A six-week rally in Asian stocks faltered this week, as earnings from companies such as China Mobile Ltd and KDDI Corp reduced optimism the global economy is recovering.
China Mobile (中國移動通信), the world’s biggest wireless carrier, sank 6.6 percent in Hong Kong after first-quarter profit grew at the slowest rate in five years. KDDI, Japan’s second biggest, lost 6 percent after projecting the slowest earnings growth since 2006. PCCW Ltd, Hong Kong’s biggest phone carrier, slumped 16 percent as Chairman Richard Li abandoned his US$2.1 billion takeover bid.
“You’re seeing cold water being poured on the theme of a sharp rebound in growth,” said Tim Schroeders, who helps manage about US$1 billion at Pengana Capital Ltd in Melbourne. “It’s encouraging that a bottom has been perceived, but given the likelihood of a protracted period of low growth, some of these share prices ran ahead of reality.”
PHOTO: BLOOMBERG
The MSCI Asia-Pacific Index slipped 0.2 this week to 89.52, following a 25 percent rally in the previous six weeks. It plunged by a record 43 percent last year as the credit crunch tipped the world’s largest economies into recession, forcing companies to cut jobs amid slumping profits.
Japan’s Nikkei 225 Stock Average and Hong Kong’s Hang Seng Index both declined 2.2 percent. Thailand’s SET Index advanced 3.8 percent as Thai Prime Minister Abhisit Vejjajiva ended 12 days of emergency rule in Bangkok, saying the nation has “returned to normal.”
Taiwanese share prices are expected to meet further technical resistance ahead of the psychological 6,000-point level, dealers said on Friday.
As the market repeatedly failed to pass the figure in the past few sessions, investors have kept alert on possible technical corrections after the bourse had staged significant gains recently, they said.
Market sentiment has become cautious before Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract microchip maker, reports its first quarter results on Thursday, they added.
Investors are also watching closely how the US auto sector will resolve its financial difficulties and how Wall Street reacts to the development, they said.
While it is possible for the market to challenge 6,000 points again next week, downside pressure is expected to drag the index down with technical support at around 5,600, dealers said.
In the week to Friday, the weighted index rose 125.39 points, or 2.18 percent, to 5,880.77 after a 0.5 percent decline a week earlier.
Average daily turnover stood at NT$130.81 billion (US$3.88 billion), compared with NT$168.57 billion a week ago.
“The market is waiting for TSMC’s comments on an outlook of the global high tech industry,” Taiwan International Securities (金鼎證券) analyst Arch Shih (施博元) said.
Taiwan’s economy has been badly hit as its electronics exports suffered steep declines amid a global economic meltdown. While major high-tech firms have canceled unpaid leave after receiving large orders from China, “investors need real numbers. The upcoming TSMC investor conference is the key,” Shih said.
Other markets on Friday:
BANGKOK: Up 1.72 percent. The Stock Exchange of Thailand composite index gained 8.01 points to 474.07. Investors welcomed the lifting of a state of emergency in and around Bangkok before profit-taking later in the day, dealers said.
KUALA LUMPUR: Up 1.40 percent. The Kuala Lumpur Composite Index gained 14.04 points to 992.68.
JAKARTA: Flat. The Jakarta Composite Index lost 1.37 points to 1,591.33.
MANILA: Up 1.7 percent. The composite index gained 35.33 points to 2,103.63. The market was lifted by regulators’ approval of a rate hike by Meralco, the country’s biggest power distributor, as well as moves in Congress to push for amendments to the constitution to remove a ban on foreigners from owning land.
WELLINGTON: Flat. The NZX-50 index fell 2.46 points to 2,656.39.
MUMBAI: Up 1.74 percent. The 30-share SENSEX rose 194.06 points to 11,329.05.
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
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TARIFF SURGE: The strong performance could be attributed to the growing artificial intelligence device market and mass orders ahead of potential US tariffs, analysts said The combined revenue of companies listed on the Taiwan Stock Exchange and the Taipei Exchange for the whole of last year totaled NT$44.66 trillion (US$1.35 trillion), up 12.8 percent year-on-year and hit a record high, data compiled by investment consulting firm CMoney showed on Saturday. The result came after listed firms reported a 23.92 percent annual increase in combined revenue for last month at NT$4.1 trillion, the second-highest for the month of December on record, and posted a 15.63 percent rise in combined revenue for the December quarter at NT$12.25 billion, the highest quarterly figure ever, the data showed. Analysts attributed the
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