Asian stocks fell this week as Standard & Poor’s said it may strip Germany and France of their “AAA” credit ratings and an EU summit ended without a “unanimous agreement” on fighting the debt crisis.
The MSCI Asia Pacific Index dropped 2.2 percent this week to 115.07. The gauge gained the most in four years the previous week as the US Federal Reserve and five other central banks fought Europe’s crisis by making it cheaper for banks to borrow in US dollars.
“European issues will not be easy,” said Koji Toda, chief fund manager at Resona Bank Ltd in Tokyo. “The global economy is slowing. If you see that fact, you can’t be so optimistic. Companies depending on China business will likely have an impact from the slowdown.”
Taiwan’s TAIEX fell 3.5 percent on the week to close at 6,893.30.
“The [Taiwanese] government’s constant support of the local bourse is unlikely to reverse the current downtrend amid worries over the sluggish economic fundamentals,” Mirae Asset Management analyst Arch Shih (施博元) said.
Hong Kong’s Hang Seng Index declined 2.4 percent this week, while China’s Shanghai Composite Index fell 1.9 percent. South Korea’s KOSPI dropped 2.1 percent.
The Nikkei 225 Stock Average slipped 1.2 percent as reports from Japan last week showed orders for machinery fell unexpectedly and the economy grew last quarter less than initially estimated.
Australia’s S&P/ASX 200 dropped 2 percent as energy and mining stocks slid amid falling oil and metal prices. The nation’s central bank lowered its benchmark interest rate on Tuesday for a second straight month as Europe’s fiscal crisis threatens to slow the nation’s commodity exports.
In other markets on Friday:
Manila closed 0.47 percent, or 20.39 points, down from Thursday at 4,292.50.
Wellington closed flat, nudging up 1.52 points from Thursday to 3,271.46.
Mumbai slid 287.25 points, or 1.74 percent, from Thursday at 16,200.99.
IN THE AIR: While most companies said they were committed to North American operations, some added that production and costs would depend on the outcome of a US trade probe Leading local contract electronics makers Wistron Corp (緯創), Quanta Computer Inc (廣達), Inventec Corp (英業達) and Compal Electronics Inc (仁寶) are to maintain their North American expansion plans, despite Washington’s 20 percent tariff on Taiwanese goods. Wistron said it has long maintained a presence in the US, while distributing production across Taiwan, North America, Southeast Asia and Europe. The company is in talks with customers to align capacity with their site preferences, a company official told the Taipei Times by telephone on Friday. The company is still in talks with clients over who would bear the tariff costs, with the outcome pending further
WEAKER ACTIVITY: The sharpest deterioration was seen in the electronics and optical components sector, with the production index falling 13.2 points to 44.5 Taiwan’s manufacturing sector last month contracted for a second consecutive month, with the purchasing managers’ index (PMI) slipping to 48, reflecting ongoing caution over trade uncertainties, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The decline reflects growing caution among companies amid uncertainty surrounding US tariffs, semiconductor duties and automotive import levies, and it is also likely linked to fading front-loading activity, CIER president Lien Hsien-ming (連賢明) said. “Some clients have started shifting orders to Southeast Asian countries where tariff regimes are already clear,” Lien told a news conference. Firms across the supply chain are also lowering stock levels to mitigate
NEGOTIATIONS: Semiconductors play an outsized role in Taiwan’s industrial and economic development and are a major driver of the Taiwan-US trade imbalance With US President Donald Trump threatening to impose tariffs on semiconductors, Taiwan is expected to face a significant challenge, as information and communications technology (ICT) products account for more than 70 percent of its exports to the US, Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) president Lien Hsien-ming (連賢明) said on Friday. Compared with other countries, semiconductors play a disproportionately large role in Taiwan’s industrial and economic development, Lien said. As the sixth-largest contributor to the US trade deficit, Taiwan recorded a US$73.9 billion trade surplus with the US last year — up from US$47.8 billion in 2023 — driven by strong
RESHAPING COMMERCE: Major industrialized economies accepted 15 percent duties on their products, while charges on items from Mexico, Canada and China are even bigger US President Donald Trump has unveiled a slew of new tariffs that boosted the average US rate on goods from across the world, forging ahead with his turbulent effort to reshape international commerce. The baseline rates for many trading partners remain unchanged at 10 percent from the duties Trump imposed in April, easing the worst fears of investors after the president had previously said they could double. Yet his move to raise tariffs on some Canadian goods to 35 percent threatens to inject fresh tensions into an already strained relationship, while nations such as Switzerland and New Zealand also saw increased
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