Aug. 31 (Bloomberg) --
"Asian stocks declined, heading for the first monthly loss since May, bond risk in the region rose and the yen strengthened after a report showed deflation and shrinking output in Japan and as investors awaited a speech by U.S. Federal Reserve Chairman Ben S. Bernanke.
The MSCI Asia Pacific Index lost 0.5 percent at 11:48 a.m. in Tokyo, dropping to a four-week low, as Japan’s Nikkei 225 Index slid 1.1 percent. Futures on the Standard & Poor’s 500 Index were little changed while credit default swaps climbed to the highest in a month in Asia. The yen advanced against all of its 16 major counterparts. Platinum slipped for a fifth day and rubber retreated 1.5 percent.
Japan’s consumer prices fell for a third month in July and the nation’s industrial production unexpectedly declined, while output in South Korea dropped for a second month. Losses were capped as investors weigh whether Bernanke will announce new stimulus at an annual meeting of central bankers in Jackson Hole, Wyoming today. Industrial & Commercial Bank of China Ltd. led the nation’s biggest lenders in posting slower profit growth in the second quarter and Spain delayed making a decision on seeking a bailout for its banks until the terms are clear.
“Bernanke may reiterate his stance on accommodative policy and expand upon some of the policies and the impact they’ve had thus far and going forward, but in terms of bond purchases or expansion of balance sheet, we don’t think we’ll get that at Jackson Hole,” Jerry Cudzil, head of U.S. credit trading TCW Group Inc., said in a Bloomberg Television interview. “At this point, what the market could be either disappointed or excited with, is what happens in the Euro zone.”
Sharp, ICBC
About five stocks dropped for every three that gained on the MSCI Asia Pacific Index, which is down 0.8 percent in August. Consumer discretionary and industrial companies paced declines. Sharp Corp. sank 9.3 percent after Taiwan’s Foxconn Technology Group said talks about investing in the Japanese electronics maker haven’t reached a final stage.
The Shanghai Composite Index, down 0.2 percent today, is heading for a fourth monthly decline in the longest losing streak in eight years. Macquarie Capital Securities lowered its rating on the MSCI China Index to neutral from overweight, citing a deteriorating outlook for banks amid a “disturbingly” widespread weakness in the economy.
ICBC, the world’s largest lender by market value, retreated 0.3 percent in Shanghai. Net income climbed 11 percent in the second quarter to 61.8 billion yuan ($9.7 billion), according to first-half figures reported yesterday by the Beijing-based bank. Combined earnings of China’s five biggest lenders increased 13 percent to 203.6 billion yuan in the quarter, slowing from 33 percent a year earlier.
Dollar, Yen
The yen was set for a weekly gain versus most of its peers as Moody’s Investors Service reiterated it may downgrade Spain’s debt rating, spurring demand for haven assets amid Europe’s fiscal turmoil.
The yen was at 98.28 per euro after rising 0.3 percent to 98.33 in New York. The U.S. dollar fetched $1.2515 per euro, after climbing 0.5 percent in the previous two days to close at $1.2506 yesterday.
The cost of insuring corporate and sovereign bonds in the Asia-Pacific region from non-payment surged, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan increased 5 basis points to 158 basis points, Royal Bank of Scotland Group Plc prices show. The gauge is poised for its highest close since Aug. 2, according to data provider CMA."
To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net ; Susan Li in Hong Kong at sli31@bloomberg.net
Steven
Steven Morris CA (SA)
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