Asian stocks fell this week by the most since June amid concern that the US Federal Reserve would soon cut its record stimulus and that capital outflows from emerging markets would accelerate.
The MSCI Asia Pacific Index fell 2.2 percent this week, the steepest drop since the five days ended June 21, to 131.39, as the US Federal Open Market Committee’s (FOMC) minutes last month showed policymakers support the reduction of US$85 billion in monthly bond purchases. The regional gauge rose 1.4 percent on Friday, for its only gain this week, as reports from Europe, the US and China boosted confidence in the economic recovery. The MSCI Emerging Markets Index slumped 2.7 percent.
“It seems there’s obviously unanimous, broader support for tapering and it seems the prospect of tapering sooner rather than later is a good excuse for markets to have a correction,” Don Williams, chief investment officer at Platypus Asset Management in Sydney, said in an interview on Thursday. “The market is correcting and that might continue for some time.”
Stocks on Asia’s benchmark index were valued at 12.8 times estimated earnings on average, compared with multiples of about 15.1 for the Standard & Poor’s 500 Index and 13.9 for the STOXX Europe 600 Index, according to data compiled by Bloomberg.
Japan’s TOPIX slid 0.1 percent this week. Tokyo Electric led declines, tumbling 21 percent to ￥508 as a spill of contaminated water escalated into the biggest crisis at its Fukushima Dai-ichi nuclear power plant since the facility was smashed by a tsunami in March 2011.
Hong Kong’s Hang Seng Index fell 2.9 percent this week. China’s Shanghai Composite Index slid 0.5 percent as Everbright Securities (光大證券) tumbled 19 percent after its president resigned following erroneous buy orders, which the company estimates caused a loss of 194 million yuan (US$31.7 million).
In Taipei, the TAIEX slid 0.7 percent this week to 7,873.31. Stocks closed higher on Friday, as investors took cues from gains posted by Wall Street overnight to pick up bargains, breaking a three-session losing streak, dealers said.
Throughout the session, buying on Friday focused on large-cap stocks in both technology and old economy sectors, such as Taiwan Semiconductor Manufacturing Co (台積電), United Microelectronics Corp (聯電) and Formosa Plastics Corp (台塑), the dealers said.
Interest in market heavyweights pushed the index close to the nearest technical resistance level of around 7,900 points, before profit-taking emerged to limit the gains at the end of the session, they said.
“[Friday’s] reduced turnover showed that many investors were reluctant to chase prices at a time when market sentiment remained haunted by worries over a possible early exit by the Fed from its ... bond-buying program,” MasterLink Securities (元富證券) analyst Tom Tang (湯忠謙) said.
South Korea’s KOSPI fell 2.6 percent, while Australia’s S&P/ASX 200 Index gained 0.2 percent.
In other markets on Friday:
Wellington ended down 0.12 percent, or 5.65 points, from Thursday at 4,524.21.
Mumbai rose 1.13 percent, or 206.50 points, to 18,519.44 points.
Manila closed 0.4 percent higher, adding 24.48 points to 6,161.20.
NO VIRUS BLUES: A SEMI Taiwan official said that the virus does not slow down the global semiconductor industry’s investment in manufacturing equipment The production value of the nation’s semiconductor industry is expected to grow 16.7 percent this year from last year, outpacing the global industry’s 3.3 percent growth, industry association SEMI said yesterday. That would help Taiwan safeguard its second spot in the global semiconductor market with a production value of more than NT$3 trillion (US$102.73 billion), SEMI Taiwan president Terry Tsao (曹世綸) told a media briefing in Taipei for the Semicon Taiwan trade show beginning today. The global semiconductor industry’s production value is expected to increase to US$426 billion this year, SEMI said. In terms of semiconductor equipment investment, equipment billings from Taiwanese firms
NOTABLE SHIFT: By 2030, 50% of all laptops would be assembled in Southeast Asia, while Taiwan would still mostly focus on research and development, a report said Global laptop and desktop computer supply chains are expected to shift significantly away from China in the next 10 years, a Market Intelligence & Consulting Institute (MIC, 產業情報研究所) report said. By 2030, only 40 percent of global laptop production would remain in China, said the report, which was released on Thursday. “The reshuffling of the global supply chain will be one of the most important trends in the next 10 years,” the institute said in the report. “In the long run, key component makers will follow laptop assemblers in moving out of China.” The Taipei-based institute predicted most key component makers
Intel Corp has received licenses from US authorities to continue supplying certain products to Huawei Technologies Co (華為), a company spokesman said yesterday. Washington has been pushing governments around to world to squeeze out Huawei, saying that the telecom giant would hand data to Beijing for espionage. From Monday last week, new curbs have barred US companies from supplying or servicing Huawei. This week, the state-backed China Securities Journal reported that Intel had received permission to supply Huawei. China’s Semiconductor Manufacturing International Corp (SMIC, 中芯國際), which uses US-origin equipment to make chips for Huawei and other companies, last week confirmed that it had sought
Merck Group Taiwan yesterday said that it plans to invest substantially on expanding its fab in Kaohsiung’s Lujhu District (路竹) to better serve its local customers, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電). The company said it plans to expand its production space by 50 percent in the next five years and its workforce by about 40 percent, Merck Group Taiwan managing director Dick Hsieh (謝志宏) told a media briefing in Taipei. Hsieh declined to disclose investment details, but said that the latest investment would exceed the total amount Merck has invested in Taiwan over the past few years. Those investments would be