HONG KONG (MarketWatch) — Asia stocks ended mostly lower Monday, with South Korean car makers and resource stocks trading in Hong Kong among the top decliners as caution reigned ahead of the U.S. presidential election.
“Markets are in an uncertain mode, given the nearing close-call U.S. elections, and this is not conducive to gains,” said Dariusz.Kowalczyk, an emerging markets strategist at Credit Agricole.
South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -1.49% fell 0.6%, China’s Shanghai Composite Index /zigman2/quotes/206600939/delayed CN:000001 -0.06% slipped 0.1% and Taiwan’s Taiex slid 0.4%, while Australia’s S&P/ASX 200 index /zigman2/quotes/210598100/delayed AU:XJO -0.33% climbed 0.3%.
China boycott costs Japan billions
The China-Japan dispute over a group of islands is taking a heavy toll on Japanese companies doing business in the Middle Kingdom.
U.S. shares fell on Friday, with nervousness over Tuesday’s presidential election overshadowing jobs data that showed nonfarm payrolls increased by 171,000 in October, more than the 120,000 rise expected by economists. Read: U.S. stocks fall sharply; election eyed.
The race between President Barack Obama and Republican challenger Mitt Romney is expected to be close, with the vast majority of national polls showing the gap between the two candidates within the margins of error. Read: Obama, Romney sprint to finish line.
Once the election is over, markets will likely be relieved, as “investors hate uncertainty,” said Craig James, chief economist at CommSec.
“We don’t expect a significant, sustained lift or slump in the share market if either Obama is returned or Romney is elected and a divided Congress is maintained ... [as] the incumbent will continue to haggle and do deals to advance policies” said James.
Some uncertainty may linger in Asia ahead of China’s 18th Party Congress later this week, where leadership changes are expected for the world’s second-largest economy.
But Barclays Capital strategist Yiping Huang said the leadership handover won’t alter the economic environment right away.
“Investors expecting immediate and drastic changes in policy or another big stimulus package will likely be disappointed,” Huang said.
Car makers skidded in Seoul, with Hyundai Motor Co. /zigman2/quotes/206684590/delayed KR:005380 -1.54% /zigman2/quotes/204364212/delayed HYMTF 0.00% dropping 7.2% and affiliate Kia Motors Corp. /zigman2/quotes/206019389/delayed KR:000270 -1.23% /zigman2/quotes/205439169/delayed KIMTF +8.21% sliding 6.9%. The losses came after the two car makers on Friday admitted to overstating fuel economy figures for some vehicles sold in the U.S. over the last two years.
/zigman2/quotes/206019389/delayed 000270 40,050.00, -500.00, -1.23%
/zigman2/quotes/210598069/delayed 180721 2,162.84, -32.66, -1.49%
“Apart from the direct compensation, Hyundai and Kia will need to pay to the affected customers, we think this may damage the Hyundai Motor Group brand value and sales volume, potentially leading to increased marketing expenses for the companies,” said analysts at Nomura. Read: Will Korean car makers’ woes help U.S., Japanese rivals?
In Tokyo, Toyota Motor Corp. /zigman2/quotes/203803129/delayed JP:7203 +1.10% /zigman2/quotes/200537742/composite TM -0.05% climbed 2.2% ahead of its earnings report due later in the day, as broadcaster NHK said the car maker would hike its full-year operating profit forecast.