Asian stocks fell for a fifth week, with the regional benchmark index capping its biggest monthly loss since May, as concern that the global economic recovery is faltering spurred investors to sell riskier assets.
The MSCI Asia-Pacific Index dropped 2.1 percent to 134.81 this week, the biggest weekly decline since August and capping a 4.6 percent fall for last month. Global stocks tumbled as a sell-off in emerging-market currencies prompted central banks to boost borrowing costs while the Federal Reserve moved ahead with a plan to further reduce stimulus.
“It’s been unsettling,” said Benjamin Collett, Hong Kong-based head of Asian equities at Sunrise Brokers LLP. “Volatility is up. If you want to step into this market, you have to be prepared to handle bigger swings, and evidently many exiting holders don’t like that.”
Japan’s TOPIX slumped 3.5 percent this week. The Nikkei 225 Stock Average tumbled 3.1 percent to cap its biggest monthly rout since May 2012 as a gauge tracking the volatility of the stock measure surged 28 percent.
Australia’s S&P/ASX 200 Index declined 1 percent and New Zealand’s NZX 50 Index was little changed. Hong Kong’s Hang Seng Index fell 1.9 percent while the Hang Seng China Enterprises Index of Chinese stocks listed in the city slid 2 percent. China’s Shanghai Composite Index lost 1 percent, while Singapore’s Straits Times Index dropped 1.6 percent.
India’s S&P BSE SENSEX dropped 2.9 percent after its central bank unexpectedly raised its benchmark interest rate to 8 percent from 7.75 percent to curb inflation. Only three of 45 analysts in a Bloomberg News survey predicted the move, with the rest expecting no change.
The Fed this week said it will reduce purchases by another US$10 billion to US$65 billion, sticking to a plan for a gradual withdrawal from its unprecedented monetary easing. The central bank, which announced its first US$10 billion reduction in December, left unchanged its statement that it will probably hold its target interest rate near zero “well past the time” that the unemployment rate falls below 6.5 percent.
“Sentiment will probably remain negative and slightly cautious on some of these emerging markets over the next couple of months as the Fed tapers stimulus,” Mark Lister, head of private wealth research at Craigs Investment Partners Ltd in Wellington, said by phone. “Given that there’s a bit of disappointment with recent earnings, things could weaken off a little bit this year.”
The MSCI Asia-Pacific index traded at 12.7 times estimated earnings compared with a multiple of 15.1 for the Standard & Poor’s 500 Index and 13.6 for the STOXX Europe 600 Index, according to data compiled by Bloomberg.
Of the 178 companies on the MSCI Asia-Pacific Index that have reported earnings since the beginning of January and for which estimates are available, 51 percent missed analyst projections for profit, according to data compiled by Bloomberg.
Fears about the state of the global economy saw the TAIEX drop 135.74 points to 8,462.57 as the Taipei markets closed on Monday for the Lunar New Year holiday, meaning the bourse closed the Year of the Snake down 1.58 percent to reverse 15 years of rallies at the final session of the lunar year.
Altogether, the benchmark TAIEX gained 7.03 percent in the Year of the Snake, while market capitalization increased 9.59 percent to NT$22.22 trillion in the lunar year, the exchange said in a statement.
The local bourse will repoen on Wednesday.
Elsewhere, Sydney ended flat on Friday, edging up 1.9 points to 5,190.0 and Wellington added 0.51 percent, or 24.74 points, to 4874.58. Mumbai gained 0.08 percent, or 15.60 points, to close at 20,513.85 while Bangkok added 0.81 percent, or 10.21 points, to 1,274.28.
Across the rest of Asia, the markets in Hong Kong, Shanghai, Seoul, Jakarta, Kuala Lumpur, Manila and Singapore were also closed for the Lunar New Year.