Asia Stocks Cut Gain as Emerging Currencies Fall on China
Asian stocks pared gains, while emerging-market and commodity producers’ currencies slipped as a surprise drop in China’s trade tempered optimism after the Federal Reserve eased concern about U.S. rate rises. Indonesian equities tumbled after elections failed to show a clear winner.
The MSCI Asia Pacific Index rose 0.2 percent by 2:28 p.m. in Tokyo, after adding as much as 0.9 percent before China’s data release. Standard & Poor’s 500 Index futures were little changed. India’s rupee weakened 0.2 percent, Canada’s dollar dropped 0.2 percent and Australia’s currency, which touched a four-month high after a surge in employment, pared its gain to 0.2 percent. Copper and tin erased gains while nickel climbed 1 percent, a ninth straight rise. The Jakarta Composite Index plunged 3.2 percent and the rupiah weakened.
Chinese exports fell 6.6 percent in March, extending the steepest drop since 2009 in February and missing the estimate for a 4.8 percent gain from a Bloomberg survey of economists. Fed minutes played down forecasts for rates to increase faster than previously projected. Australia’s unemployment rate unexpectedly dropped after the country added more jobs than estimated in March, while South Korea kept its key rates unchanged and boosted its economic growth outlook.
“It’s surprising and disappointing to see that softness in China’s March trade numbers,” said Sean Callow, a currency strategist at Westpac Banking Corp. in Sydney. “It’s a definite setback for what has been a very positive mood in global markets, and particularly in Asian currencies. The Aussie seemed to be on track for a run at 95 U.S. cents, but the China trade number was a definite setback.”
Hong Kong
The Hang Seng Index fluctuated as Premier Li Keqiang talked about linking the Hong Kong and Shanghai stock exchanges, tempering concerns about slower trade. A gauge of Chinese shares in the city dropped 0.5 percent, its first decline in six days, while the Shanghai Composite Index climbed 0.2 percent. The so-called Aussie traded at 94.08 U.S. cents.
China’s imports plunged 11.3 percent last month down from growth of 10.1 percent in February and below the survey forecast for a 3.9 percent expansion. China’s export data have been distorted by inflated numbers in early 2013, when some companies filed fake invoices to disguise capital inflows.
“The data is fueling concerns about the emerging market economies,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd., which manages the equivalent of $474 billion. “March should be free from distortion from Lunar New Year, and the fact that imports dropped this much implies huge impact on the global economy.”
The Kospi index in Seoul was little changed after three days of gains. Benchmark gauges in Taiwan and Singapore also fell. Australia’s S&P/ASX 200 index climbed 0.4 percent after rising as much as 0.7 percent, while the NZX 50 Index in Wellington advanced 1 percent
Yen Rebounds
Japan’s Topix was little changed after jumping as much as 1.5 percent earlier. The yen strengthened 0.3 percent, erasing yesterday’s decline and denting the prospects for exporters. Toyota Motor Corp., Japan’s largest listed company, retreated 2.3 percent, a sixth straight decline amid the stronger yen and a day after announcing a global recall of more than 6 million vehicles.
The won rose a third day, gaining 0.2 percent to 1,039.20. The currency earlier touched 1,031.55, the strongest level since August 2008. South Korea is closely watching capital flows as well as currency transactions at home and abroad, Choi Hee Nam, director general of the finance ministry, said in a text message today. The won leading April gains against the dollar among 10 Asian currencies tracked by Bloomberg.
China’s yuan slipped 0.2 percent in offshore trading while Canada’s so-called loonie slipped to C$1.0895 to the dollar. The Beijing leadership, under pressure to preserve growth in Asia’s largest economy, last week outlined an aid package that included spending on railways and tax breaks.
Boao Forum
Premier Li will speak at the Boao Forum for Asia’s annual conference today along with People’s Bank of China Governor Zhou Xiaochuan and Finance Minister Lou Jiwei. Adding stimulus to China’s economy would be a “mistake,” and the government needs to continue reforms aimed at redirecting the economy to one driven by consumption rather than the state, Nobel laureate economist Edmund Phelps said at the forum yesterday.
Copper was little changed at $6,615.25 a ton, erasing a gain of as much as 0.6 percent before China’s trade report. Tin was little changed at $23,250 a ton after advancing 0.2 percent. Nickel rose to $16,867 a ton and extended gains to a ninth straight day, the metal’s longest winning streak since October 2010, on concern that tensions in Ukraine may escalate amid a continuing ban on some ore exports from Indonesia.
Rupiah Drops
Indonesia’s rupiah,the best-performing Asian currency this year, slipped 0.6 percent after parliamentary elections. Joko Widodo, leader of the Indonesian Democratic Party of Struggle, or PDI-P, took 19.7 percent of the vote in parliamentary elections held yesterday, based on an unofficial tally compiled by Lingkaran Survei Indonesia. That’s below the threshold required for a presidential candidate to stand alone.
Speculation Widodo, who is the governor of Jakarta and is known as Jokowi, would win the presidential election slated for July has helped Indonesia’s benchmark stock index rally 17 percent in the past three months and fueled gains of about 8 percent in the rupiah. Jokowi may have to form an alliance in order to stand in the ballot, limiting his ability to carry out reforms in Southeast Asia’s largest economy.
Several Fed officials noted that the increase in the median forecast for the U.S. benchmark rate “overstated the shift in the projections,” according to the minutes. Some expressed concern that the estimates could be “misconstrued,” the record showed.
Source: bloomberg
