Asian Stocks Ex-Japan Retreat on Crude Drop; Topix Ends Higher

(Bloomberg) -- Asian stocks outside Japan slid from the highest level in almost a year as commodity producers tumbled amid declines in crude oil. Financial shares rallied in Tokyo after the Bank of Japan expanded exchange-traded fund purchases and kept its policy interest rate unchanged.

The MSCI Asia Pacific Excluding Japan Index fell 0.7 percent to 435.59 as of 4:12 p.m. in Hong Kong, trimming this month’s advance to 5.1 percent. After a wild ride for investors, the Topix index ended 1.2 percent higher, having changed direction at least 10 times, while the yen rose 1.4 percent. The Bank of Japan refrained from expanding the government bond purchases that have been the mainstay of its unprecedented monetary stimulus, opting instead to almost double the buying of ETFs.

“The market is probably holding judgement of the BOJ announcement today until the fiscal stimulus is announced,” Shane Oliver, Sydney-based global investment strategist at AMP Capital Investors Ltd., which manages more than $110 billion, said by phone. “Perhaps the BOJ wants more help from the government in terms of the stimulus and they’re not prepared to do anything in advance to that.”

The BOJ was widely expected to add to easing at the end of its two-day meeting, with 32 of 41 analysts in a Bloomberg survey forecasting the central bank would expand its record stimulus program. Prime Minister Shinzo Abe’s government added pressure on Wednesday as Kyodo News cited him as saying a fiscal stimulus package of more than 28 trillion yen ($267 billion) would be compiled next week.

In an unexpected development, Governor Haruhiko Kuroda has ordered an assessment of the effectiveness of BOJ policy, to be undertaken at the next meeting, which is scheduled for September.

The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong slid 1.4 percent. The Shanghai Composite Index slipped 0.5 percent, paring this month’s gain to 1.7 percent. The advance for July was the biggest since March as concern about a weaker yuan faded and data added to evidence of a stabilizing economy.

DBS Plunges

Singapore’s Straits Times Index fell 1.5 percent, set for its biggest decline in a month. DBS Group Holdings Ltd., Southeast Asia’s biggest lender, slumped by most since August 2015, after saying it expects to recover half of its S$700 million ($518 million) exposure to Swiber Holdings Ltd., a Singapore-listed offshore oil and gas services group that filed for liquidation on July 27.

Hong Kong’s Hang Seng Index declined 1.3 percent, South Korea’s Kospi Index fell 0.2 percent and Taiwan’s Taiex index sank 1 percent. The island’s economy expanded in the three months to June, ending three quarters of contraction, as demand for electronic goods increased. The Jakarta Composite Index retreated from the highest close since May 2015.

Australia’s S&P/ASX 200 Index increased 0.1 percent, extending an almost one-year high, amid expectations the central bank will cut rates when they meet next week as consumer-price growth remained subdued. New Zealand’s S&P/NZX 50 Index added 0.6 percent to close at a fresh all-time high.

BHP Billiton Ltd., the world’s biggest mining company and Australia’s largest energy producer, dropped 2.3 percent in Sydney. Crude oil headed for the biggest monthly drop in a year, while the Bloomberg Commodity Index was poised for its worst month since November.

Nomura Holdings Inc. surged 13 percent, leading gains in Tokyo, after Japan’s biggest brokerage unveiled plans to buy back more shares and posted its biggest overseas quarterly profit in seven years.

Futures on the S&P 500 Index fell 0.2 percent. The U.S. equity benchmark index gained 0.2 percent on Thursday, heading for a fifth monthly advance amid a raft of corporate results and ahead of data due Friday on the strength of the American economy.

--With assistance from Emma O'Brien To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net. To contact the editors responsible for this story: Jeff Sutherland at jsutherlan13@bloomberg.net, Chan Tien Hin, Ravil Shirodkar

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