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.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to