BLBG: Asian Stocks Pare First Weekly Gain Since July as Nikkei Drops
S&P 500 rebounded Thursday on low equity trading volumes
Short-term stock volatility in Tokyo now topping Shanghai's
Asian stocks fell, paring the regional benchmark measure’s first weekly advance since July. Energy and material companies declined.
The MSCI Asia Pacific Index dropped 0.1 percent to 127.28 as of 7:16 p.m. in Hong Kong. Most of this week’s 2 percent gain came on Sept. 9, when stocks in Japan soared in a rally that analysts said was fueled by short-sellers closing bearish bets. Investors are grappling with heightened global equity volatility as they await the Federal Reserve’s decision next week and watch developments in China.
“Markets have been wild and fear is still near its zenith,” said Tim Shirata, Los-Angeles based executive vice president at Guild Investment Management Inc. “Pessimism about China and the world economic outlook is widespread, and optimism about continued economic growth in the U.S. is declining. We hold a lot of cash, and are waiting patiently for opportunities to invest it.”
The Standard & Poor’s 500 Index rebounded from a selloff Thursday amid low trading volumes. While Federal Reserve officials have in recent weeks acknowledged global equity rout that followed China’s currency devaluation, they haven’t been willing to rule out a September interest-rate increase. Many economists are still predicting the Fed will increase its key rate even as rate futures traders have pared bets.
Japan Volatility
Japan’s Nikkei 225 Stock Average declined 0.2 percent, narrowing its first weekly advance in five weeks to 2.7 percent. After the gauge’s 7.7 percent surge on Sept. 9, short-term price swings in Tokyo are topping those in Shanghai for the first time this year. The Topix index climbed less than 0.1 percent today.
With Japan’s economy struggling to gather momentum after a contraction last quarter, more than a third of economists see the central bank expanding monetary stimulus by next month, according to a Bloomberg News survey. Eleven of 35 respondents see the Bank of Japan stepping up its easing on Oct. 30, while two forecast a move as early as next week, the Sept. 7-10 survey shows. The central bank last expanded asset purchases in October 2014.
Hong Kong’s Hang Seng China Enterprises Index slid 0.6 percent, paring its weekly gain to 6 percent, the most in five months. The stock index was 34 percent below its May peak on Thursday, leaving valuations cheaper than any other market in Asia, as a boom in mainland equities turned to bust.
The city’s benchmark Hang Seng Index fell 0.3 percent and the Shanghai Composite Index added less than 0.1 percent. China’s central bank Governor Zhou Xiaochuan said over the weekend the plunge in Chinese equities is almost over.
South Korea’s Kospi index retreated 1.1 percent, the most among major Asian equity benchmarks on Friday. Australia’s S&P/ASX 200 Index lost 0.5 percent and New Zealand’s NZX 50 Index declined 0.4 percent.
Singapore’s cash equity market is closed for a holiday as the nation heads to the polls with Prime Minister Lee Hsien Loong’s People’s Action Party expected to win re-election.
