Asian stocks fell, with the regional benchmark index capping its biggest weekly loss this year, after the US Federal Reserve dampened expectations for more monetary easing and on renewed concern Europe’s debt crisis would weigh on economic growth.
The MSCI Asia Pacific Index fell 1.3 percent to 124.91 this week, the most since the period ended Dec. 16. The measure has gained 9.7 percent this year amid signs the US economy is recovering. Gains slowed after China last month cut its target for economic growth, seeking to cool its property market and become less reliant on exports.
“You can’t stay confident about the US economy without policy support,” said Kazuyuki Terao, chief investment officer of RCM Japan Co. “Europe’s economy faces a downside risk, and it remains to be seen whether it will spread across the world.”
Trading volume across Asia fell during market holidays. Japan and South Korea were the only major markets open all week, as others closed for either the Tomb Sweeping Holiday or the Easter holidays. The Nikkei-225 Stock Average plunged 3.9 percent this week, the biggest weekly loss since the period ended Aug. 5, as the yen strengthened, dimming the earnings prospects for Japanese exporters. South Korea’s KOSPI added 0.7 percent.
In Taipei, a proposal to exclude certain foreign investors and retail investors from a proposed capital gains tax helped shares edge higher on Friday, breaking a three-session losing streak. The TAIEX rose 0.9 percent to 7,706.26 at the close, but it was still Asia’s worst- performing benchmark stock gauge in the past five trading days. It closed the week down 2.9 percent.
Hong Kong’s Hang Seng Index added 0.2 percent on the week. Australia’s S&P/ASX 200 Index lost 0.4 percent, while Singapore’s Straits Times Index dropped 0.8 percent.
The Shanghai Composite Index advanced 1.9 percent on speculation China would ease monetary policy further to spur growth.
Asian stocks fell after the US Federal Reserve’s meeting minutes revealed on Tuesday showed it’s holding off on increasing monetary accommodation.
“The perception is that you’re taking away the safety net of excess liquidity that lifted asset prices and at the same time the prospects for growth that beat expectations aren’t that good,” said Tim Schroeders, of Pengana Capital Ltd in Melbourne. “Under that scenario and given the exceptionally good run we’ve had year-to-date, people are reassessing their risk-reward scenarios.”
Exporters and resources companies fell after the release of the Fed notes. Stocks also fell after sluggish demand at Spain’s debt sale and slowing German factory output fueled concern Europe’s debt crisis was spreading and the economy was contracting.
“Investors realize those economies are heading into a significant recession,” said Andrew Pease, chief investment strategist for the Asia-Pacific region at Russell Investment Group in Sydney. “Gains from here are going to be hard work.”