Asian stocks fell this week, retreating from a 20-month high, as mining companies declined after reports showed recovery in the Chinese and US economies may be stalling.
The MSCI Asia Pacific Index slid 1.4 percent to 136.29 this week. The gauge retreated from the highest level since August 2011 after the IMF cut its forecast for global economic growth, China’s economy expanded less than economists’ estimates and industrial production in the US unexpectedly dropped.
“The Chinese economy is heading toward slower growth than what we’ve seen in the past decade, which means it’s a lot less investment-intensive with less demand for commodities,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors. “We’ve reduced our equity exposure in the short term, as economic data show signs of softening. The market needs to correct at least 10 percent.”
Australia’s S&P/ASX 200 Index, which counts mining companies BHP and Rio Tinto Group among its biggest components, slipped 1.6 percent this week. Japan’s Nikkei 225 Stock Average fell 1.3 percent, snapping a three-week advance.
Taiwan’s TAIEX bucked the downtrend, advancing 1.4 percent to 7,930.80. Trading was mixed during the week, but closed on a higher note on Friday, led by market bellwether Taiwan Semiconductor Manufacturing Co (TSMC, 台積電).
TSMC, the world’s largest contract chipmaker, gained 6 percent to NT$106.50 after forecasting record quarterly sales and raising its spending plan amid rising smartphone demand.
South Korea’s KOSPI lost 0.9 percent this week and Hong Kong’s Hang Seng Index declined 0.3 percent, but China’s Shanghai Composite Index climbed 1.7 percent.
The MSCI Asia Pacific Index has gained more than 5 percent this year amid signs the US economy was recovering and as Japanese equities rallied on speculation the Bank of Japan would step up efforts to stimulate its economy. Shares on the gauge traded at 13.8 times estimated earnings on Friday, compared with 13.9 for the Standard & Poor’s 500 Index and 12.3 times for the STOXX Europe 600 Index, according to data compiled by Bloomberg.
Raw-material producers and energy companies posted the biggest declines amid concern demand from China, the world’s biggest consumer of metals and fuel, will drop as economic growth slows. Copper fell to the lowest since October 2011, while gold posted its biggest daily drop since 1983 this week. Silver and crude oil slipped.
BHP sank 5.9 percent to A$31.40 in Sydney. Rio Tinto, the world’s second-largest mining firm, fell 4.5 percent to A$54.32. Newcrest Mining Ltd, Australia’s No. 1 gold producer, tumbled 15 percent to A$16.65. Inpex Corp, Japan’s biggest energy explorer, decreased 7.6 percent to ￥473,000 in Tokyo.
In other markets on Friday:
Manila closed 1.45 percent higher from Thursday, adding 99.62 points to 6,957.10.
Wellington ended flat, edging up 2.4 points to 4,444.50.
Mumbai was closed for a public holiday.