Asian stocks slumped, dragging the MSCI Asia-Pacific Index to its second drop in three weeks, as a record plunge in US home sales and slowing export growth in Japan added to evidence the global recovery is faltering.
Canon Inc, which makes 78 percent of its sales outside Japan, retreated 2.8 percent. James Hardie Industries SE, the biggest seller of home siding in the US, dropped 2.6 percent. LG Electronics Inc, the world’s third-largest mobile-phone maker, slumped 7.7 percent as consumer sentiment in its home market in South Korea declined. China Life Insurance Co (中國人壽), China’s No. 1 insurer, tumbled 9.8 percent after Citigroup Inc said first-half earnings were “weak.”
“The US economy now seems to be weaker than markets expected,” said Stephen Halmarick, who helps manage about US$135 billion as head of investment markets research at Colonial First State Global Asset Management in Sydney. “Investors are worried growth will fade sharply and that an improvement in company profits will reverse.”
The MSCI Asia-Pacific Index dropped 1.2 percent to 116.82 this week, following last week’s 0.4 percent gain. The index has slumped about 9.5 percent from its high this year on April 15 as Europe’s debt crisis, China’s measures to curb property-price inflation and disappointing economic reports in the US fueled concern global growth may stall.
Japan’s Nikkei 225 Stock Average slumped 2.1 percent as Japan’s export growth slowed last month, adding to risks in an economy already under threat by the yen’s appreciation. The Shanghai Composite Index dropped 1.2 percent as shares of developers dropped on speculation the government will introduce a property tax.
Australia’s S&P/ASX 200 Index fell 1.4 percent as Australian business investment unexpectedly fell in the second quarter and neither Prime Minister Julia Gillard nor opposition leader Tony Abbott gained an outright majority in last weekend’s national election.
South Korea’s KOSPI fell 2.6 percent as South Korea’s consumer confidence fell for the first time in five months, according to a Bank of Korea statement on Wednesday.
Shares of technology companies and raw material suppliers posted the biggest decline among 10 industry groups on the MSCI Asia-Pacific Index this week.
Japanese exporters declined after the yen advanced to a 15-year high against the US dollar on Wednesday as economic growth concerns boosted demand for refuge assets. A stronger yen reduces overseas income at Japanese companies converted into their home currency.
Japan’s export growth slowed for a fifth month in July, government data release on Wednesday showed. Japanese Prime Minister Naoto Kan said on Friday the government is ready to take “bold” action in the currency market when necessary.
Disappointing economic data from the US, one of biggest markets for Asia’s exports, sparked concern shipment of goods from the region will weaken.
“The US is a big consumer of goods manufactured in Asia,” said Prasad Patkar, who helps manage US$1.6 billion at Platypus Asset Management in Sydney. “Weakness in the US implies softer demand for Asian exports, which weighs down on growth in the region.”
Taiwan’s TAIEX rose 33.17, or 0.4 percent, to 7,722.91 at the 1:30pm close of Taipei trading on Friday, snapping three days of declines. The benchmark fell 2.6 percent this week, the most in 14 weeks.
Other markets on Friday:
Manila fell 1.03 percent, or 36.91 points, from Thursday to 3,558.67.
Wellington closed down 0.36 percent, or 10.81 points, from Thursday at 3,007.44.
Jakarta fell 1.28 percent, or 40.40 points, from Thursday to 3,104.73, with most of the falls among commodity-related and banking stocks.
Mumbai fell 1.25 percent, or 227.94 points, from Thursday to 17,998.41.
A Chinese freighter that allegedly snapped an undersea cable linking Taiwan proper to Penghu County is suspected of being owned by a Chinese state-run company and had docked at the ports of Kaohsiung and Keelung for three months using different names. On Tuesday last week, the Togo-flagged freighter Hong Tai 58 (宏泰58號) and its Chinese crew were detained after the Taipei-Penghu No. 3 submarine cable was severed. When the Coast Guard Administration (CGA) first attempted to detain the ship on grounds of possible sabotage, its crew said the ship’s name was Hong Tai 168, although the Automatic Identification System (AIS)
An Akizuki-class destroyer last month made the first-ever solo transit of a Japan Maritime Self-Defense Force ship through the Taiwan Strait, Japanese government officials with knowledge of the matter said yesterday. The JS Akizuki carried out a north-to-south transit through the Taiwan Strait on Feb. 5 as it sailed to the South China Sea to participate in a joint exercise with US, Australian and Philippine forces that day. The Japanese destroyer JS Sazanami in September last year made the Japan Maritime Self-Defense Force’s first-ever transit through the Taiwan Strait, but it was joined by vessels from New Zealand and Australia,
CHANGE OF MIND: The Chinese crew at first showed a willingness to cooperate, but later regretted that when the ship arrived at the port and refused to enter Togolese Republic-registered Chinese freighter Hong Tai (宏泰號) and its crew have been detained on suspicion of deliberately damaging a submarine cable connecting Taiwan proper and Penghu County, the Coast Guard Administration said in a statement yesterday. The case would be subject to a “national security-level investigation” by the Tainan District Prosecutors’ Office, it added. The administration said that it had been monitoring the ship since 7:10pm on Saturday when it appeared to be loitering in waters about 6 nautical miles (11km) northwest of Tainan’s Chiang Chun Fishing Port, adding that the ship’s location was about 0.5 nautical miles north of the No.
SECURITY: The purpose for giving Hong Kong and Macau residents more lenient paths to permanent residency no longer applies due to China’s policies, a source said The government is considering removing an optional path to citizenship for residents from Hong Kong and Macau, and lengthening the terms for permanent residence eligibility, a source said yesterday. In a bid to prevent the Chinese Communist Party (CCP) from infiltrating Taiwan through immigration from Hong Kong and Macau, the government could amend immigration laws for residents of the territories who currently receive preferential treatment, an official familiar with the matter speaking on condition of anonymity said. The move was part of “national security-related legislative reform,” they added. Under the amendments, arrivals from the Chinese territories would have to reside in Taiwan for
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