Asian stocks outside Japan fell this week after the European Central Bank (ECB) said the euro’s strength could hamper an economic recovery. Japanese shares gained as the yen fell after Bank of Japan (BOJ) Governor Masaaki Shirakawa said he will step down ahead of schedule.
The MSCI Asia-Pacific Excluding Japan Index slipped 0.5 percent this week to 476.25 as ECB President Mario Draghi on Friday said growth risks remain as EU leaders meet in Brussels to seek agreement on a budget. Shares on the gauge advanced in the past five months amid signs of economic recovery in China and the US.
“It’s a return of worries about Europe,” said Shane Oliver, Sydney-based head of strategy at AMP Capital Investors Ltd, which has about US$126 billion under management. “The market got very stretched and was due for a pullback, it was just a question of what the trigger would be. We could still see some further weakness this month.”
Japan’s TOPIX gained 1.6 percent this week, extending its rally to a 13th week. The streak, the longest since 1973, has boosted valuations for the MSCI Asia-Pacific Index. Asia’s regional gauge traded at 14.8 times average estimated earnings compared with 13.6 for the Standard & Poor’s 500 Index and a multiple of 12.1 for the STOXX Europe 600 Index, according to data compiled by Bloomberg.
The Nikkei 225 Stock Average, Japan’s benchmark index, lost 0.3 percent this week, snapping a 12-week winning streak, after companies including Nikon Corp and Sony Corp posted disappointing earnings in Tokyo.
The BSE India Sensitive Index fell 1.5 percent this week, the most among major Asia-Pacific gauges, after the government forecast the weakest economic growth in a decade. South Korea’s KOSPI slipped 0.4 percent, Hong Kong’s Hang Seng Index dropped 2.1 percent and Australia’s S&P/ASX 200 Index climbed 1 percent
The Shanghai Composite Index added 0.6 percent as reports on Friday showed inflation gained and the nation’s exports rose more than forecast last month.
Companies that do business in Europe dropped on speculation political turmoil will make it difficult for governments to lead their countries out of recession.
Markets in Taiwan and China will be shut this week for the Lunar New Year holidays, while those in Hong Kong will close from tomorrow through Wednesday.
Shares in Taiwan closed above the 7,900-point mark on Wednesday, helped by buying in the financial sector on the first day banks were allowed to handle Chinese yuan-denominated transactions in Taiwan, dealers said.
The upside was capped, however, when some investors locked in gains in the last trading session before the Lunar New Year holiday amid fears that negative leads could emerge on Wall Street and Europe during the holiday period, they said.
The local bourse is scheduled to reopen on Feb. 18 after the holiday.
The TAIEX on Wednesday closed the holiday-shortened week up 19.71 points, or 0.25 percent, at the day’s low of 7,906.65, off an early high of 7,941.65, on turnover of NT$91.83 billion (US$3.11 billion).
“In the wake of the new yuan business, investors rushed to pick up financial stocks, and the buying in the financial sector boosted today’s trading volume on the broader market,” Hua Nan Securities (華南永昌證券) analyst Henry Miao (苗台生) said.
Miao said the financial sector accounted for about 20 percent of the market’s turnover on Wednesday, double its normal share of about 10 percent.
“While it remains to be seen whether and when the new yuan business will generate significant sales for local banks, investors decided to buy on hope,” Miao said.
Miao said investors should follow how Wall Street and the European markets move during the Lunar New Year holiday before deciding on investment strategies in Taiwan when trading resumes.
“If turnover expands to NT$100 billion or more, it’s possible that the local market will quickly challenge 8,000 points,” he said.
In other markets on Friday:
Manila was flat, slipping 1.32 points from Thursday to close at 6,458.67.
Wellington added 0.73 percent, or 30.48 points, from Thursday to 4,225.72.
Mumbai slipped 0.49 percent, or 95.55 points, from Thursday to 19,484.77.