Asian stocks fell for a second week, led by Samsung Electronics Co and Cheung Kong (Holdings) Ltd, on concern that the US and China may raise interest rates to cool economic growth.
The Morgan Stanley Capital International Asia-Pacific Index shed 2.3 percent to 89.58 this week, following a 4.3 percent drop last week. The regional index has not fallen for two consecutive weeks since the week ended Feb. 6.
"Investors are now worried about interest rate increases in both US and China, which will surely hurt sentiment," said Tomokatsu Mori, who helps manage the equivalent of US$7.4 billion in assets at Fukoku Capital Management Inc. in Tokyo.
Japan's Nikkei 225 Stock Average lost 2.8 percent in a holiday-shortened week, while the broader Topix index slid 3 percent in two-day trading this week. The Japanese markets were closed for the Golden Week holiday and resumed trading Thursday.
South Korea's Kospi index slipped 2.8 percent this week, while Taiwan's TAIEX dropped 1.3 percent, its third weekly slide.
The US Federal Reserve said Tuesday it will lift interest rates at a "measured" pace to curb inflation. Investors are betting the central bank will start boosting lending rates in August by a quarter point, according to trading in federal funds futures. Two months ago, the futures were indicating just a 46 percent chance of an increase in that month.
"People are now expecting an interest rate hike in the US in August and that's not a good thing for stock markets," said Teo Chon Kiat, who helps manage about US$1.4 billion of Asian assets at DBS Asset Management Ltd. in Singapore. "Rising interest rates means higher borrowing costs."
Expectations that the Fed will raise interest rates soon increased after a US government report on Friday showed the number of Americans filing initial claims for jobless benefits dropped to 315,000 last week, the fewest since October 2000.
Meanwhile, the Chinese premier told a business forum in Brussels that he's taking "forceful" steps to restrain expansion in the economy, which grew 9.1 percent last year, without triggering a slump.
Commodities Fed Chairman Alan Greenspan said slowing growth in China may push commodities prices lower.
Cheung Kong, Hong Kong's second-biggest developer by market value, lost 2.9 percent this week. The Hang Seng Property Index, which tracks six developers, declined 3.6 percent on concern higher interest rates in the city would slow demand for properties.
Developers declined amid concern Hong Kong's monetary authority will follow the Fed in raising lending rates. Movements in Hong Kong's interest rates typically track US credit policy because the local currency is pegged to the dollar.
Aluminum Corp of China, the world's second-largest producer of alumina, plunged 5.5 percent. Toyota Motor Corp lost 3.3 percent in the past two days. Toyota derives 80 percent of its operating profit from North America.
Samsung Electronics Samsung Electronics, whose shares fell for the last eight sessions before Friday, the longest losing streak since 1996, declined 3.1 percent this week. Samsung Electronics is the world's largest memory-chip maker. Samsung Electronics had a record first-quarter profit.
"South Korean technology shares have gained this year because of strong first-quarter earnings," said Masaki Takahashi, who manages about US$500 million in Asia excluding Japan at Cigna International Investment Advisor in Tokyo. Hynix, for example, reported a record quarterly profit last week.
RSS