Asian Stock Rally Stumbles on South Korean President's Tax Plan

(Bloomberg) -- South Korean stocks led losses in Asia after President Moon Jae-in announced plans to raise corporate and individual tax rates to address inequality.

The MSCI Asia Pacific Index declined 0.5 percent to 160.51 as of 11:33 a.m. in Hong Kong, retreating from near a 10-year high as it slipped for the first day in four. Samsung Electronics Co., Korea's biggest company, weighed the most on the measure, falling 2.5 percent.

Samsung's decline also helped pulled down Korea's Kospi benchmark, which declined as much as 2.2 percent, the biggest drop since Nov. 9. Moon's plan isn't a certainty because his party doesn't have a majority in parliament. His government also unveiled measures to cool the housing market.

“South Korea's tax plan and new measures will certainly slow fund inflows into the nation's assets,” said Jitra Amornthum, head of research at Finansia Syrus Securities Pcl in Bangkok. “Most investors will begin to reduce exposure in South Korea.”

A measure of regional technology stocks also retreated, with Tencent Holdings Ltd. and Taiwan Semiconductor Manufacturing Co. leading losses. The sector on Wednesday reached a 17-year high, buoyed by Apple Inc.'s forecast.

The next major data point comes Friday, when investors will look at U.S. jobs numbers for clues on the strength of the world's largest economy and the Federal Reserve's next policy move. Meanwhile, U.S. officials are said to be gearing up to investigate China over perceived violations of intellectual property -- any action is likely to effect global markets.

Summary

• Topix -0.2%, Nikkei 225 -0.3%
  • Shares in Tokyo Fluctuate as Investors Await Flood of Earnings
• Hang Seng Index -0.1%, Hang Seng China Enterprises Index -0.3%
  • Hong Kong Stocks Drop Off Two-Year High Amid Overbought Signals
  • Kospi -1.6%, Kospi 200 Index -1.6%
    • South Korean Stocks Worst in Asia Amid Moon's Corporate Tax Hike
    • Shanghai Composite Index -0.2%, Taiwan's Taiex Index -0.5%
    • Australia's S&P/ASX 200 Index -0.1, New Zealand's NZX 50 -0.4%
    • Straits Times Index -0.3%, FTSE Bursa Malaysia KLCI Index little changed, Philippine Stock Exchange PSEi Index little changed, Jakarta Composite Index -0.3%, Vietnam's VN Index +0.4%

    --With assistance from Livia Yap

    To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net.

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

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