Asian stocks dropped for a second week this month, trimming the regional benchmark index’s first monthly advance since April, as US lawmakers failed to break a deadlock over raising the US federal debt limit and China increased lending restrictions to local governments.
Li & Fung Ltd (利豐), the largest supplier of toys and clothes to retailers including Target Corp and Wal-Mart Stores Inc, sank 8.7 percent in Hong Kong on speculation shipments to the US will weaken. Nintendo Co, the maker of the Wii game consoles, slumped 18 percent after slashing its full-year profit forecast by 82 percent. China Vanke Co (萬科企業), China’s biggest developer, fell 3.2 percent in Shenzhen after the government prohibited banks from renewing loans to local financing vehicles.
The MSCI Asia Pacific Index slid 1.6 percent as better-than-estimated earnings from AIA Group Ltd (美國友邦保險) and Cheung Kong Infrastructure Ltd (長江基建集團) were overshadowed by concern the US may default on its debt if lawmakers can’t reach an agreement on raising the government’s borrowing limit by Tuesday. For the month, the gauge increased 2.6 percent after European leaders announced steps toward easing the region’s sovereign debt crisis.
“It’s unbelievable, these guys are not just playing with financial markets, but their own constituents’ jobs,” said Sydney-based Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. “It’s certainly adding to stock-market nervousness. I think they will eventually get a deal that avoids massive spending cuts or default, but the risk is growing that they won’t.”
Taiwan’s TAIEX dropped 1.38 percent on the week, closing on Friday at 8,644.18, Japan’s Nikkei 225 Stock Average sank 3 percent, while South Korea’s KOSPI declined 1.8 percent. China’s Shanghai Composite Index dropped 2.5 percent and Hong Kong’s Hang Seng Index was little changed.
Australia’s S&P/ASX 200 Index slumped 3.9 percent as a report published on Wednesday showed the nation’s inflation rate gained more than economists forecast last quarter, increasing the chance that Reserve Bank of Australia Governor Glenn Stevens will resume a tightening policy.
The regional benchmark index lost 0.7 percent this year through Friday, compared with a gain of 2.8 percent by the S&P 500 and a drop of 3.8 percent by the STOXX Europe 600 Index.
In other markets on Friday:
Manila rose 0.46 percent, or 20.83 points, from Thursday to 4,503.63.
Wellington closed flat, edging down 1.16 points from Thursday to 3,395.63.
In Mumbai, the Bombay Stock Exchange dropped 12.32 points, or 0.07 percent, from Thursday to 18,197.2 in the wake of this week’s latest interest rate hike and investor fears of further rises in the months ahead.
Taiwan’s technology protection rules prohibits Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) from producing 2-nanometer chips abroad, so the company must keep its most cutting-edge technology at home, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. Kuo made the remarks in response to concerns that TSMC might be forced to produce advanced 2-nanometer chips at its fabs in Arizona ahead of schedule after former US president Donald Trump was re-elected as the next US president on Tuesday. “Since Taiwan has related regulations to protect its own technologies, TSMC cannot produce 2-nanometer chips overseas currently,” Kuo said at a meeting of the legislature’s
GEOPOLITICAL ISSUES? The economics ministry said that political factors should not affect supply chains linking global satellite firms and Taiwanese manufacturers Elon Musk’s Space Exploration Technologies Corp (SpaceX) asked Taiwanese suppliers to transfer manufacturing out of Taiwan, leading to some relocating portions of their supply chain, according to sources employed by and close to the equipment makers and corporate documents. A source at a company that is one of the numerous subcontractors that provide components for SpaceX’s Starlink satellite Internet products said that SpaceX asked their manufacturers to produce outside of Taiwan because of geopolitical risks, pushing at least one to move production to Vietnam. A second source who collaborates with Taiwanese satellite component makers in the nation said that suppliers were directly
Top Taiwanese officials yesterday moved to ease concern about the potential fallout of Donald Trump’s return to the White House, making a case that the technology restrictions promised by the former US president against China would outweigh the risks to the island. The prospect of Trump’s victory in this week’s election is a worry for Taipei given the Republican nominee in the past cast doubt over the US commitment to defend it from Beijing. But other policies championed by Trump toward China hold some appeal for Taiwan. National Development Council Minister Paul Liu (劉鏡清) described the proposed technology curbs as potentially having
EXPORT CONTROLS: US lawmakers have grown more concerned that the US Department of Commerce might not be aggressively enforcing its chip restrictions The US on Friday said it imposed a US$500,000 penalty on New York-based GlobalFoundries Inc, the world’s third-largest contract chipmaker, for shipping chips without authorization to an affiliate of blacklisted Chinese chipmaker Semiconductor Manufacturing International Corp (SMIC, 中芯). The US Department of Commerce in a statement said GlobalFoundries sent 74 shipments worth US$17.1 million to SJ Semiconductor Corp (盛合晶微半導體), an affiliate of SMIC, without seeking a license. Both SMIC and SJ Semiconductor were added to the department’s trade restriction Entity List in 2020 over SMIC’s alleged ties to the Chinese military-industrial complex. SMIC has denied wrongdoing. Exports to firms on the list