Asian stocks fell, with the regional benchmark posting its largest weekly retreat since May, amid concern a slowdown in economies from China and South Korea to Australia would hurt corporate profits.
The MSCI Asia Pacific Index slid 2.8 percent, the largest weekly decline since the third week in May, to 115.28.
Data this week showed China’s economy expanded at the slowest rate in three years and Singapore’s GDP shrank last quarter as South Korea and Taiwan cut full-year forecasts, adding to concern that global growth is faltering.
“The global economy is deteriorating faster than central banks can ease policy,” said Tomomi Yamashita, a senior fund manager in Tokyo at Shinkin Asset Management Co, which oversees about US$6.3 billion. “Your best bet is to hold on to cash right now.”
Central banks in China, Europe, Taiwan, South Korea and Brazil have cut interest rates in the past fortnight to bolster economies against the impacts of Europe’s debt crisis and the faltering recovery in the US.
The MSCI Asia Pacific Index fell almost 11 percent from this year’s high on Feb. 29 through July 13, as the deepening crisis in Europe weighed on growth and corporate earnings.
Shares in the measure are valued at 11.75 times estimated earnings on average, compared with 13.06 times for the Standard & Poor’s 500 Index and 10.73 times for the STOXX Europe 600 Index.
Japan’s Nikkei 225 Stock Average lost 3.3 percent, snapping five weeks of gains, as the Bank of Japan altered its stimulus program without adding extra money.
The bank expanded its asset-purchase fund to ￥45 trillion (US$564 billion) from ￥40 trillion, while paring a loan program by ￥5 trillion.
South Korea’s KOSPI fell 2.4 percent as an unexpected interest rate cut from the Bank of Korea failed to alleviate investors’ concern that the central bank can spur growth. The MSCI Emerging Markets Index slid 2.1 percent this week.
Australia’s S&P/ASX 200 Index slid 1.8 percent after employers in the Pacific nation unexpectedly reduced payrolls last month and the jobless rate rose.
Hong Kong’s Hang Seng Index dropped 3.6 percent, the most since May, and China’s Shanghai Composite Index lost 1.7 percent as China’s growth slowed for a sixth quarter, putting pressure on Chinese Premier Wen Jiabao (溫家寶) to boost stimulus to secure a second-half rebound.
In Taiwan, the TAIEX dropped 0.37 percent on Friday to 7,104.27, capping a 3.6 percent loss this week, the first drop in five weeks.
The Taipei bourse extended losses on Friday from the previous session as market confidence remained haunted by worry over the global economy, dealers said.
Fears escalated that foreign institutional investors would continue to move their funds out of the country as the global financial markets face further volatility amid growth concerns, they said.
Concord Securities (康和證券) analyst Kerry Huang said that as there are few signs that the global economy will make a quick turnaround any time soon, investors were rushing to move their funds to the US dollar.
“A stronger US dollar has raised fears that foreign institutional investors will move more and more of their funds out of Taiwan, which is likely to further impact the local bourse,” Huang said. “With market confidence fragile, the local bourse simply could not get out of the current doldrums.”
During the morning session, China reported that its economy for the second quarter grew 7.6 percent from a year earlier, easing from an 8.1 percent increase recorded a quarter earlier.