Biggest Asian stocks loss for 7 months

Asian stocks declined, with the region's benchmark index posting its biggest loss since June, as concern that the global economic recovery is faltering spurred investors to sell riskier assets.

Sony Corp fell 3% in Tokyo, pacing losses among Japanese exporters. Tata Motors Ltd., India’s largest automaker by revenue, tumbled 6% in Mumbai after Managing Director Karl Slym died in Bangkok. GCL-Poly Energy Holdings Ltd, the world’s largest maker of polysilicon, declined 6.3% in Hong Kong after China set a lower-than-expected target for installed solar-energy capacity this year.

The MSCI Asia Pacific Index dropped 2.2% to 134.62 at 7.59pm in Tokyo to its lowest level since Sept 6. The gauge declined for the past four weeks. Japan’s Topix index sank 2.8% on Monday. Global stocks tumbled the most since June on Jan 24 as a selloff in emerging-market currencies prompted investors to seek havens.

"Optimism among global stock investors is waning," said Tetsuo Seshimo, a Tokyo-based portfolio manager at Saison Asset Management Co, which oversees about US$791 million. "Markets are losing momentum after rising a lot toward the end of last year."

The Asia-Pacific equity gauge is headed for its biggest monthly decline since May after a private gauge of China's manufacturing dropped to a six-month low in January, adding to signs growth in the world’s second-largest economy is slowing.

'Elevated' valuations

"There are real reasons to be cautious since market valuation is still relatively elevated," Chris Weston, chief strategist at IG Ltd in Melbourne, said by phone. "We've got numerous issues out of China, with manufacturing beginning to contract."

The Hang Seng China Enterprises Index of mainland Chinese companies listed in Hong Kong sank 2.2% to its lowest level in five months, while the city’s benchmark Hang Seng Index (HSI) dropped 2.1%. China's Shanghai Composite Index slipped 1%.

Trading volume on the Hang Seng Index was 56% greater than the 30-day average, while volume was 23% above average on the Topix and 70% higher on Singapore’s benchmark index, data compiled by Bloomberg show.

South Korea’s Kospi Index fell 1.6% to its lowest close since August. Taiwan’s Taiex Index lost 1.6%. Singapore’s Straits Times Index declined 1.1%. New Zealand’s NZX 50 Index decreased 0.4%. Australian markets were closed for a holiday.

Thai election

Thailand’s SET Index dropped 2% after a protest leader was shot and killed as groups seeking to block early voting for a Feb 2 election clashed with government supporters, prompting the Election Commission to repeat calls for the ballot to be delayed.

Japan reported a record annual trade deficit for last year as energy shipments and weakness in the yen pumped up the country's import bill. The shortfall was 11.5 trillion yen ($112 billion), almost double the previous year's 6.9 trillion yen, a finance ministry report showed in Tokyo today. Imports rose 25% in December from a year earlier and exports gained 15%, leaving a monthly deficit of 1.3 trillion yen.

Futures on the S&P 500 added 0.2% on Monday. The equity gauge tumbled 2.1% Jan 24 and has declined 3.1% this year.

Emerging-market volatility

Volatility in emerging-market equities jumped the most in two years last week, with the Chicago Board Options Exchange Emerging Markets ETF Volatility Index climbing 40% to 28.26, according to data compiled by Bloomberg. Bearish bets outnumbered bullish ones on the underlying exchange-traded fund by the most since July, with about 60% more puts than calls.

Japanese exporters declined after the yen rose 0.9% against the dollar on Jan 24. A stronger currency reduces the overseas income of the country's electronics manufacturers and carmakers when repatriated.

Sony fell 3% to 1,711 yen. Toyota Motor Corp, the world's biggest carmaker, slipped 2.1% to 6,039 yen. Canon Inc, the largest camera maker worldwide, dropped 2.5% to 3,089 yen.

Advantest Corp, a maker of semiconductor-testing devices and electronic measuring instruments, slid 6.1% to 1,207 yen on a Nikkei newspaper report that it probably had an operating loss for the nine months ended Dec 31.

Tata Motors decreased 6% to 348.25 rupees in Mumbai. Thailand police said they are investigating the death of Slym, head of the carmaker's Indian operations, who fell from the Shangri-La hotel in Bangkok and died.

'Negative surprise'

GCL-Poly Energy sank 6.3% to HK$2.53 in Hong Kong. China, the world's biggest solar market, plans to add 10 gigawatts of solar power in 2014, the same as last year's target, according to a National Energy Administration statement posted on Jan 24. That is less than the 14-gigawatt figure reported this month by state television.

"This announcement was a big, negative surprise to the solar sector," Michael Parker, a senior analyst at Sanford C Bernstein & Co in Hong Kong, said in a report on Monday. "If China is able to constrain the market to 10 gigawatt in 2014, that would be an unambiguous negative for the sector."

China Coal Energy Co slid 2% to HK$3.93 after the country's second-largest coal producer said net income last year probably slumped between 55% and 65%, citing a continuing decline in coal prices. China is seeking to cut its reliance on the fuel as part of an effort to ease air pollution in the country.

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