Asian stocks dropped, with a gauge of Chinese shares in Hong Kong flirting with a bear market, after at least four investment banks reduced their growth forecasts for the region’s biggest economy.
Taiwanese shares pulled back yesterday amid raised tensions in Ukraine.
The MSCI Asia Pacific Index fell 2 percent to 133.89 as of 2:30pm in Hong Kong, set for a one-month low and a weekly drop of 3.8 percent, its biggest decline since May 2012.
The Shanghai Composite Index lost 0.73 percent, or 14.77 points, falling to 2,004.34, while Hong Kong’s Hang Seng Index closed 1 percent lower, shedding 216.59 points to 21,539.49.
In Taipei, the TAIEX fell 0.69 percent, or 60.16 points, to 8,687.63.
“China’s growth is already moderating and corporate profits continue to be rather disappointing,” said Mikio Kumada, who helps oversee more than US$25 billion as Hong Kong-based global strategist at LGT Capital Partners.
There are “legitimate concerns about future profitability,” he said.
Bank of America Corp, UBS AG, JPMorgan Chase & Co and Nomura Holdings Inc lowered forecasts for China’s economic expansion for this year after the latest economic data released on Thursday showed factory output rose in January and last month at the slowest pace since the global financial crisis, while retail sales grew at the slowest rate for the period since 2004.
Chinese Premier Li Keqiang (李克強) told reporters on Thursday that the nation’s goal of 7.5 percent economic growth for this year is “flexible,” and some financial-product defaults may be unavoidable.
In Taiwan, the TAIEX closed down because of a heavy sell-off in New York and Europe in reaction to another batch of poor Chinese data and flaring tensions in Ukraine.
The bellwether electronics sector, which led the gains on the broader market in the previous session, suffered relatively heavy downward pressure as investors in Taiwan took cues from a slide on the tech-heavy NASDAQ index overnight, dealers said.
Old economy shares, in particular “China concept stocks,” which have close business ties with China, also trended lower in reflection of Beijing’s disappointing economic data, they added.
Minister of Finance Chang Sheng-ford (張盛和) said yesterday that he remains confident that the TAIEX will challenge the 9,000-point hurdle soon.
Saying that the weighted index on the main board is now hovering at about 8,700 points, Chang said it is likely to reach 9,000 points in the near future.
On the question of whether the National Stabilization Fund would be activated in response to the Ukraine crisis, Chang said that there is no need at the moment.
ELECTRONICS BOOST: A predicted surge in exports would likely be driven by ICT products, exports of which have soared 84.7 percent from a year earlier, DBS said DBS Bank Ltd (星展銀行) yesterday raised its GDP growth forecast for Taiwan this year to 4 percent from 3 percent, citing robust demand for artificial intelligence (AI)-related exports and accelerated shipment activity, which are expected to offset potential headwinds from US tariffs. “Our GDP growth forecast for 2025 is revised up to 4 percent from 3 percent to reflect front-loaded exports and strong AI demand,” Singapore-based DBS senior economist Ma Tieying (馬鐵英) said in an online briefing. Taiwan’s second-quarter performance beat expectations, with GDP growth likely surpassing 5 percent, driven by a 34.1 percent year-on-year increase in exports, Ma said, citing government
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SMART MANUFACTURING: The company aims to have its production close to the market end, but attracting investment is still a challenge, the firm’s president said Delta Electronics Inc (台達電) yesterday said its long-term global production plan would stay unchanged amid geopolitical and tariff policy uncertainties, citing its diversified global deployment. With operations in Taiwan, Thailand, China, India, Europe and the US, Delta follows a “produce at the market end” strategy and bases its production on customer demand, with major site plans unchanged, Delta president Simon Chang (張訓海) said on the sidelines of a company event yesterday. Thailand would remain Delta’s second headquarters, as stated in its first-quarter earnings conference, with its plant there adopting a full smart manufacturing system, Chang said. Thailand is the firm’s second-largest overseas
SUPPLY RESILIENCE: The extra expense would be worth it, as the US firm is diversifying chip sourcing to avert disruptions similar to the one during the pandemic, the CEO said Advanced Micro Devices Inc (AMD) chief executive officer Lisa Su (蘇姿丰) on Wednesday said that the chips her company gets from supplier Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) would cost more when they are produced in TSMC’s Arizona facilities. Compared with similar parts from factories in Taiwan, the US chips would be “more than 5 percent, but less than 20 percent” in terms of higher costs, she said at an artificial intelligence (AI) event in Washington. AMD expects its first chips from TSMC’s Arizona facilities by the end of the year, Su said. The extra expense is worth it, because the company is
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