Asian stocks fell this week as the deepening global recession slashed consumer demand, driving commodity prices lower and dragging down materials companies and oil drillers.
BHP Billiton Ltd, the world’s biggest mining company, dropped 16 percent after oil fell more than US$100 a barrel from its record in July and copper prices slumped. Honda Motor Co sank 21 percent as last month’s US sales plunged the most since 1981. Surfwear maker Billabong International Ltd tumbled 25 percent in Sydney after cutting its earnings forecast as its US customers deferred deliveries amid the economic contraction.
“The world is in recession and earnings will fall next year for most companies the world over, including Asia,” said Hugh Young, managing director at Aberdeen Asset Management Ltd in Singapore, overseeing about US$45 billion. “Asia is in pretty good shape for surviving, not in great shape for growing.”
The MSCI Asia-Pacific Index fell 3.8 percent to 79.52 this week. Raw-materials producers had the biggest percentage decline among the 10 industry groups.
MSCI’s Asian index has plunged 50 percent this year as global financial companies’ losses and writedowns from the collapse of the US subprime-mortgage market neared US$1 trillion. Shares on the MSCI gauge are now valued at 9.7 times trailing earnings after falling to as low as 8.2 times last month. That’s half the 19.5 times on Nov. 11 last year, when the measure hit a peak of 172.32. Prior to the current market turmoil, the price-earnings ratio never dropped below 10, according to Bloomberg data.
TAIPEI
Taiwanese share prices are expected to face further volatility next week amid uncertainty over electronics as global economic weakness compromises the sector’s profitability, dealers said.
Investors have turned more cautious after the high-tech sector was hard hit this week with several heavyweights having lowered their fourth quarter earnings outlook, they said.
They are looking into the sector’s sales data for last month, which are due by Wednesday, for a clear indication amid falling global consumption, they added.
However, financials may offset the impact from the high-tech sector’s losses as investors have hopes that Taiwan and China will sign a deal next year to increase banking exchanges, they said.
The market is expected to test the key 4,000-point support level in the week ahead, while any technical rebound may face stiff resistance at around 4,400 to 4,500 points, dealers said.
For the week to Friday, the weighted index lost 235.42 points, or 5.28 percent, at 4,225.07 after a 6.94 percent rise a week earlier.
Average daily turnover stood at NT$54.83 billion (US$1.64 billion), compared with NT$53.51 billion the previous week.
Other regional markets:
TOKYO: The benchmark Nikkei-225 index dropped 6.73 points, or 0.08 percent, to 7,917.51. The broader TOPIX index of all first section issues slipped 2.86 points, or 0.36 percent, to 786.02. Major bank stocks remained under pressure.
KUALA LUMPUR: Malaysian shares closed 1 percent lower. The Kuala Lumpur Composite Index lost 8.58 points to close at 838.28.
JAKARTA: Indonesian shares ended 0.3 percent lower. The Jakarta Composite Index closed 2.98 points lower at 1,202.34.
MANILA: Philippine share prices closed 0.1 percent lower. The composite index lost 1.93 points to 1,888.96.
WELLINGTON: New Zealand shares closed 0.88 percent lower. The benchmark NZX-50 index fell 23.96 points to 2,706.72.
MUMBAI: Indian shares fell 2.87 percent as investors locked in gains ahead of an economic stimulus package expected from India’s central bank on yesterday. The benchmark 30-share SENSEX fell 264.55 points to 8,965.2.
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