Asian stocks outside Japan fell this week, with the regional benchmark index slumping to its longest losing streak in two years, amid concern that US stimulus is nearing an end and that a cash crunch in China is worsening.
The MSCI Asia Pacific excluding Japan Index fell 4.5 percent to 420.30 this week, the biggest drop since May last year. The MSCI Asia Pacific Index, which includes Japanese shares, fell 4.1 percent on Thursday, the most since March 15, 2011, after US Federal Reserve Chairman Ben Bernanke said the Fed may cut stimulus this year.
“You tighten before the economy shows actual signs of strengthening and that means you are adopting a tighter monetary policy,” said Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management Ltd. “If the economy in the US is truly strong, then earnings will be strong, too. But that’s not the case. That’s why the market is falling.”
The MSCI Asia Pacific Index has retreated 12 percent from the closing level on May 20, which was the highest since June 2008. Asia’s benchmark trades at 12.3 times average estimated earnings, compared with multiples of 14.4 for the Standard & Poor’s 500 Index and 12.4 for the Europe STOXX 600 Index, according to data compiled by Bloomberg.
A gauge of energy companies had the biggest declines in the Asia-Pacific benchmark this year amid concern that China’s fuel demand would drop as growth slows. A measure of consumer discretionary companies has led gains.
Taiwan’s TAIEX retreated 1.8 percent this week to 7,793.31, with foreign institutional selling focusing on large-cap stocks. However, government-led funds were believed to have stepped in on Friday in a bid to prevent the broader market from falling further, dealers said.
“I suspect that the government jumped into the trading floor to lend support to share prices in an attempt to reduce anxiety among the investors here who were stunned by the dive on Wall Street,” Ta Ching Securities Co (大慶證券) analyst Andy Hsu said.
Support from government-led funds lifted market heavyweight Taiwan Semiconductor Manufacturing Co (台積電) off an early low of NT$101.50 to close at NT$103.50, down 0.48 percent for the day, Hsu said.
Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker, also benefited from bargain hunting to recover from an early low of NT$68.80, ending down 0.99 percent at NT$70.
Hong Kong’s Hang Seng Index declined 3.4 percent, extending its run of weekly losses to six, the longest streak since the global financial crisis of 2008. China’s Shanghai Composite Index dropped 4.1 percent, and a gauge of mainland firms listed in Hong Kong retreated 4.5 percent.
South Korea’s KOSPI lost 3.5 percent. Australia’s S&P/ASX 200 Index retreated 1.1 percent. Singapore’s Straits Times Index slipped 1.2 percent. Jakarta’s Composite Index tumbled 5.2 percent.
In other markets on Friday:
Manila fell 2.28 percent, or 144.5 points, from Thursday to 6,182.17.
Wellington shed 0.81 percent, or 35.45 points, to 4,363.07.
Mumbai rose 0.29 percent, or 54.95 points, to 18,774.24.