By Daniel Inman
Asian stocks dropped after China's leaders failed to provide a
clear direction on policy over the coming decade, pushing down the
Hong Kong index by the most since late August.
Stocks in China in particular reacted badly to Tuesday's
conclusion of the Third Plenum -- a four day meeting that is
supposed to set the course for the world's second-largest economy
for the coming 10 years. The communique that followed the meeting
said market forces would play a "decisive" role in future economic
decisions but was lacking in specific details.
Hong Kong's Hang Seng Index fell 1.9% to 22,463.83. Chinese
companies listed in the city slumped, with the Hang Seng China
Enterprises Index plunging 2.7% to 10276.61. The Shanghai Composite
fell 1.8% on the mainland.
China economic data have picked up in recent months, relieving
concerns over a slowdown earlier in the year. The Third Plenum was
important because it gave an opportunity for the new government to
present a plan on how it would reshape the economy in order to
achieve sustainable growth. The negative market reaction points
toward dissatisfaction over the lack of details after the
meeting.
"The communique doesn't provide investors with any upside
surprise, and closely watched reforms in state-run enterprises are
missed in the documents," said Zhang Gang, an analyst at Central
China Securities.
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The absence of obvious plans to reform the state-owned sector
hit large companies owned by the government. The meeting failed to
offer plans on how to tackle issues such as restructuring China's
state-owned companies or liberalizing local interest rates.
Banks fell sharply in Hong Kong, with China Merchants Bank Co.
losing 3.7%. Other companies weighing down Hong Kong included China
Petroleum & Chemical Corporation(SNP), which dropped 3%.
Disappointment over the much-anticipated meeting in Beijing was
felt across Asia, as Australia's S&P ASX 200 fell 1.4% to
5.319.20, South Korea's Kospi lost 1.6% to 1963.56 and Singapore's
Straits Times Index was down 0.4% late in Asia.
Japan's Nikkei shed 0.2% to 14,567.16 after a 3.6% gain over the
past two sessions -- the market's largest two-day rise since early
September. The move higher in stocks was encouraged by a weakening
of the yen, which started to fall at the end of last week after a
strong U.S. October labor report gave the dollar some upward
momentum.
After weakening towards the Yen100-to-the dollar mark in the
past few days, the yen (USDJPY) strengthened in Asia and was last
at Yen99.56 compared with Yen99.63 late Tuesday in New York.
Salary data weighed on Australia after local wages, excluding
bonuses, rose by a seasonally adjusted 0.5% in the quarter that
ended in September -- lower than a 0.7% consensus. The Australian
dollar dipped as low as 92.83 U.S. cents but bounced back to 93.04
U.S.
The regional earnings season continues. In Tokyo, Sumitomo
Mitsui Financial Group (SMFJY) rose 1.6 after the bank raised its
full-year net profit forecast to Yen750 billion from Yen580
billion.
Singapore Airlines was up 0.6% late in Singapore after the
carrier reported a sharp rise in its fiscal second-quarter net
profit, though it warned that margins will be under pressure in the
coming months.
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