Asian Stocks Decline a Third Day as Bullard Says New Fed Buying Unlikely By Jonathan Burgos - Jan 8, 2012

Asian stocks (MXAPJ) outside of Japan dropped for a third day after Federal Bank of St. Louis President James Bullard said the Fed probably won’t begin a new round of bond purchases amid “encouraging” U.S. economic data.

Samsung Electronics Co. (005930), the world’s second-biggest maker of mobile phones by sales, decreased 2.2 percent in Seoul. Hutchison Whampoa Ltd., the utilities company and port operator that gets more than half of revenue from Europe, fell 1.5 percent in Hong Kong after European economic confidence and German factory orders plunged. HTC Corp. dropped 2.7 percent in Taipei as the maker of smartphones posted its first drop in quarterly profit in two years.

“An improving U.S. economy doesn’t necessarily mean we’re firmly in a recovery,” said Lee King Fuei, a Singapore-based fund manager at Schroders Plc, which oversees about $326 billion of assets globally. “The question is how sustainable that will be. Europe remains a risk. We’ll probably see more pain before we see a resolution.”

The MSCI Asia Pacific Excluding Japan Index (MXAPJ) declined 1.2 percent to 391.57 as of 10:13 a.m. in Hong Kong, with more than four stocks falling for each that rose. The measure gained 0.9 percent last week as manufacturing growth from the U.S., Australia, China and India added to signs the global economy may withstand Europe’s debt crisis.

Australia’s S&P/ASX 200 Index (AS51) lost 0.4 percent after the country’s retail sales unexpectedly stalled, while South Korea’s Kospi Index declined 1.4 percent. Hong Kong’s Hang Seng Index dropped 1.3 percent. Japanese markets are closed today for a holiday.
‘Wait and See’

Futures on the Standard & Poor’s 500 Index (SPH2) slid 0.3 percent today. The gauge fell 0.3 percent in New York on Jan. 6 as a drop in the U.S. unemployment rate to 8.5 percent, the lowest since February 2009, failed to extend a weekly rally.

Exporters to the U.S. declined after Bullard said the Federal Reserve “probably could wait and see for now” before deciding whether there is a need for more accomodative policies.

Companies that get revenue from Europe also dropped after European economic confidence fell to the lowest in more than two years and German factory orders plunged by the most in almost three years, according to reports on Jan. 6. Separate reports showed euro-area unemployment remained at a 13-year high of 10.3 percent in November, while retail sales slipped 0.8 percent.

The MSCI Asia Pacific Index (MXAP) lost 17 percent in 2011 as China took steps to cool its property market and Europe struggled to resolve its debt crisis. The S&P 500 Index broke even for the year and the Stoxx Europe 600 Index dropped 11 percent. Stocks in the Asian gauge were valued at 12 times estimated earnings on average as of Jan. 6, compared with 12.1 times for the S&P 500 and 9.9 times for the Stoxx 600.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
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