Asian stocks dropped, with the regional benchmark index heading for a seven-week low, as US President Barack Obama authorized air strikes in Iraq.
The MSCI Asia Pacific Index fell 1.4 percent to 144.09 in Hong Kong, taking its loss this week to 2.5 percent. Obama said he has authorized air strikes to prevent genocide in Iraq. The announcement heightened geopolitical risks as Russia retaliated against US and EU sanctions by banning some western food imports, with concern that Russian President Vladimir Putin could ratchet up tensions by invading Ukraine.
“US air strikes in Iraq could stir up more tensions in the region,” said Desmond Chua, a strategist at CMC Markets in Singapore. “The geopolitical situation seems to be getting rougher every day. Given these high-risk events, investors should probably stay on the sidelines.”
In Taipei, plunging share prices cut the stock market’s capitalization by 1.96 percent in one week, Taiwan Stock Exchange statistics showed.
In the past five trading sessions, the weighted index fell 180.55 points from the end of last week to close at 9,085.96 points on Friday, the lowest level since May 30, when the index stood at 9,075.91 points.
The heavy losses was largely due to lingering concern over the impact from a series of deadly chemical explosions in Greater Kaohsiung, which killed at least 30 people and injured more than 300, analysts said.
Market sentiment was also dampened by worries over geopolitical tensions in Ukraine and the Middle East, they added. The FTSE TWSE Taiwan 50 Index, which is composed of the 50 largest cap stocks on the main board, fell 0.92 percent during one week, while the Formosa Stock Index, which can measure the aggregate performance of the main board and the local over-the-counter market, lost 2.15 percent.
Auto stocks led the decliners, falling 6.55 percent, while electronics shares led gainers, rising 0.17 percent, the TWSE said.
After nose-diving this week, the weighted index has moved closer to the nearest technical resistance of around 9,000 points, analysts said, adding that the index could stage a technical rebound next week.
Meanwhile, Japan’s TOPIX fell 2.4 percent. The Bank of Japan maintained record stimulus after recent production and export data highlighted weakness that could challenge Governor Haruhiko Kuroda’s push to stoke faster inflation. The central bank kept current policy of expanding the monetary base by ￥60 trillion to ￥70 trillion (US$588 billion to US$686 billion).
South Korea’s KOSPI lost 1.1 percent. India’s S&P BSE Sensex index both dropped 1.1 percent. Singapore’s Straits Times Index and New Zealand’s NZX 50 Index both lost 0.8 percent. Australia’s S&P/ASX 200 Index retreated 1.3 percent and Hong Kong’s Hang Seng Index dropped 0.2 percent.
China’s Shanghai Composite Index added 0.3 percent. A report on Friday showed China’s export growth unexpectedly accelerated last month and the trade surplus surged to a record as imports fell.
Overseas shipments increased 14.5 percent from a year earlier, the Beijing-based customs administration said on Friday, compared with the median projection of 7 percent in a Bloomberg News survey. Imports dropped 1.6 percent, leaving a trade surplus of US$47.3 billion.
“These are very good numbers,” Nader Naeimi, head of dynamic asset allocation at AMP Capital Investors Ltd in Sydney, said by phone. “China’s economy is picking up momentum and it looks sustainable. Chinese equities are still attractively valued, offering investors a good buying opportunity.”
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