Asian stocks tumbled, dragging the region’s key benchmark index to its longest series of weekly losses in seven years, on concern faltering US economic growth and Greece’s worsening sovereign debt crisis would derail the global economic recovery.
The MSCI Asia Pacific Index declined 1.9 percent to 129.60 this week as manufacturing in New York unexpectedly shrank and Greek Prime Minister George Papandreou fired his finance minister in a Cabinet overhaul aimed at fending off a party rebellion and ensuring the passage of austerity measures needed for a bailout.
“Investors still get nightmares from the events of 2008 and nobody wants to see an encore,” said Prasad Patkar, who helps manage about US$1.7 billion at Platypus Asset Management Ltd in Sydney. “Europe has the potential to set off another global credit crisis, which is the biggest worry.”
Japan’s Nikkei 225 Stock Average slid 1.7 percent this week. South Korea’s Kospi index dropped 0.7 percent. Australia’s S&P/ASX 200 Index fell 1.7 percent. Hong Kong’s Hang Seng Index declined 3.2 percent. The gauge entered a so-called correction on Thursday after falling more than 10 percent from its recent high on April 8.
China’s Shanghai Composite Index fell 2.3 percent after the central bank ordered lenders to set aside more cash as reserves after inflation accelerated to the fastest pace in almost three years last month.
The MSCI Asian gauge’s seven-week slump exceeded a six-week streak of declines in the aftermath of the collapse in Lehman Brothers in 2008, on speculation Greece will default on its debt payments.
Former US Federal Reserve chairman Alan Greenspan said that a default by Greece was “almost certain” and could drive the US economy into recession following the failure of EU officials to break a deadlock on negotiations for a second Greek aid plan.
“The problem you have is that it’s extremely unlikely the political system will work” in a way that solves Greece’s crisis, Greenspan said in an interview with Charlie Rose in New York on Thursday. “The chances of Greece not defaulting are very small.”
“It’s another riot point in markets with the EU debt crisis intensifying and growth losing significant momentum,” said Nader Naeimi, a Sydney-based strategist for AMP Capital Investors. “It looks like there’s still more downside in markets.”
Exporters dropped after reports showed manufacturing in the New York region unexpectedly shrank this month and confidence among US homebuilders slumped to the lowest level in nine months.
The TAIEX slid 2.28 percent this week to 8,636.1. Smartphone maker HTC Corp slumped 14 percent this week to NT$998. Macquarie Group on Tuesday lowered its rating on the stock to “neutral” from “outperform,” saying competition from makers of low-cost handsets would increase. UBS AG removed the stock on its list of preferred technology stocks.
In other markets on Friday:
‧ Manila closed down 0.48 percent, or 19.97 points, from Thursday at 4,153.11.
‧ Wellington shed 0.35 percent, or 12.02 points, from Thursday to 3,469.59.
‧ Mumbai declined 0.64 percent, or 115.35 points, from Thursday to 17,870.53, its third-straight day of losses.
ADDITIONAL REPORTING BY STAFF WRITER, WITH CNA
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