Asian equities fell the most since July last year this week as Chinese manufacturing data missed estimates and amid concern that the US might begin to unwind stimulus. The decline was led by Japan, where shares saw their largest one-day plunge since March 2011.
The TOPIX plummeted 6.9 percent on Thursday, wiping US$314 billion from the world’s best-performing stock market this year. Sumitomo Mitsui Financial Group Inc led a plunge among Japan’s largest financial companies as the country’s bonds dropped to a one-year low, stoking concern about the nation’s balance sheet.
A gauge of Australian banks fell 6.6 percent in Sydney — the most since the Greek crisis in May last year — on speculation that slowing growth in China will undermine the resource-based economy.
In Taipei, the TAIEX fell 0.34 percent, or 28.05 points, on Friday to end the week at 8,209.78, down from 8,368.19 on May 17. The local bourse touched a 21-month high on Wednesday as a plan to cut taxes on stock investments attracted global funds to the nation’s assets.
Overseas funds bought US$107 million more local shares than they sold in the week through Thursday, Taiwan Stock Exchange data showed.
On Friday, Taiwan Semiconductor Manufacturing Co (台積電) rose 1.39 percent to NT$109.5, while HTC Corp (宏達電) fell 1.24 percent to NT$279.
Among other regional gauges, the Shanghai Composite Index was little changed, while South Korea’s KOSPI slid 0.7 percent and Singapore’s Straits Times Index declined 1.6 percent. Financial markets in Thailand and Malaysia were closed on Friday for holidays.
The MSCI Asia Pacific Index slid 2.7 percent, the biggest weekly decline since the week ended on July 13 last year. The gauge rose 10 percent this year through Friday last week amid signs of improvement in the US economy and unprecedented stimulus efforts in Japan.
A measure of Asia-Pacific shares outside Japan dropped 2.6 percent this week, leaving it virtually unchanged for the year as Chinese data signals a slowdown in the world’s No. 2 economy.
The MSCI Asia Pacific Index traded for 13.7 times estimated earnings. That compares with multiples of 15 for the Standard & Poor’s 500 Index and 13.3 for the STOXX Europe 600 Index. The TOPIX traded as much as 24.8 times earnings this week, higher than 86 percent of days since 2004, data compiled by Bloomberg show.
Japan’s broadest equity gauge, still this year’s best-performing major equity benchmark, plunged in record volume on Thursday. It was the first time since April 2005 that every company on the Nikkei 225 Stock Average retreated.
The slide triggered a halt in Osaka-traded index futures on Thursday and cut the measure’s annual advance to 38 percent from 48 percent. Gains for the TOPIX remain more than twice as big as in the S&P 500 Index this year. The measure, which finished the week 4.7 percent lower, is still up 2.8 percent for the month.
Financial shares led the plunge, which JPMorgan Asset Management and Pinebridge Investments LLC said was overdue.
About US$1.2 trillion was added to equities since Nov. 14 last year, when elections were announced that brought Japanese Prime Minister Shinzo Abe to power on the promise of massive stimulus and Bank of Japan action to end two decades of deflation.
“Everyone is surprised at today’s drop, but it was overdue,” said Grace Tam, a Hong Kong-based global market strategist at JPMorgan Asset Management Ltd.
Japanese equities had risen “too much, too fast,” especially financial stocks, former Japanese Ministry of Finance official Eisuke Sakakibara said in a Bloomberg interview on May 15. Shares needed “some kind of correction” before resuming their climb, he added.
All 44 members of the TOPIX Real Estate Index, the worst performing of the benchmark measure’s 33 industries, declined. Gauges of consumer lenders, brokers and banks dropped more than 9 percent.
Elsewhere in the region, Australia’s S&P/ASX 200 Index dropped 3.8 percent for the week as banks plunged the most in a year.
Commonwealth Bank of Australia, the country’s biggest bank, hit a record high on Monday before a four-day retreat left it 6.1 percent lower for the week at A$68.77.
Shares in Hong Kong fell after US Federal Reserve Chairman Ben Bernanke said the bank may consider winding back stimulus and after a preliminary survey from HSBC Holdings PLC and Markit Economics showed manufacturing in China is contracting.
The Hang Seng Index fell 2 percent, the most since the week ended on April 5. China Resources Power Holdings Co (華潤電力控股) fell the most, losing 11 percent to HK$20.20 after the Economic Information Daily reported onMay 16 that China may ban some imports of thermal coal.
In other markets on Friday:
Wellington fell 1.36 percent, or 62.35 points, from Thursday to 4,526.24.
Manila closed down 0.62 percent, or 45.47 points, at 7,268.91.
Mumbai rose 0.15 percent, or 30.0 points, to 19,704.33 points.