Asian stocks dropped, snapping three weeks of gains, on concern China will curb lending to avert a bubble in equities and after Nikon Corp and DBS Group Holdings Ltd reported declining earnings.
China’s Shanghai Composite Index fell the most since February. Nikon, Japan’s biggest maker of steppers used in microchip production, slumped 12 percent after forecasting a record loss. DBS, Southeast Asia’s biggest bank, sank 7.5 percent in Singapore as provisions for bad loans surged.
HSBC Holdings PLC, Europe’s biggest bank, climbed 8.7 percent in Hong Kong on better-than-estimated profit.
The MSCI Asia-Pacific Index declined 1 percent to 110.74 this week, with about twice as many stocks retreating as gaining. The gauge has climbed 57 percent from its March 9 five-year low on speculation a recovering global economy will boost earnings. Japan’s Nikkei 225 Stock Average added 0.5 percent to a 10-month high, and most Asian benchmark indexes advanced.
“I’m a bit more cautious, as valuations have run ahead of fundamentals following the recent rally,” said Ivan Tham, Singapore-based head of fund management at state-backed Kuwait Finance House, which has about US$24 billion in assets. “There are early indications that the economy is bottoming out.”
Better-than-estimated earnings and economic reports worldwide have driven stocks higher since March, lifting the average valuation of companies on the MSCI Asia-Pacific Index to 24 times estimated profit as of yesterday, near this year’s high of 26 reached in March.
Data this week showed Australian employers unexpectedly added jobs and pointed to improving manufacturing industries in China, Europe and the US.
The Shanghai Composite sank 4.4 percent as the People’s Bank of China said in a quarterly report released on Thursday that it would fine-tune monetary policy, sparking concern the central bank will rein in lending to avert bubbles in equities and property.
Taiwanese share prices are seen consolidating in the week ahead as investors remain cautious over negative economic data, analysts said..
For the week to Thursday, the weighted index fell 209.06 points, or 2.95 percent, to 6,868.65 after a 1.50 percent increase a week earlier. Average daily turnover stood at NT$138.87 billion (US$4.23 billion), compared with NT$146.38 billion a week ago.
Taiwan’s financial markets were closed on Friday as Typhoon Marakot hit. Trading will resume tomorrow.
“The sentiment is cautious as July consumer prices fell steepest in nearly 39 years ... which showed a lackluster consumption willingness,” said the Chinese-language Liberty Times (the Taipei Times’ sister newspaper).
The Taipei bourse is expected to consolidate in the near term although companies with a positive earning outlook are likely to stage a rebound, the paper said.
Taiwan’s consumer price last month fell for the sixth consecutive month by 2.33 percent year-on-year, while June unemployment hit a record high of 5.94 percent, the government said.
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