. The Hang Seng China Enterprises Index climbed 0.3 percent. The Shanghai Composite Index surged 1 percent. South Korea’s Kospi index declined 0.3 percent. Australia’s S&P/ASX 200 Index was little changed and New Zealand’s NZX 50 Index lost 0.3 percent. Taiwan’s Taiex Index was 0.4 percent lower, while Singapore’s Straits Times Index was little changed.
Ukrainian President Petro Poroshenko pledged to step up the country’s defenses as rebels widened their offensive. The U.S. said Russia may be directing attacks by separatists, souring investor sentiment that improved in recent weeks on optimism that Russian President Vladimir Putin would take steps to de-escalate the conflict that’s claimed more than 2,000 lives.

Weekend Work

Kingston Financial Group Ltd., Guotai Junan International Holdings Ltd., Tebon Securities Co. and Haitong Securities Co. are among firms in Hong Kong working through the weekend in the first full trial of an exchange link between Asia’s biggest stock markets after Japan. Bourse officials in Shanghai and Hong Kong are seeking to hammer out technical glitches before the connect goes live in October. A similar plan allowing Chinese investors to buy Hong Kong stocks in 2007 was abandoned.
Aluminum Corp. of China declined 4.6 percent to HK$3.29. The company also known as Chalco posted a loss of 4.12 billion yuan ($671 million) in the first half, compared with a loss of 623.8 million yuan a year ago.
CSPC Pharmaceutical lost 5.7 percent to HK$6.48. Joyful Horizon is selling 650 million shares of the company at HK$6.30 each in a placement, reducing its stake to 30.77 percent after the disposal, according to a statement to the Hong Kong stock exchange.
Futures on the S&P 500 added 0.3 percent today after the U.S. equities benchmark index yesterday dropped 0.2 percent. The world’s biggest stock market is seeing the slowest trading in at least six years as investors leave for vacation before the Labor Day holiday.

U.S. Growth

The U.S. economy expanded more than previously forecast in the second quarter, propelled by the biggest gain in business investment in more than two years. Gross domestic product rose at a 4.2 percent annualized rate, up from an initial estimate of 4 percent and following a first-quarter contraction, Commerce Department figures showed yesterday.
Other reports showed contracts to purchase previously owned homes rose more than forecast in July. The number of Americans filing for unemployment benefits was little changed last week, near the lowest level in seven years.
“On a 12-month view Asian stocks will do very well, though in the short term we’re heading up against some resistance levels here,” Steve Brice, Singapore-based chief investment strategist at Standard Chartered Plc, told Bloomberg TV. “We still think market sentiment is going to remain pretty well supported. The main risk for equity markets in the short term is a melt-up scenario. That’s not really changed by fundamental factors or geopolitical factors.”
Among shares that rose, NAB gained 1.2 percent to A$35.20. The Australian bank will sell a minority stake through an initial public offering next quarter and eventually exit Great Western Bancorp Inc., which it bought for $798 million in 2007, the Melbourne-based lender said.