Asia: Stocks drop led by energy shares as October rally halts

[SYDNEY] Asian stocks fell, paring the benchmark regional equities gauge's biggest monthly rally in five years, as energy and material shares led losses and casino stocks trading in Hong Kong slumped.

BHP Billiton Ltd., the world's largest mining company, slipped 2.9 per cent in Sydney as commodity companies extended Monday losses. Wynn Macau Ltd sank 0.5 per cent in Hong Kong as gaming revenue at Macau casinos dropped. Gold futures dropped the most this month, dragging Newcrest Mining Ltd down 5.1 per cent in Sydney. Tokyo Electric Power Co tumbled 4.5 per cent in Tokyo as NHK reported that Japan's Health Ministry said for first time that leukemia in an employee who worked at its Dai-Ichi power plant resulted from the March 2011 nuclear disaster.

The MSCI Asia Pacific Index slipped 0.1 percent to 133.98 as of 4:01 pm in Tokyo. The gauge surged 8.3 per cent this month through Monday, on course for its best monthly advance since September 2010, as Chinese shares rallied and traders pushed back expectations on the timing of the Federal Reserve's first interest-rate increase. The global stock rebound in October has restored more than US$4 trillion in equity value.

"The three-week recovery is approaching an exhaustion point," said Matthew Sherwood, head of investment strategy at Perpetual Ltd in Sydney, which manages about US$21 billion. "Valuations have expanded and 2016 earnings have not been upgraded."

The October surge pushed valuations on the MSCI Asia Pacific index this month back above their five-year average, Bloomberg data show. The index trades at 13.6 times estimated earnings, the data show. Equity gains came after last quarter's volatility triggered by China's surprise decision to devalue the yuan in August.

Hong Kong's Hang Seng Index declined 0.4 per cent and the Hang Seng China Enterprises Index of mainland firms listed in the city retreated 0.4 per cent. Financial markets in Hong Kong will be closed on Wednesday for a public holiday. The Shanghai Composite Index advanced 1.1 per cent as small-company shares advanced.

Raw-materials shares extended Monday's losses as data showed China's economy grew last quarter at the slowest pace since the global financial crisis.

Financial Inquiry Australia's S&P/ASX 200 Index dropped 0.6 per cent. The nation's banking regulator will take additional steps by the end of 2016 to ensure Australia's lenders have strong capital levels, the government said Tuesday in its response to the Financial System Inquiry.

Commonwealth Bank of Australia, the nation's biggest, fell 0.9 per cent and Westpac Banking Corp. retreated 1.6 per cent.

South Korea's Kospi index advanced 0.4 per cent and New Zealand's S&P/NZX 50 Index rose 1 per cent. Singapore's Straits Times Index gained 0.1 percent and India's S&P BSE Sensex Index added 0.2 per cent.

Japan's Topix index gained 0.3 per cent. Investors offered to buy shares in Japan Post Holdings Co's banking and insurance units for more than their initial public offering prices, a sign of appetite for the nation's biggest privatization in almost three decades.

Japan Post Insurance Buyers were willing to pay 2,350 yen a share for Japan Post Insurance Co as of 3 pm in Tokyo in the so-called gray market, according to Churchill Capital Ltd. That was 6.8 per cent above the IPO price of 2,200 yen. Japan Post Bank Co was bid at 1,550 yen, compared with its official price of 1,450 yen. Churchill Capital Ltd said the bank was bid at 1,510 yen, while investors offered to buy the insurer for 2,290 yen. Both brokerages said no trades were made as nobody agreed to sell the shares.

E-mini futures on the Standard & Poor's 500 Index slipped 0.1 per cent. The underlying gauge closed little changed on Monday at the highest level since Aug 20, rising above a level where past rallies since the summer selloff have lost momentum. International Business Machines Corp fell in late trading as quarterly revenue missed estimates.

BLOOMBERG