Asian stocks headed for their worst week since September 2011 as Taiwan, Hong Kong and Indonesia entered bear markets.
The MSCI Asia Pacific Index sank 2.04 percent to 131.51 on Friday in Hong Kong, dropping to its lowest close since February last year and falling 4.9 percent from the previous week.
Taiwan’s TAIEX plunged 3.02 percent from Thursday, while the Jakarta Composite Index closed 2.4 percent lower, bringing its drop from an April peak to 22 percent. The Hang Seng Index lost 1.5 percent.
China’s surprise devaluation of the yuan last week and prospects for the first US interest rate increase since 2006 triggered a selloff in emerging markets and commodities that is spreading to developed markets.
“It seems like we’re seeing the makings of the 1997 Asian financial crisis all over, with emerging-market currencies plunging,” Nicholas Teo, a strategist at CMC Markets in Singapore, said by phone. “China’s knock-on effect on the rest of the world is huge and China’s deepening economic slowdown will have an impact for the next couple months or so. We are getting closer to a Fed rate hike. If they move, that will have disastrous effects.”
A report on Friday showed a private gauge of Chinese manufacturing unexpectedly fell to the lowest level in more than six years, suggesting the world’s second-largest economy would need further policy support to stem a deepening slowdown. Concern that demand is weakening has driven a commodities rout that has erased US$2 trillion from the value of mining and oil companies since the middle of last year.
BHP Billiton Ltd, the world’s biggest mining company and Australia’s largest oil producer, slipped 1.2 percent in Sydney as commodities from copper to oil extended their rout. Sinotrans Ltd tumbled 9 percent in Hong Kong after Daiwa Securities Group Inc downgraded its rating on the logistics company. Takeda Pharmaceutical Co slumped 3.1 percent in Tokyo after the drugmaker lost a court ruling that could shave years off a patent on its top-selling cancer drug.
Taiwanese stocks entered a bear market amid concern China’s economic slowdown and currency devaluation would curb demand for its technology products.
The TAIEX fell 3.02 percent to 7,786.92 at the close on Friday, the lowest level since June 2013. The benchmark gauge tumbled 6.2 percent from the previous week and more than 20 percent from a 15-year high on April 27, the threshold for a bear market. Taiwan Semiconductor Manufacturing Co (台積電), the biggest stock in the local market, dropped 4 percent.
Foreign investors pulled a net US$2.5 billion from Taiwanese shares this quarter, the most in Asia after Japan and South Korea.
“The TAIEX is declining because of uncertainties in Taiwan and the global economy,” Parker Wu (吳年恭), a portfolio manager at the Agriculture Bank of Taiwan (台灣農業金庫), said by phone.
“Taiwan’s GDP is weaker than expected. China’s economic slowdown and yuan depreciation are also worrying Taiwan stock investors. A key level is 7,800. If the market drops below that, it may mean investors are more pessimistic about the future,” Wu said.
Hong Kong’s Hang Seng Index slipped 6.6 percent this week, the most since September 2011, as declines in mainland equities and the devaluation of the yuan erode support for the territory’s shares.
The Hang Seng Properties Index dropped for a 13th day, the longest stretch on record, raising concern Hong Kong’s real-estate market is overvalued. Cheung Kong Property Holdings Ltd (長地集團) tumbled 3.6 percent, the third-biggest decline on the Hang Seng Index.
Indonesia’s economy is growing at the slowest pace in six years as President Joko Widodo struggles to deliver on plans to revitalize growth. The weakest rupiah in 17 years is limiting scope for the central bank to cut interest rates, while tumbling commodity prices and a deepening economic slowdown in China threaten to slash export revenue.
The Shanghai Composite Index dropped 4.3 percent, extending the first weekly loss in three weeks. The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong slumped 2 percent. Chinese stocks fell this week after the securities regulator indicated a week ago that the state would reduce buying and data showed the richest traders were cashing out.
In other markets on Friday, South Korea’s KOSPI fell 2 percent, Japan’s TOPIX slumped 3.1 percent, Australia’s S&P/ASX 200 Index slid 1.4 percent, Singapore’s Straits Times Index lost 1.3 percent and Thailand’s fell 0.5 percent.
New Zealand’s NZX 50 Index bucked the trend by edging up 0.13 percent.
Financial markets in Manila were closed for a public holiday.
Additional reporting by AFP
TECH RACE: The Chinese firm showed off its new Mate XT hours after the latest iPhone launch, but its price tag and limited supply could be drawbacks China’s Huawei Technologies Co (華為) yesterday unveiled the world’s first tri-foldable phone, as it seeks to expand its lead in the world’s biggest smartphone market and steal the spotlight from Apple Inc hours after it debuted a new iPhone. The Chinese tech giant showed off its new Mate XT, which users can fold three ways like an accordion screen door, during a launch ceremony in Shenzhen. The Mate XT comes in red and black and has a 10.2-inch display screen. At 3.6mm thick, it is the world’s slimmest foldable smartphone, Huawei said. The company’s Web site showed that it has garnered more than
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
Vanguard International Semiconductor Corp (世界先進) and Episil Technologies Inc (漢磊) yesterday announced plans to jointly build an 8-inch fab to produce silicon carbide (SiC) chips through an equity acquisition deal. SiC chips offer higher efficiency and lower energy loss than pure silicon chips, and they are able to operate at higher temperatures. They have become crucial to the development of electric vehicles, artificial intelligence data centers, green energy storage and industrial devices. Vanguard, a contract chipmaker focused on making power management chips and driver ICs for displays, is to acquire a 13 percent stake in Episil for NT$2.48 billion (US$77.1 million).
RSS