Asian stocks fell, dragging the region’s benchmark index to its second straight weekly drop as China restricted bank lending, stoking concern anti-inflation policies may slow growth in the world’s second-biggest economy.
Industrial & Commercial Bank of China Ltd (中國工商銀行), China’s biggest lender, lost 1.1 percent in Hong Kong. Japanese banks fell as the government said lenders might have to write off loans to Tokyo Electric Power Co (TEPCO), owner of a nuclear reactor crippled by the March earthquake and tsunami.
The MSCI Asia Pacific Index declined 1 percent to 136.17 this week. The gauge dropped 1.4 percent the previous week as US economic data and plunging commodity prices added to signs a global economic recovery is faltering and as the US Federal Reserve prepares to end a US$600 billion asset-purchase program known as quantitative easing.
“Investors are worried inflation may slow a recovery in the global economy,” said Masaru Hamasaki, chief strategist at Toyota Asset Management Co in Tokyo. “That may cause a slump in global demand, trimming companies’ earnings outlooks.”
Taiwan’s TAIEX was a winner, gaining 0.3 percent from 8,977.23 on May 6 to close at 9,006.61.
Japan’s Nikkei 225 Stock Average fell 2.1 percent. South Korea’s KOSPI index dropped 1.3 percent. Australia’s S&P/ASX 200 Index lost 0.7 percent in the week, as Australia’s statistics bureau reported the nation’s employers unexpectedly cut workers last month by the most since 2009.
China’s lenders dropped after the nation’s central bank on Thursday raised lenders’ reserve requirements for the fifth time this year, prompting analysts from Credit Suisse Group AG to Citic Securities Co to predict further tightening.
China’s inflation held above 5 percent last month and lending exceeded analyst estimates, signaling that further monetary tightening may be needed to cool the world’s fastest-growing major economy.
“Markets always struggle with tightening cycles,” said James Holt, Sydney-based director of BlackRock Investment Management (Australia) Ltd. “The China inflation data show that the country will need to do more tightening.”
“China’s reserve ratio requirement rise has been seen by some investors as adding to the risks of a hard landing,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd in Sydney. “This perception is mistaken.”
Mitsubishi UFJ Financial Group Inc, Japan’s biggest publicly traded lender, fell 2.5 percent to ￥383, while smaller rival Sumitomo Mitsui Financial Group Inc declined 3.3 percent to ￥2,452 after Japanese Chief Cabinet Secretary Yukio Edano told reporters that “people won’t support” using taxpayer funds for TEPCO unless banks waive some loans made before the March 11 earthquake.
TEPCO lost 0.4 percent to ￥453 after Kyodo News reported this week that the utility found holes in the bottom of the pressure vessel of a reactor.
In other markets on Friday:
Manila closed 0.46 percent, or 19.90 points, lower from Thursday at 4,292.11.
Wellington ended 0.12 percent, or 4.13 points, off at 3,536.18 compared with Thursday.
Mumbai rose 1.07 percent, with the benchmark SENSEX 30 closing up 197.49 points from Thursday at 18,531.28.