Asian stocks fell on Friday as Chinese shares suffered their worst back-to-back weekly losses since 1996.
The MSCI Asia Pacific Index retreated 1 percent to 147.82 in Hong Kong, paring this week’s gain to 0.4 percent. Chinese stocks plunged as leveraged speculators unwind positions and a growing number of analysts warn that valuations have climbed too far. The Shanghai Composite Index tumbled 7.4 percent, bringing the gauge’s slump in the past fortnight to 19 percent.
“The new risk in China is that excessive speculation in the stock market is creating a bubble that the authorities want to control,” said Mark Matthews, head of Asia research and a managing director of Bank Julius Baer & Co in Singapore. “The risk is that intervention in the market could cause it to go down.”
Chinese stocks have already peaked and recent declines are not an opportunity to buy, Morgan Stanley strategists led by Jonathan Garner and Laura Wang said.
They cited a surge in new share sales, weak earnings growth, expensive valuations and “very high” margin debt as the four main concerns about a rally that propelled the benchmark index 151 percent to a seven-year high in the 12 months through June 12.
Friday’s rout was paced by technology shares and smaller companies, the leaders of China’s world-beating rally through the middle of this month. Hong Kong’s Hang Seng China Enterprises Index, a gauge of Chinese equities listed in the territory, lost 2.8 percent.
Shares in Taiwan also pulled back on Friday after posting four straight days of gains this week, as investors were discouraged by losses on Wall Street overnight and concern over Greece’s debt problems, dealers said.
The bellwether electronics sector encountered selling pressure throughout the session, led by high-priced stocks, such as the smartphone camera lens supplier Largan Precision Co (大立光), while select Apple Inc suppliers and semiconductor stocks appeared resilient, lending support to the sector, they said.
The weighted index closed down 0.14 percent at 9,462.57 on Friday, paring this week’s advance to 2.6 percent.
Largan, the most expensive stock in the local market, fell 1.51 percent to close at NT$3,585 after hitting a fresh closing high of NT$3,640 on Thursday.
“The losses incurred by Largan were simply technical in nature. Many investors have high hopes that the company will benefit from an increase in orders to be placed by Apple,” Ta Ching Securities (大慶證券) analyst Andy Hsu said.
Among other falling electronics stocks, chip designer MediaTek Inc (聯發科) dropped 1.73 percent to NT$425 and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) fell 0.34 percent to NT$146.
Bucking the downturn in the electronics sector are Hon Hai Precision Industry Co (鴻海精密), an assembler of iPhones and iPads, which edged up 0.2 percent to NT$99.20, and IC packaging and testing services provider Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), which rose 0.81 percent to NT$43.30.
In Japan, the TOPIX fell 0.2 percent from Thursday. The central bank’s key measure of inflation rose 0.1 percent last month from a year earlier, data showed, while household spending increased more than economists expected.
Australia’s S&P/ASX 200 Index slid 1.5 percent, while New Zealand’s NZX 50 Index advanced 0.4 percent. South Korea’s KOSPI added 0.3 percent.
Elsewhere in Asia, Manila gained 0.5 percent, while Singapore fell 0.9 percent, Kuala Lumpur lost 0.4 percent and Mumbai slid 0.3 percent.
Jakarta and Bangkok closed unchanged.
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