Asia: Stocks fall as China exports unexpectedly drop, yen gains

[SYDNEY] Asian stocks fell, led by Hong Kong equities, after China's exports unexpectedly declined. The yen strengthened on the data, reversing earlier gains in Japanese shares.

The MSCI Asia Pacific Index dropped 0.5 per cent to 138.03 as of 11:31am in Tokyo. Japan's Topix index slid 0.1 per cent after the yen rose against the US dollar, while Hong Kong's Hang Seng Index lost 1.2 per cent.

China's overseas shipments fell 5.6 per cent in yuan terms in September compared with the previous year to snap a six-month streak of gains, missing economists' forecasts for a 2.5 per cent increase.

Investors also weighed minutes from the Federal Reserve's September meeting, which showed several policy makers said a rate increase was needed "relatively soon".

"Asian shares are falling on a combination of the prospect of the US raising interest rates and a slowdown in global demand hurting China exports," said Andrew Sullivan, managing director of sales trading at Haitong International Securities Group Ltd in Hong Kong.

The Shanghai Composite Index slipped 0.1 per cent. Imports to China rose 2.2 per cent last month, short of estimates for a 5.5 per cent gain, leaving a trade surplus of 278.4 billion yuan (S$57.38 billion). Lacklustre trade data may increase pressure on the yuan while new property curbs challenge the resilience of the nation's economic recovery.

The Topix, which was up as much as 0.9 per cent earlier when the yen was down, slumped along with regional gauges after the yen reversed its decline. Australia's S&P/ASX 200 Index lost 0.9 per cent and New Zealand's S&P/NZX 50 Index added 0.2 per cent.

South Korea's Kospi index slid 0.7 per cent. Samsung Electronics Co Ltd jumped 1.6 per cent, heading for its first advance in four days, The manufacturing giant said Wednesday that it now projects profit of 5.2 trillion won (S$6.38 billion) instead of 7.8 trillion won in the three months ended September, after ending production of its fire-prone Galaxy Note 7 smartphones.

Minutes of the Fed's September meeting showed the decision to keep rates on hold was a close call, with three Open Market Committee members voting to raise. The likelihood of a hike by year-end stands at 68 per cent, futures contracts show, compared with 59 per cent at the end of last month. Higher US rates would further amplify the country's divergence with policy approaches in Japan and Europe.

"The market is becoming more confident that there is growth momentum in the US economy finally," Paresh Upadhyaya, a Boston-based strategist at Pioneer Investment Management Inc, which oversees about US$221 billion, told Bloomberg Radio's Daybreak Asia programme.

"In the minutes, it changed its language to relatively soon, sending a really strong signal that they prefer to hike in December."

Thai assets are under pressure amid concern over the health of the king and on the prospect of a US rate increase this year. Thailand's benchmark equity gauge and currency have fallen every day after the royal palace said Sunday that King Bhumibol Adulyadej's condition was unstable. The 88-year-old monarch's health is closely watched as he is revered by many for what they say has been his unifying presence during a seven-decade reign.

S&P 500 Index futures lost 0.6 per cent. The underlying US equity gauge added 0.1 per cent Wednesday, near its average price during the past 100 days, after the steepest selloff in four weeks took it below that closely watched level for the first time since June.

BLOOMBERG