Asian stocks plunged yesterday, with the regional index headed for its biggest drop in seven weeks after Japan’s machinery orders dropped, China’s export growth slowed and Europe’s debt crisis has infected Italy.
HSBC Holdings PLC, the UK’s largest lender by market value, sank 9.1 percent in Hong Kong after profit at its investment bank declined amid political and economic uncertainty in Europe. Fanuc Corp, a maker of industrial robots, slipped 4.1 percent in Tokyo. Noble Group Ltd slumped 25 percent in Singapore, its biggest plunge since 1998, as chief executive officer Ricardo Leiman quit after the Hong Kong-based commodity supplier posted its first loss in 14 years.
“Europe’s problems are structural and require more than a tinkering on the edges to resolve,” said Lee King Fuei, a Singapore-based fund manager at Schroders PLC, which has about US$326 billion of assets globally. “Solving these problems will require a fair bit of pain among citizens. Even if politicians know the right solutions, they risk getting kicked out. The global economic environment looks very challenging.”
The MSCI Asia Pacific Index declined 3.4 percent to 115.95 as of 6:02pm in Tokyo, poised for its biggest drop since Sept. 22. Just 50 of the 1,015 companies on the gauge advanced.
Gauges of financial and -industrial companies led the -decline. -Information technology companies had the third-biggest loss on the index as Elpida Memory Inc, which shed 10 percent, led chipmakers down after memory fell to a record low price.
Japan’s Nikkei 225 Stock Average slipped 2.9 percent, the most since Aug. 5. Australia’s S&P/ASX 200 dropped 2.4 percent. China’s Shanghai Composite Index fell 1.8 percent as the nation’s exports rose at the slowest pace in almost two years. India’s markets were closed yesterday.
Hong Kong’s Hang Seng Index tumbled 5.3 percent, the most since Aug. 9. South Korea’s KOSPI fell 4.9 percent. Volatility indexes for the Hong Kong and Japanese benchmark gauges jumped more than 20 percent. A gauge of price swings on the KOSPI 200 Index jumped 17 percent.
Futures on the Standard & Poor’s 500 Index swung between gains of 0.7 percent and losses of 0.6 percent. The index slumped 3.7 percent in New York on Wednesday, with only one stock advancing, the lowest number since June 29 last year, according to data compiled by Bloomberg.
“The big concern is that Italy will need to get its funding from other sources than the market,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about US$150 billion. “Because of its size, people are very worried.”
Financial stocks were the main drag for the MSCI Asia Pacific Index amid concern political wrangling in Europe would hinder efforts to contain the debt crisis. Greek Prime Minister George Papandreou’s drive to put together a unity government in Greece descended into disarray as rival parties squabbled over his replacement.
HSBC slumped 9.1 percent to HK$61.90 in Hong Kong, the most since March 2009, after the lender posted a 53 percent drop in third-quarter pretax profit at its investment bank and bad loan provisions climbed.
Industrial & Commercial Bank of China Ltd (中國工商銀行) sank 8.7 percent to HK$4.74 after Goldman Sachs Group Inc raised US$1.1 billion selling shares of ICBC, as the world’s biggest lender is known, at a discount. Goldman Sachs sold 1.75 billion ICBC shares at HK$4.88, two people with knowledge of the -matter said, asking not to be identified because the details are private.
Japanese industrial companies dropped after a report showed the nation’s machinery orders fell more than economists forecast in September, indicating companies may hold off capital outlays as Europe’s crisis threatens the global economic recovery.
Fanuc slipped 4.1 percent to ￥12,280 in Tokyo. Komatsu Ltd, Asia’s biggest maker of construction equipment, dropped 5.1 percent to ￥1,898.
Chipmakers tumbled after the price of computer-storage chips dropped to their cheapest levels on record. Elpida dropped 10 percent to ￥377. Toshiba Corp, which receives 18 percent of sales from semiconductors, retreated 6.7 percent to ￥323 Inotera Memories Inc (華亞科技), a Taiwanese DRAM chipmaker, dropped 7 percent to NT$4.12.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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