Sun, Apr 03, 2016 - Page 15 News List

Asian stocks plunge as Japan’s ‘tankan’ nosedives

Bloomberg and staff writer, with CNA

Asian stocks posted their biggest decline in seven weeks on Friday, as Japanese corporate sentiment deteriorated and a broad-based selloff from consumer-discretionary companies to healthcare engulfed the region’s equities markets.

The MSCI Asia Pacific Index dipped to 125.93 in Tokyo on Friday, down 2.3 percent from Thursday and 1.5 percent from last week. However, the equity gauge climbed 8.2 percent last month, the best month since October last year, to end a tumultuous quarter for global markets. Equities had rebounded from lows in February as the US Federal Reserve reassured investors that it would not rush to increase borrowing costs.

A stellar performance last month was tested immediately on the first day of the second quarter. Japan’s TOPIX lost 3.4 percent, the worst start to a quarter since 2008, after the tankan index of confidence among large manufacturers missed economist estimates. The index lost 4.7 percent this week after capping a 13 percent quarterly drop.

“After strong gains from their February lows, shares are overbought and vulnerable to a pullback,” said Shane Oliver, head of investment strategy at Sydney-based AMP Capital Investors Ltd, which oversees about US$122 billion. “March-quarter tankan business conditions and confidence readings were disappointing,” he said.

The tankan index of sentiment plummeted to 6 in the first quarter, the lowest level since the middle of 2013, from 12 in the previous three months, the Bank of Japan reported on Friday.

Economists had expected a reading of 8. A positive number means there are more optimists than pessimists among manufacturers.

In Taipei, shares took a beating on Friday, as investors rushed to cut their holdings amid concern over possible negative leads in global financial markets during the four-day Tomb Sweeping holiday starting yesterday, dealers said.

Turnover was low as many investors stayed on the sidelines ahead of the release of US non-farm payroll data, dealers said.

The TAIEX closed down at 8,657.55, down 1 percent from Thursday and 0.5 percent from last week.

Selling focused on large-cap stocks like Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which fell 2.2 percent to NT$158.50, as investors locked in gains from recent sessions, dealers said.

Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics manufacturer, shed 2.1 percent to end at NT$83.00 and chip designer MediaTek Inc (聯發科) dropped 2.4 percent to NT$241.

Bucking the downturn on the broader market, smartphone camera lens supplier Largan Precision Co (大立光) rose 0.6 percent to finish at NT$2,510.

In the financial sector, Fubon Financial Holding Co (富邦金控) fell 1.5 percent to NT$40.40, CTBC Financial Holding Co (中信金控) lost 1.5 percent to end at NT$16.75 and Cathay Financial Holding Co (國泰金控) finished 2.1 percent lower at NT$37.75.

“With the index falling below the 20-day moving average of around 8,700 points, the local main board has become weaker technically and more selling is likely to follow,” KGI Securities Co (凱基證券) analyst Phil Chu said.

The Shanghai Composite Index rebounded in late trading on Friday, as a surprise jump in an official factory gauge increased optimism about the economy and speculation grew that state-backed funds intervened to support the market after Standard & Poor’s (S&P) cut the nation’s credit-rating outlook.

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