Asian Stocks Decline as Commodity Rout Endures Amid Low Volumes

(Bloomberg) -- Asian stocks fell amid low trading volumes as commodity producers tracked a slide in industrial metals and crude oil.

“This is not a really welcoming environment for risk taking,” said Tim Condon, head of Asia research at ING Groep NV in Singapore. “Liquidity is beginning to dry up as people are waiting for what happens in December with the Fed. Worries about China persist.”

As the chances rise of a Federal Reserve interest-rate increase, the dollar is climbing, making commodities more expensive for buyers in other currencies. The London Metal Exchange index of six industrial metals has plummeted 27 percent this year, the worst annual performance since the global financial crisis in 2008.

The MSCI Asia Pacific excluding Japan Index lost 0.3 percent to 418.71 as of 4:13 p.m. in Hong Kong, after climbing 2.4 percent last week. BHP Billiton Ltd. was the biggest drag on the regional gauge, while Guotai Junan International Holdings Ltd. plunged as much as 17 percent in Hong Kong after the brokerage said it can’t contact its Chairman.

The Hong Kong unit of one of China’s biggest securities firms, Guotai Junan Securities Co., appointed temporary replacements after failing to reach its Chairman and Chief Executive Officer Yim Fung since Nov. 18, the company told the stock exchange on Monday. The executive “currently cannot discharge his duties,” the company said. Two calls to Yim’s mobile phone went to his voicemail box.

China’s Shanghai Composite Index retreated 0.6 percent and Hong Kong’s Hang Seng Index fell 0.4 percent. The China Securities Regulatory Commission has restarted IPOs for five companies to list on the Shanghai stock exchange and five in Shenzhen, according to a statement on its official microblog on Friday. The resumption shows authorities are becoming more confident the stock market can stand on its own after the index rallied back into a bull market this month.

Singapore’s Straits Times Index slipped 0.2 percent. Japan was closed for a holiday. The Kospi index added 0.7 percent, with volume about 21 percent below its 30-day average. Australia’s S&P/ASX 200 Index gained 0.4 percent and New Zealand’s S&P/NZX 50 Index rose 1.2 percent to a record high. Taiwan’s Taiex Index rose 0.2 percent.

U.S. Rates

With interest-rate futures now predicting a 70 percent probability that the Federal Reserve will raise U.S. rates next month and European Central Bank President Mario Draghi signalling he may soon boost stimulus, investors are watching economic data releases to assess global monetary policy divergence.

John Williams, president of the Federal Reserve Bank of San Francisco, said at the weekend that there was a “strong case” for a December rate hike, a day after his counterpart at the St Louis Fed, James Bullard, said the pace of any increases will be data dependent. The comments came after Draghi said ECB officials “will do what we must” to boost price growth, weakening the euro and fueling gains in shorter-maturity German bunds.

E-mini futures on the Standard & Poor’s 500 Index declined 0.1 percent. The underlying gauge gained 0.4 percent on Friday, taking its gain last week to 3.3 percent, the most since December.

Commodity Shares

Commodities producers accounted for the biggest declines on the Asia-Pacific regional gauge. Copper in London dropped to the lowest since 2009. BHP Billiton, the world’s largest mining company, declined 2.1 percent and Rio Tinto Ltd. slipped 1 percent in Sydney.

Woolworths Ltd. led consumer shares higher, climbing 3.9 percent, the most in three months, after the Australian Financial Review reported private-equity firms are eyeing the retailer’s Big W unit.

“Markets are going to be driven by expectations about the key coming events, which are the ECB next week and payrolls” in the U.S., Richard Yetsenga, head of global markets research at Australia & New Zealand Banking Group Ltd., told Bloomberg TV in Sydney. “Markets will be nervous ahead of that.”

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net; Jonathan Burgos in Singapore at jburgos4@bloomberg.net To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net John McCluskey