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.