Sat, Mar 15, 2014 - Page 14 News List

Stocks in Asia drop after cut in growth forecasts

Bloomberg and CNA

Asian stocks dropped, with a gauge of Chinese shares in Hong Kong flirting with a bear market, after at least four investment banks reduced their growth forecasts for the region’s biggest economy.

Taiwanese shares pulled back yesterday amid raised tensions in Ukraine.

The MSCI Asia Pacific Index fell 2 percent to 133.89 as of 2:30pm in Hong Kong, set for a one-month low and a weekly drop of 3.8 percent, its biggest decline since May 2012.

The Shanghai Composite Index lost 0.73 percent, or 14.77 points, falling to 2,004.34, while Hong Kong’s Hang Seng Index closed 1 percent lower, shedding 216.59 points to 21,539.49.

In Taipei, the TAIEX fell 0.69 percent, or 60.16 points, to 8,687.63.

“China’s growth is already moderating and corporate profits continue to be rather disappointing,” said Mikio Kumada, who helps oversee more than US$25 billion as Hong Kong-based global strategist at LGT Capital Partners.

There are “legitimate concerns about future profitability,” he said.

Bank of America Corp, UBS AG, JPMorgan Chase & Co and Nomura Holdings Inc lowered forecasts for China’s economic expansion for this year after the latest economic data released on Thursday showed factory output rose in January and last month at the slowest pace since the global financial crisis, while retail sales grew at the slowest rate for the period since 2004.

Chinese Premier Li Keqiang (李克強) told reporters on Thursday that the nation’s goal of 7.5 percent economic growth for this year is “flexible,” and some financial-product defaults may be unavoidable.

In Taiwan, the TAIEX closed down because of a heavy sell-off in New York and Europe in reaction to another batch of poor Chinese data and flaring tensions in Ukraine.

The bellwether electronics sector, which led the gains on the broader market in the previous session, suffered relatively heavy downward pressure as investors in Taiwan took cues from a slide on the tech-heavy NASDAQ index overnight, dealers said.

Old economy shares, in particular “China concept stocks,” which have close business ties with China, also trended lower in reflection of Beijing’s disappointing economic data, they added.

Minister of Finance Chang Sheng-ford (張盛和) said yesterday that he remains confident that the TAIEX will challenge the 9,000-point hurdle soon.

Saying that the weighted index on the main board is now hovering at about 8,700 points, Chang said it is likely to reach 9,000 points in the near future.

On the question of whether the National Stabilization Fund would be activated in response to the Ukraine crisis, Chang said that there is no need at the moment.

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