Asia: Stocks drop on China concern as industrial profits fall

[SYDNEY] Asian stocks fell after the biggest drop in China's industrial profits since at least 2011 underscored the slowdown in the world's second-largest economy.

Toyota Motor and Sony were among the largest drags on the regional benchmark equity gauge as more than 1,000 Japanese companies traded without the right to the upcoming dividend. Markets in Hong Kong, Taiwan and South Korea are closed for holidays Monday, while mainland China will be shut from Thursday for a week-long break. In Australia, M2 Group surged 13 percent after Vocus Communications agreed to buy M2 in a A$1.93 billion (S$1.93 billion) deal.

The MSCI Asia Pacific Index slid 0.3 per cent to 124.65 as of 7:07 pm in Tokyo. The regional gauge has slumped about 15 per cent since the end of June, heading for its worst quarter since 2011, as the Federal Reserve prepares to raise interest rates with financial markets rattled by concern over China's economic outlook.

"Sure, there's been plenty of policy stimulus noise coming through in recent months, but it's not really yet getting enough traction to deliver much of a boost to growth" to the Chinese economy, Richard Jerram, chief economist at Bank of Singapore, told Bloomberg TV. "Even after Ms Yellen's comments last week we're not really any closer to understanding what they need to see before they raise rates." Chinese industrial companies' profits dropped 8.8 per cent to 448.1 billion yuan (S$100.42 billion) last month from a a year earlier, the National Bureau of Statistics said on its website. That's the steepest loss since at least October 2011, when the government began releasing monthly data. Profits in coal mining plunged 64.9 per cent, while oil and gas profits tumbled 67.3 per cent, according to the report.

The Shanghai Composite Index climbed 0.3 per cent as a rally among technology companies overshadowed the economic data. The gauge has slumped 28 per cent since June, the worst quarter since March 2008.

Japan's Topix index lost 1 per cent. More than 1,000 Topix members traded ex-dividend Monday, equating to a 10.8 point drag on the measure, data compiled by Bloomberg show.

India's S&P BSE Sensex Index dropped 1 per cent. Australia's S&P/ASX 200 Index gained 1.4 per cent and New Zealand's NZX 50 Index rose 0.2 per cent. Volume in Japan and Australia was at least 24 per cent lower than the 30-day average, Bloomberg data show.

E-mini futures on the Standard & Poor's 500 Index fell 0.4 per cent. A 2.7 per cent slump in health-care stocks left the US benchmark index down 0.1 per cent on Friday.

US House Speaker John Boehner will resign from Congress at the end of October, following clashes with conservative members of his Republican conference. For some traders, the move reduces the likelihood of a government shutdown as soon as October, while raising the specter of a stalemate later in 2015.

BLOOMBERG