Asian stocks dropped this week on concern China will increase interest rates to cool economic growth. Denway Motors Ltd and Brilliance China Automotive Holdings Ltd, which make cars in China, led the slide.
"We may not be able to bet on continued demand" from China, said Nobuki Goto, who helps manage the equivalent of US$14 billion at Tokio Marine Asset Management Co in Tokyo. "Markets that have been depending on that demand such as Taiwan are going to be more vulnerable."
The Hang Seng China Enterprises Index sank 11 percent this week and was the worst performer among 60 global benchmarks compiled by Bloomberg. All of the index's 37 companies, known as H shares, fell. The Shanghai Composite Index, tracking the larger of China's two stock markets, slid 3 percent. Shenzhen's composite lost 3.4 percent.
The Morgan Stanley Capital International Asia-Pacific Index, which consists of more than 900 stocks, shed 0.8 percent.
Prospects of higher rates in the US, the biggest destination for Asian exports, also helped push down indexes in Hong Kong, Japan and Taiwan for their second declining week in three.
The Standard & Poor's 500 added 0.3 percent, and the Dow Jones Industrial Average gained 0.4 percent. The NASDAQ Composite Index advanced 0.2 percent on expectations second-quarter earnings growth at companies will surpass estimates amid signs of an economic expansion.
China's central bank held a monetary policy meeting on Friday, on which officials declined to comment. Premier Wen Jiabao said June 13 China's government faces a "tough job" to slow growth in the world's seventh-largest economy, which grew at a 9.8 percent annual rate in the first quarter.
Wen's comments, and US reports this week showing rising retail sales, industrial production and producer prices, fueled speculation that higher interest rates are warranted.
The prospect of higher rates "is a concern and the concern is more at the company level," said Choo Yoon Lai, who helps manage about US$2 billion at Comgest (Far East) Ltd. Chinese property, steel and auto manufacturing companies will be most affected, Choo said.
Stock in carmakers fell. Denway plunged 22 percent and Brilliance China tumbled 15 percent in the five days ended Friday. The companies, which both have joint ventures in China, were among the worst performers on the MSCI index.
Jiangxi Copper Co, China's biggest producer of the metal, plunged 16 percent and Aluminum Corp. of China Ltd, the nation's biggest maker of the metal, slumped 15 percent.
Benchmarks around the region also fell after reports this week showed US retail sales rose 1.2 percent in May, and another said industrial production increased 1.1 percent last month, the most in almost six years.
Producer prices climbed 0.8 percent in May, the biggest jump in more than a year, and so-called core prices, which exclude food and energy, rose 0.3 percent, the most since January. The figures, released by the US Labor Department, were higher than the median estimate in a Bloomberg survey.
The reports stoked concerns the US Federal Reserve may have to be more aggressive in raising rates. Higher borrowing costs may hurt spending.
"Higher interest rates will mar the outlook for economic growth," said Hiroshi Mizutani, who helps manage US$3.7 billion in equities at Asahi Life Asset Management Co in Tokyo.
The US is Taiwan's second-largest export market after China. Hong Kong, Singapore and South Korea each ships about a fifth of its goods to the world's largest economy.
China Airlines sank 15 percent. Taiwan's largest air carrier got almost two-fifths of its sales from the US last year, according to Bloomberg data. Compeq Manufacturing Co, the island's No. 1 maker of boards that connect parts in cellphones made by companies such as and Motorola Inc, lost 11 percent.
In Japan, Tokyo Electron Ltd., the world's second-largest maker of semiconductor production equipment, and Kyocera Corp, the world's No. 1 maker of ceramic packaging used to protect finished microchips, also declined.
Other losers included UFJ Holdings Inc, Japan's fourth-largest lender by assets, which dropped 7.2 percent in the week just ended. Inspectors at the Financial Services Agency found documents at UFJ Bank Ltd. in October that didn't match ones it had submitted earlier, the Nihon Keizai Shimbun reported.
Ranbaxy Laboratories Ltd and Dr. Reddy's Laboratories Ltd led the slide among drugmakers in India.
Softbank Group Corp plans to keep a stake in the chip designer Arm Ltd, even if it sells a partial interest to Nvidia Corp, the Nikkei reported. The companies are negotiating terms, the newspaper reported, citing sources. Softbank might take a stake in Nvidia after it buys Arm, the report said. Nvidia and Arm might also merge through a share swap, and Softbank would become a major shareholder in the combined company, it said. The two parties aim to reach a deal in the next few weeks, the sources said, asking not to be identified because the information is private. Nvidia is the
MOVING FROM CHINA? The article did not name the company, but Foxconn, Wistron and Pegatron were among firms chosen for a production-linked incentive plan in India An Apple Inc vendor is looking at shifting six production lines to India from China, which could result in US$5 billion of iPhone exports from the South Asian nation, the Times of India reported, citing people familiar with the matter who it did not identify. The establishment of the facility would create about 55,000 jobs over about a year, the newspaper reported, not naming the Apple vendor. It would also cater to the domestic market and expand operations to include tablets and laptops, the newspaper reported. Samsung Electronics Co and Apple’s assembly partners are among 22 companies that have pledged 110 billion
‘ONE-STOCK SHOW’: Turnover hit an all-time high as TSMC continued to determine the local market’s direction and surpassed Visa in market capitalization The TAIEX early yesterday hit an all-time intraday high on the back of soaring Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) shares, before tumbling back to the previous day’s close as the contract chipmaker could not single-handedly prop up the index. The TAIEX rose more than 400 points in the first 20 minutes of trading to hit a record 13,031.7 points, but later pared its gains to close down 0.01 percent at 12,586.73. Turnover was NT$343.252 billion (US$11.63 billion), the highest in the Taiwan Stock Exchange’s history. TSMC continued to dictate the market’s direction, as its early surge by the daily
Gold surged to a fresh record on Friday, fueled by US dollar weakness and low interest rates, while silver headed for its best month since 1979. Spot bullion is up more than 10 percent this month, as US real yields lingered near record lows. While the ferocity of rallies in gold and silver cooled in the middle of the week, most market watchers predict there might be more gains ahead. Both metals have added about 30 percent this year, with gold and silver exchange-traded funds boosting holdings to a record, as concern about the fallout from the COVID-19 pandemic fuels demand for