Asian stocks fell, with the regional benchmark index recording its biggest weekly retreat in six weeks, as political wrangling in Greece put a European rescue package in doubt and China’s manufacturing growth slowed.
The MSCI Asia Pacific Index declined 3.6 percent to 120.22 this week, its biggest weekly drop since the period ending Sept. 23. Stock prices fell after Greek Prime Minister George Papandreou announced on Oct. 31 a parliamentary confidence vote and his desire to hold a referendum on Europe’s rescue pact. He scrapped the plan on Thursday, the same day the European Central Bank unexpectedly cut interest rates, spurring a regional rally.
“People were naturally skeptical that the resolution agreed last week in Europe was going to bring an end to the volatility in markets, and that’s clearly the case with what we’ve seen,” said Tim Schroeders, who helps manage US$1 billion in equities at Pengana Capital Ltd in Melbourne.
“The deteriorating global economic growth indicators are an increasingly uncertain backdrop,” he said.
Japan’s Nikkei 225 Stock Average fell 2.75 percent, South Korea’s KOSPI dipped 0.16 percent and Singapore’s Straits Times Index slid 1.67 percent. Australia’s S&P/ASX 200 fell 1.7 percent, while Hong Kong’s Hang Seng Index dropped 1.1 percent after the territory’s home sales slid.
Taiwan’s benchmark TAIEX bucked the trend, however, edging up 0.2 percent to close the week at 7,603.23. Buying focused on large-cap stocks across the board, especially financial heavyweights, amid optimism toward the European financial conditions after uncertainty imposed by the referendum was removed, dealers said.
“Investors hailed the move by Greece to cancel the poll,” Concord Securities (康和證券) analyst Kerry Huang said. “The market has turned upbeat and believed that Greece will soon obtain a new batch of rescue money soon as the European leaders have promised to avoid an immediate default.”
Huang said market sentiment had improved as fears of a liquidity crisis had been reduced.
“After yesterday’s [Thursday’s] sell-off, investors simply seized the opportunity to hunt bargains among large cap stocks and that’s why the index made such a significant advance,” he said.
The Shanghai Composite Index also advanced, rising 2.2 percent on speculation the government would accelerate measures to boost the economy after a report on non-manufacturing industries signaled tight monetary policies are hurting businesses.
The MSCI Asia Pacific Index declined 12.7 percent this year through Thursday, compared with a 0.4 percent drop by the S&P 500 and a 13.1 percent loss by the STOXX Europe 600 Index. Stocks in the Asian benchmark were valued at 12.8 times estimated earnings on average, compared with 12.6 times for the S&P 500 and 10.3 times for the STOXX 600.
In other markets on Friday:
Mumbai rose 0.46 percent, or 80.7 points, from Thursday to 17,562.61.
Manila rose 1.46 percent, or 61.5 points, from Thursday to 4,271.72.
Wellington closed 0.61 percent, or 20.3 points, higher from Thursday at 3,331.79.