Asian stocks posted the biggest weekly decline since October as the weakening global economy assailed corporate profits.
Mitsubishi UFJ Financial Group Inc, Japan’s largest listed bank, plunged 9.1 percent after the nation’s economy contracted at the fastest pace since 1974. Woori Finance Holdings Co, controlling South Korea’s second-largest bank, slumped 17 percent after rising bad loans forced it to apply for state funds. Elpida Memory Inc, Japan’s largest memory chipmaker, tumbled 27 percent after Standard & Poor’s slashed the company’s debt rating, citing its liquidity risk.
“There’s no magic potion we can all drink and cure the ills that the global economy has at the moment,” said Tim Schroeder, who helps manage about US$2.6 billion at Pengana Capital Ltd in Melbourne. “The evidence shows any pickup is going to be muted, and that profitability is not going to recover meaningfully for some time.”
The MSCI Asia-Pacific Index plunged 7 percent this week to 76.03, the steepest slide since the period ending Oct. 24. The gauge has plunged 15 percent this year and is less than 2 percent from a six-year low.
Japan’s TOPIX Index dropped 3.3 percent as it tumbled to the lowest since January 1984. All of the region’s benchmark equity indexes slumped, except in Pakistan. South Korea led the region’s declines as financial and heavy industry companies sent the KOSPI Index to an 11 percent slide.
MSCI’s Asian index slumped by a record 43 percent last year as the credit crunch tipped the world’s largest economies into recession, forcing companies to cut jobs amid falling profits. Earnings estimates for companies in the gauge have been slashed 44 percent since the beginning of the year, bringing them to the lowest level since Bloomberg began compiling the data in 2005.
Taiwanese share prices are expected to remain volatile next week as an unstable Wall Street continues to haunt market sentiment, dealers said on Friday.
A weakening New Taiwan dollar has discouraged foreign institutional investors from buying assets, including stocks, on the local market, paving the way for a further downturn, they said.
The financial sector is likely to continue to underperform the broader market on concerns over more possible bank bad loans after the island’s economy contracted a record 8.36 percent in the fourth quarter of last year, they added.
The market could extend its downside to test 4,300 points next week, while any technical rebound may face strong resistance at the key 4,500 point level, dealers said.
For the week to Friday, the weighted index fell 153.56 points or 3.35 percent to 4,436.94 after a 2.67 percent increase the previous week.
Average daily turnover stood at NT$65.84 billion (US$1.89 billion), compared with NT$73.60 billion a week earlier.
“Wall Street has fallen to a six-year low. It seems that more negative news related to the global economy will come to further hurt market sentiment,” Taiwan International Securities (金鼎證券) analyst Arch Shih (施博元) said.
Shih said the reduced trading volume showed investors’ hesitation to hunt bargains after the week’s losses.
“If daily turnover continues to shrink and fall below NT$50 billion, the market is expected to enter the doldrums,” Shih said.
On Friday, turnover fell to NT$59.85 billion from Thursday’s NT$70.52 billion.
Other regional markets:
KUALA LUMPUR: Down 1.1 percent. The Kuala Lumpur Composite Index lost 9.88 points to 889.71.
BANGKOK: Down 1.57 percent. The Stock Exchange of Thailand composite index fell 6.95 points to 434.67 points. “The [market] sentiment was down as investors lost confidence in the global economy and solutions to the financial crisis in the US,” said Pichai Lertsupongkit, senior vice president at Thanachart Securities.
JAKARTA: Down 2 percent. The Jakarta Composite Index lost 26.75 points to 1,296.94.
MANILA: Down 1 percent. The composite index shed 18.36 points to 1,881.44. “Investors are selling because of the fear of what will happen in the US,” said April Lee-Tan, research head at CitisecOnline.com.
MUMBAI: Down 2.21 percent. The benchmark 30-share SENSEX index fell 199.42 points to 8,843.21 as foreign funds sold index heavyweights on the back of weak US index futures trends.
WELLINGTON: Down 1.54 percent. The benchmark NZX-50 index dropped 40.25 points to 2,576.68.