Asian stocks fell this week as investors sold shares trading at their most expensive valuations in five years on concerns that the economy and corporate profits will take longer than expected to recover.
Hitachi Ltd, Japan’s third-largest chipmaker, tumbled 17 percent after forecasting a loss. Rio Tinto Group, the world’s third-largest mining company, slumped 14 percent after London’s Telegraph newspaper reported the company may sell shares. China Construction Bank Ltd (中國建設銀行), the world’s No. 2 lender by market value, dropped 8.8 percent as Bank of America Corp sold a stake.
“All positive news has already been priced,” said Masaru Hamasaki, a senior strategist at Toyota Asset Management Co, which oversees the equivalent of US$3.3 billion. “We need solid evidence the economy is indeed recovering to go up any further.”
The MSCI Asia-Pacific Index fell 0.7 percent to 97.28 in the past five days, ending a two-week, 9.5 percent advance. Speculation the global economy is recovering sent the gauge to the highest since Oct. 7 on Monday. The average valuation of its companies is 33 times trailing earnings, the highest level since 2004, according to data compiled by Bloomberg.
Cautious sentiment is expected to affect Taiwanese shares next week after today’s pro-independence protests against the China-friendly Chinese Nationalist Party (KMT) government, dealers said on Friday. Worries linger over a possible prolonged standoff and even violence as the Democratic Progressive Party also plans an all-night sit-in protest in front of the Presidential Office, they said.
“Political conflicts are the last thing the stock market wants to have,” Grand Cathay Securities Corp (大華證券) analyst Mars Hsu said.
Investors are also keeping a close eye on first-quarter GDP data scheduled for release on May 21, and waiting for government comments on the economic outlook for the rest of the year, they added.
The market is expected to face stiff technical barriers as it moves closer to 6,500-6,600 points next week, while ample liquidity may lend some support to prices at around 6,300, dealers said. In the week to Friday, the weighted index fell 94.78 points, or 1.44 percent, to 6,489.09 after a 9.86 percent increase the previous week.
Average daily turnover stood at NT$170.52 billion (US$5.18 billion), compared with NT$211.87 billion a week ago.
Hsu said the market’s recent significant gains have paved the way for volatility in the short term.
“Many investors may use such political factors as an excuse to cut positions for profit,” Hsu said.
Other markets on Friday:
KUALA LUMPUR: Up 0.2 percent. The Kuala Lumpur Composite Index gained 2.22 points to 1,014.21.
BANGKOK: The SET gained 7.37 points, or 1.4 percent, to 533.92.
MANILA: Up 1.97 percent. The composite index rose 44.47 points to 2,308.70.
WELLINGTON: Up 0.53 percent. The NZX-50 index rose 14.78 points to 2,790.90.
MUMBAI: Up 2.53 percent. The 30-share SENSEX gained 300.51 points to 12,173.42.
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