Asian stocks outside China rose for a second day on Friday, following gains in US shares, led by industrial and financial companies. Equities in Shanghai tumbled, posting the biggest weekly drop since June 2008.
The Shanghai Composite Index fell 6.4 percent on Friday amid growing concern that China’s longest-ever bull market has propelled valuations to unsustainable levels.
“With Chinese authorities wanting the share market to be strong, but not manic, the latest share market correction means that it wouldn’t be surprising to see another People’s Bank of China rate cut or required reserve ratio reduction soon,” said Shane Oliver, global strategist at AMP Capital Investors Ltd in Sydney. “Volatility is to be expected as it has risen a bit too far, too fast.”
The Shanghai Composite, which reached the highest level since 2008 on Friday last week, has since tumbled 13 percent. Analysts are increasingly warning stocks will fall after the gauge more than doubled in the past 12 months.
The bull market, which turned 928 days old on Friday, is the longest since Chinese bourses opened for trading in 1990 and more than five times the average lifespan of the nation’s previous bull markets.
The MSCI Asia Pacific Index climbed 0.554 percent to 147.18 on Friday in Hong Kong, paring this week’s slide to 0.7 percent. The Standard & Poor’s 500 Index jumped 1 percent on Thursday in New York and the NASDAQ Composite Index closed at a record high after the US Federal Reserve signaled it would continue to support the economy even as growth picks up.
In Taipei, shares staged a rebound on Thursday to close above the 9,200-point mark as investors took their cue from Wall Street’s overnight rally. Markets were closed on Friday for a holiday. The TAIEX closed 0.31 percent higher at 9,218.37 on Thursday, paring this week’s losses to 0.9 percent.
Outside of China, most markets in the region also rose on Friday. Tokyo ended 0.9 percent higher, Sydney rose 1.3 percent and Seoul gained 0.3 percent. Mumbai and Wellington each gained 0.6 percent, Jakarta rose 0.8 percent, Hong Kong added 0.3 percent and Singapore edged up 0.02 percent.
Bangkok dropped 1.1 percent, while Manila was marginally lower, dipping 5.69 points to 7,601.17.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure