Asian stocks fell to a two-week low, led by shares in Japan, as investors showed a reluctance to take on risk before US Federal Reserve Chair Janet Yellen’s speech that might provide clues on when the world’s largest economy would raise interest rates.
The MSCI Asia Pacific Index slid 0.6 percent to 138.35 on Friday, its second weekly drop and its longest losing streak since June. Japan’s TOPIX sank 1.3 percent, as the yen traded at ¥100.45 to the US dollar.
A rally in equities lost steam this month as investors pulled back risk before a speech by Yellen later on Friday. Odds that the Fed will boost rates next month have jumped to 32 percent from 18 percent at the end of last month, while traders are betting there is a 57 percent chance of tightening in December.
WAIT AND SEE
“It’s a wait-and-see holding pattern now,” said Chris Green, the Auckland-based director of economics and strategy at First NZ Capital Group Ltd. “In some ways, markets may be disappointed if they are looking for clarity for the rate decision. The usual modus operandi would be not to comment explicitly.”
Consumer-discretionary shares and healthcare companies led declines among Asian stocks, while commodity producers tracked Thursday’s rebound in oil after Iran agreed to an informal gathering of OPEC members.
Japan’s TOPIX erased its gains for the week as insurers and carmakers led losses. The yen gained against the dollar after data showed the nation’s core consumer prices last month fell 0.5 percent from a year ago. The TOPIX has retreated 17 percent this year, making the benchmark gauge the second-worst performer among developed markets.
In Taipei, the TAIEX closed slightly higher on Friday in thin trading, as investors were cautious ahead of Yellen’s speech, dealers said.
“Look at the low turnover. It was another boring session as many investors retreated from the trading floor, waiting for the Yellen speech,” Hua Nan Securities (華南永昌證券) analyst Kevin Su (蘇俊宏) said.
The weighted index closed up 0.2 percent, at the day’s high of 9,131.72, after hitting a low of 9,092.08, Taiwan Stock Exchange data showed. On a weekly basis, it rose 1.1 percent from 9,034.27 on Aug. 19.
While most large-cap stocks in the bellwether electronics sector were sluggish, the financial sector, led by Cathay Financial Holding Co (國泰金), moved higher, mainly because of its relatively low valuations, dealers said.
Contract chip maker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the most heavily weighted stock on the market, closed unchanged at NT$177.
Hon Hai Precision Industry Co (鴻海精密), an assembler of iPhones and iPads for Apple Inc, also ended unchanged at NT$88.50.
Chip designer MediaTek Inc (聯發科) fell 0.2 percent to close at NT$243.50, while smartphone camera lens supplier Largan Precision Co (大立光) gained 1.53 percent to end at NT$3.640, remaining the most expensive stock on the main board.
FINANCIALS RISE
“Fortunately, the financial sector benefited from bargain hunting to push up the index to close above the previous day’s level. However, the broader market remained in consolidation mode without any fresh incentives for investors to trade,” Su said.
In the financial sector, Cathay Financial rose 1.7 percent to NT$39.40 because of better-than-expected second-quarter results.
E. Sun Financial Holding Co (玉山金) gained 0.55 percent to end at NT$18.25 after foreign institutional investors raised their stake in the company to 55.3 percent, the highest among Taiwan’s financial stocks.
South Korea’s KOSPI slid 0.3 percent, while Australia’s S&P/ASX 200 Index and New Zealand’s S&P/NZX 50 Index declined 0.5 percent each.
Equity measures in Indonesia, India and the Philippines slipped. Vietnam’s VN Index rose 1.4 percent to the highest since July 19.
Toyota Motor Corp sank 3.4 percent after Citigroup Inc downgraded the stock, saying recent strength in the yen against European currencies would hurt the price competitiveness of Japanese vehicles. Citigroup also cut its rating on Mazda Motor Corp, which dropped 1.9 percent.
The Shanghai Composite Index capped its biggest weekly loss in five weeks, led by property developers, on concern China would take steps to cool speculative activity in the nation’s financial markets.
Local governments in Shanghai, Beijing and Tianjin are considering new measures to rein in housing prices, according to people familiar with the matter. Hong Kong’s Hang Seng Index had its first weekly drop in four weeks.
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