Asia stocks traded mostly lower Monday, with investors cautious ahead of the U.S. presidential election, with resource shares and Korean car makers among the top decliners.
Hong Kong’s Hang Seng Index slipped 0.4%, while Japan’s Nikkei Stock Average lost 0.7%.
South Korea’s Kospi fell 0.6%, and the Shanghai Composite index edged down 0.4%, although Australia’s S&P/ASX 200 index traded up 0.4%.
“Markets are in an uncertain mode, given the nearing close-call U.S. elections, and this is not conducive to gains,” said Dariusz.Kowalczyk, emerging markets strategist at Credit Agricole.
U.S. shares fell on Friday, with election nervousness overshadowing jobs data that showed nonfarm payrolls increased by 171,000 in October, more than the 120,000 rise expected by economists.
Tuesday’s presidential election between President Barack Obama and Republican challenger Mitt Romney is expected to be a close race, with the vast majority of national polls showing the gap between the two candidates within the margins of error.
Once the election is over, markets will likely be relieved, as “investors hate uncertainty,” said Craig James, chief economist at CommSec.
“We don’t expect a significant, sustained lift or slump in the share market if either Obama is returned or Romney is elected and a divided Congress is maintained … [as] the incumbent will continue to haggle and do deals to advance policies” said James.
Some uncertainty may linger in Asia ahead of the start Thursday of China’s 18th Party Congress — where leadership and policy changes for the world’s second-largest economy are expected to take place.
But Barclays Capital strategist Yiping Huang said the leadership handover won’t alter the economic environment right away.
“Investors expecting immediate and drastic changes in policy or another big stimulus package will likely be disappointed,” Huang said.
Car makers skidded in Seoul, as Hyundai Motor Co. dropped 7.7% while affiliate Kia Motors Corp. fell 6.6%. On Friday, the two car makers admitted to overstating fuel economy figures for some vehicles sold in the U.S. over the last two years.
“Apart from the direct compensation, Hyundai and Kia will need to pay to the affected customers, we think this may damage the Hyundai Motor Group brand value and sales volume, potentially leading to increased marketing expenses for the companies,” said analysts at Nomura. Read: Will Korean car makers’ woes help U.S., Japanese rivals?
Meanwhile, the U.S. jobs figures led investors Friday to question the longevity and future size of easing measures from the Federal Reserve, pushing gold and oil futures sharply lower in New York and the dollar higher. Read: Gold drops over $40, suffers fourth weekly loss
Hong Kong-listed oil firms were under pressure after the selloff for commodities in New York on Friday, with Cnooc Ltd. down 0.7%, PetroChina Co. lower by 1.5%, and China Petroleum & Chemical Corp. losing 1.1%.
Similarly, gold miners saw selling, with Zijin Mining Group Co. down 2.6% in Hong Kong, while Newcrest Mining Ltd. fell 1.8% in Sydney.
Tech shares worked to keep the broader Tokyo market negative, with Sharp Corp. falling 7.3% after Fitch Ratings late Friday cut its rating on the firm to B- from BBB- with a negative outlook.
“The downgrade reflects growing risks to Sharp’s liquidity position, reinforcing Fitch’s view that the technology company will struggle to turn its business around,” Fitch said.
Sony Corp. lost 2.7% after its first-half earnings results prompted Moody’s to warn of a possible downgrade.
Electricity supplier Kansai Electric Power Co. retreated 6.8%. The Nikkei business daily reported that Japanese officials haven’t reached a decision on whether a fault found at one of the firm’s nuclear-power plants should be considered active and plan to hold a meeting on Wednesday with the firm.
Daiwa Securities Group Inc. shed 2.4% despite the broker posting a swing to profit in the first fiscal half, as its European and Asia operations continued to lose money.
Foster Electric Co. bucked the lower tech-sector trend in Tokyo, rallying 13% after the Apple Inc. supplier said Friday that it expects its fiscal-year net profit to surge to 4.3 billion yen ($53.5 billion), a ¥1.3 billion upgrade from its prior forecast.
In other Apple-related moves, Hong Kong-listed shares of tech major Foxconn International Holdings Ltd. exploded 40% higher after some analysts said that the firm will start making iPhones.
Foxconn International parent Hon Hai Precision Industry Co. already assembles the popular handset. Shares of Hon Hai fell 1.2% in Taipei.
Japanese car makers saw some gains, after the dollar rose sharply against the yen Friday and as their Korean peers saw stock losses, with Honda Motor Co. up 0.7%.
Toyota Motor Corp. climbed 2.1% ahead of its earnings report due later in the day, as broadcaster NHK said the car maker would hike its full-year operating profit forecast.
Sydney-listed shares also received earnings support, as Westpac Banking Corp. advanced 1.6%, after unveiling a 5% increase in fiscal-year adjusted profit that exceeded analyst expectations.
Miners were gaining as well, with Rio Tinto Ltd. up 2.6% and BHP Billiton Ltd. ahead by 1.4%.
Marketwatch
