Asian stocks slumped, dragging the MSCI Asia-Pacific Index to its second drop in three weeks, as a record plunge in US home sales and slowing export growth in Japan added to evidence the global recovery is faltering.
Canon Inc, which makes 78 percent of its sales outside Japan, retreated 2.8 percent. James Hardie Industries SE, the biggest seller of home siding in the US, dropped 2.6 percent. LG Electronics Inc, the world’s third-largest mobile-phone maker, slumped 7.7 percent as consumer sentiment in its home market in South Korea declined. China Life Insurance Co (中國人壽), China’s No. 1 insurer, tumbled 9.8 percent after Citigroup Inc said first-half earnings were “weak.”
“The US economy now seems to be weaker than markets expected,” said Stephen Halmarick, who helps manage about US$135 billion as head of investment markets research at Colonial First State Global Asset Management in Sydney. “Investors are worried growth will fade sharply and that an improvement in company profits will reverse.”
The MSCI Asia-Pacific Index dropped 1.2 percent to 116.82 this week, following last week’s 0.4 percent gain. The index has slumped about 9.5 percent from its high this year on April 15 as Europe’s debt crisis, China’s measures to curb property-price inflation and disappointing economic reports in the US fueled concern global growth may stall.
Japan’s Nikkei 225 Stock Average slumped 2.1 percent as Japan’s export growth slowed last month, adding to risks in an economy already under threat by the yen’s appreciation. The Shanghai Composite Index dropped 1.2 percent as shares of developers dropped on speculation the government will introduce a property tax.
Australia’s S&P/ASX 200 Index fell 1.4 percent as Australian business investment unexpectedly fell in the second quarter and neither Prime Minister Julia Gillard nor opposition leader Tony Abbott gained an outright majority in last weekend’s national election.
South Korea’s KOSPI fell 2.6 percent as South Korea’s consumer confidence fell for the first time in five months, according to a Bank of Korea statement on Wednesday.
Shares of technology companies and raw material suppliers posted the biggest decline among 10 industry groups on the MSCI Asia-Pacific Index this week.
Japanese exporters declined after the yen advanced to a 15-year high against the US dollar on Wednesday as economic growth concerns boosted demand for refuge assets. A stronger yen reduces overseas income at Japanese companies converted into their home currency.
Japan’s export growth slowed for a fifth month in July, government data release on Wednesday showed. Japanese Prime Minister Naoto Kan said on Friday the government is ready to take “bold” action in the currency market when necessary.
Disappointing economic data from the US, one of biggest markets for Asia’s exports, sparked concern shipment of goods from the region will weaken.
“The US is a big consumer of goods manufactured in Asia,” said Prasad Patkar, who helps manage US$1.6 billion at Platypus Asset Management in Sydney. “Weakness in the US implies softer demand for Asian exports, which weighs down on growth in the region.”
Taiwan’s TAIEX rose 33.17, or 0.4 percent, to 7,722.91 at the 1:30pm close of Taipei trading on Friday, snapping three days of declines. The benchmark fell 2.6 percent this week, the most in 14 weeks.