Asian stocks dropped for a second week in July, trimming the regional benchmark index’s first monthly advance since April, as US lawmakers failed to break a deadlock over raising the federal debt limit and China increased lending restrictions to local governments.Li & Fung, the largest supplier of toys and clothes to retailers including Target Corporation and Wal-Mart Stores, sank 8.7 per cent in Hong Kong on speculation shipments to the US will weaken. Nintendo Co., the maker of the Wii game consoles, slumped 18 per cent after slashing its full-year profit forecast by 82 per cent. China Vanke Co., the nation’s biggest developer, fell 3.2 per cent in Shenzhen after the government prohibited banks from renewing loans to local financing vehicles.The MSCI Asia Pacific Index slid 1.6 per cent as better-than-estimated earnings from AIA Group and Cheung Kong Infrastructure were overshadowed by concern the US may default on its debt if lawmakers can’t reach an agreement on raising the government’s borrowing limit by Aug.2. For the month, the gauge increased 2.6 per cent after European leaders announced steps toward easing the region’s sovereign debt crisis.“It’s unbelievable, these guys are not just playing with financial markets but their own constituents’ jobs,” said Sydney-based Shane Oliver, head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management.“It’s certainly adding to stock-market nervousness. I think they will eventually get a deal that avoids massive spending cuts or default, but the risk is growing that they won’t.”Japan’s Nikkei 225 (NKY) Stock Average sank 3 per cent through the week. South Korea’s Kospi index declined 1.8 per cent. China’s Shanghai Composite Index dropped 2.5 per cent. Hong Kong’s Hang Seng Index was little changed.Australia’s S&P/ASX 200 Index slumped 3.9 per cent as a report published on July 27 showed the nation’s inflation rate gained more than economists forecast last quarter, increasing the chance that Reserve Bank of Australia Governor Glenn Stevens will resume tightening policy.
From / Gulf Today