Asia Stocks Drop as Hong Kong Shares Start Fourth Quarter Lower

(Bloomberg) -- Asian stocks fell as Hong Kong stocks dragged the regional benchmark index lower.

The MSCI Asia Pacific Index declined 0.8 percent to 163.72 as of 4:35 p.m. in Hong Kong. The Hang Seng Index fell 2.4 percent on its first trading day of the fourth quarter. Some blamed China’s weak manufacturing data over the weekend for the losses, as well as reports of a U.S. warship sailing close to islands claimed by China. Mainland markets and exchange links with Hong Kong are shut throughout the week.

Other benchmark indexes from Indonesia to Taiwan fell more than 1 percent Tuesday.

"The escalation of trade tensions between the U.S. and China recently has likely weighed on purchasing managers’ sentiment," Bank of America Merrill Lynch economists including Sylvia Sheng wrote in a note. "We expect China’s policymakers to step up easing to soften the blow from higher tariffs."

Japan’s Topix index advanced 0.3 percent, while the Nikkei 225 closed 0.1 percent higher after reaching at a 27-year high Monday. Toyota Motor Corp. rose 1.6 percent in Tokyo, providing the biggest boost to the MSCI Asia Pacific Index, as a trade deal between the U.S. and Canada spelled relief for Japanese car manufacturers. India is closed for a holiday.

Summary

• Hang Seng China Enterprises down 2.4%
• Taiwan’s Taiex index down 1.2%
• South Korea’s Kospi index down 1.3%; Kospi 200 down 1.2%
• Australia’s S&P/ASX 200 down 0.8%; New Zealand’s S&P/NZX 50 little changed
• Singapore’s Straits Times Index down 0.4%; Malaysia’s KLCI up 0.2%; Philippine Stock Exchange down 1.2%; Jakarta Composite down 1.3%; Thailand’s SET down 0.6%; Vietnam’s VN Index up 0.6%

--With assistance from Moxy Ying.

To contact the reporter on this story: Fox Hu in Hong Kong at fhu7@bloomberg.net

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Margo Towie

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