Asian stocks fell this week, led by Sharp Corp and Taiwan Semiconductor Manu-facturing Co (TSMC, 台積電), on concern a decline in the dollar against regional currencies will reduce the value of exporters' overseas earnings.
Ricoh Co, Japan's second-largest office equipment maker, and Olympus Corp, the world's third-biggest seller of digital cameras, dropped after cutting sales forecasts because of the yen's gain. The dollar fell this week to a 3-and-a-half year low against the yen and a seven-month low against the New Taiwan dollar.
The US is Asia's biggest overseas market.
"We expect the dollar to continue to weaken gradually and we're staying away from exporters," said Teo Chon Kiat, who helps manage about US$1.4 billion in Asia, excluding Japan, at DBS Asset Management Ltd in Singapore.
The Morgan Stanley Capital International Asia-Pacific Index, which tracks 854 companies in the region, fell 0.8 percent in the past five days for its second weekly drop.
Benchmarks in China and Thailand were among the best performers in the region after government officials said they've made progress in containing bird flu.
Airline shares advanced after Singapore Airlines reported earnings that beat some forecasts and All Nippon Airways Co.
returned to profit. The Bloomberg Asia Pacific Airlines Index topped the performance of all 10 industry groups in the MSCI Asia Pacific Index.
In the US, The Standard & Poor's 500 Index gained 1 percent in the past five days, for its 10th weekly gain in the last 11. The Dow Jones Industrial Average snapped a two-week slide by gaining 1 percent to 10,593.03. The NASDAQ Composite dropped a third week to 2064.01.
All three indexes rose yesterday after a government report on job growth spurred optimism that the economy is expanding at a pace that will boost earnings without triggering a rise in interest rates.
Sharp, Japan's largest maker of liquid-crystal displays, shed 3.5 percent to ¥1,838 this week. Vice president Hiroshi Saji said on Monday that the company stuck to its profit forecast even as third-quarter net income surged 27 percent "because of uncertainty in the currency market." Ricoh lost 4.7 percent to ¥1,950. It cut its full-year sales forecast by 1.3 percent. Olympus shed 8.1 percent to ¥2,035 after lowering its full-year sales forecast to ¥650 billion (US$6 billion) from ¥660 billion.
Japan's Nikkei 225 Stock Average lost 3 percent and the Topix index declined 1.8 percent for the week.
TSMC, the world's biggest supplier of made-to-order chips, slipped 4.6 percent to NT$63.
To halt the dollar's decline, Asian governments including Japan have sold their own currencies. Taiwan's foreign-currency reserves rose to a record US$215 billion in January, indicating the central bank sold its currency for US dollars.
Japanese Finance Minister Sadakazu Tanigaki said he will tell his G7 counterparts that Japan is "ready to take action" to limit damage to exports by stemming the yen's yearlong rally. G7 finance ministers were meeting in Florida yesterday.
In China, the Shanghai Composite Index advanced 5.6 percent to 1679.19. Thailand's SET Index rose 1.8 percent to 711.15 in the week, rebounding from a 7.4 percent slump the previous week.
China's government said it has controlled all 23 known bird-flu outbreaks in the country after overcoming earlier failures in reporting the disease. Thai officials said the virus is now active in only one province, Bangkok, and has been cleared in 39 other provinces.
Anton Rychener, the UN agency's representative in Vietnam, said Friday bird flu has been found in pigs in the country, Agence France-Presse reported. A new strain mutated in pigs could be much more dangerous, officials at the World Health Organization have said.
Benchmarks in Hong Kong and Thailand slid last week on concern the spread of the bird flu virus in the region will damp travel demand and curb consumer spending.
"This is good progress for the government to clean up the infected areas," said Suppamas Payakapan, a strategist at Phillip Securities (Thailand) Pcl. "This works to help gain confidence among investors."
The Bloomberg Asia Pacific Airlines Index, which tracks 13 carriers in the region, gained 1.9 percent this week.
Singapore Air, the world's second-biggest carrier by market value, added 0.9 percent to S$11.40. The airline on Thursday said profit for the three months ended Dec. 31 more than doubled to S$378 million (US$224 million) from a year ago, topping the median forecast of four analysts surveyed by Bloomberg.
"It's a pretty good set of results," said Caleb Woo, who helps manages US$1.4 billion at DBS Asset Management Ltd in Singapore. "If you look at the regional traffic statistics for airlines, it's all been rising."
All Nippon Airways, Asia's second-biggest airline by sales, gained 1 percent to ¥292. The airline earned 6.9 billion yen in the third quarter, compared with a loss a year earlier, and plans to pay its first dividend in seven years.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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