European stocks posted their biggest weekly drop since July amid concern the EU may impose restrictions on financial companies in return for government aid and speculation a near eight-month rally in equities has outpaced the prospects for growth.
ING Groep NV sank 23 percent after agreeing to demands from the EU that it sell its insurance units and announcing plans to raise more than US$11 billion in a rights offer to help repay government assistance. Bank of Ireland PLC Allied Irish Banks PLC, which have received 7 billion euros (US$10.3 billion) from the Irish government, tumbled more than 20 percent.
The Dow Jones STOXX 600 Index dropped 3.3 percent, led by industries most-tied to economic growth. The regional gauge, which this month lost 2.3 percent, has surged 50 percent since March 9, pushing its valuation to 52 times reported earnings, the highest level since 2003.
“We have seen enormous sector rotation,” said Kevin Lilley, who helps oversee about US$2 billion at Royal London Asset Management. “ING’s news shocked the market and led to people taking profits in quite a lot of areas that have done very well.”
A Bloomberg poll this week showed the rally in stocks, which has sent the MSCI World Index up more than 60 percent from its March low, had failed to convince investors and analysts that it’s time to take on more risk or dispel their concerns about US economic policies and its banking system.
Only 31 percent of respondents in the survey see investment opportunities, down from 35 percent in the previous survey in July. Almost 40 percent in the latest quarterly survey said they are still hunkering down.
National benchmark indexes fell in 16 of the 18 western European markets. France’s CAC 40 retreated 5.3 percent and the UK’s FTSE 100 slid 3.8 percent. Germany’s DAX Index slumped 5.7 percent, the steepest weekly decline since February.
CHIP WAR: The new restrictions are expected to cut off China’s access to Taiwan’s technologies, materials and equipment essential to building AI semiconductors Taiwan has blacklisted Huawei Technologies Co (華為) and Semiconductor Manufacturing International Corp (SMIC, 中芯), dealing another major blow to the two companies spearheading China’s efforts to develop cutting-edge artificial intelligence (AI) chip technologies. The Ministry of Economic Affairs’ International Trade Administration has included Huawei, SMIC and several of their subsidiaries in an update of its so-called strategic high-tech commodities entity list, the latest version on its Web site showed on Saturday. It did not publicly announce the change. Other entities on the list include organizations such as the Taliban and al-Qaeda, as well as companies in China, Iran and elsewhere. Local companies need
CRITICISM: It is generally accepted that the Straits Forum is a CCP ‘united front’ platform, and anyone attending should maintain Taiwan’s dignity, the council said The Mainland Affairs Council (MAC) yesterday said it deeply regrets that former president Ma Ying-jeou (馬英九) echoed the Chinese Communist Party’s (CCP) “one China” principle and “united front” tactics by telling the Straits Forum that Taiwanese yearn for both sides of the Taiwan Strait to move toward “peace” and “integration.” The 17th annual Straits Forum yesterday opened in Xiamen, China, and while the Chinese Nationalist Party’s (KMT) local government heads were absent for the first time in 17 years, Ma attended the forum as “former KMT chairperson” and met with Chinese People’s Political Consultative Conference Chairman Wang Huning (王滬寧). Wang
CROSS-STRAIT: The MAC said it barred the Chinese officials from attending an event, because they failed to provide guarantees that Taiwan would be treated with respect The Mainland Affairs Council (MAC) on Friday night defended its decision to bar Chinese officials and tourism representatives from attending a tourism event in Taipei next month, citing the unsafe conditions for Taiwanese in China. The Taipei International Summer Travel Expo, organized by the Taiwan Tourism Exchange Association, is to run from July 18 to 21. China’s Taiwan Affairs Office spokeswoman Zhu Fenglian (朱鳳蓮) on Friday said that representatives from China’s travel industry were excluded from the expo. The Democratic Progressive Party government is obstructing cross-strait tourism exchange in a vain attempt to ignore the mainstream support for peaceful development
DEFENSE: The US would assist Taiwan in developing a new command and control system, and it would be based on the US-made Link-22, a senior official said The Ministry of National Defense is to propose a special budget to replace the military’s currently fielded command and control system, bolster defensive resilience and acquire more attack drones, a senior defense official said yesterday. The budget would be presented to the legislature in August, the source said on condition of anonymity. Taiwan’s decade-old Syun An (迅安, “Swift Security”) command and control system is a derivative of Lockheed Martin’s Link-16 developed under Washington’s auspices, they said. The Syun An system is difficult to operate, increasingly obsolete and has unresolved problems related to integrating disparate tactical data across the three branches of the military,
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