Asian stocks fell this week by the most since June amid concern that the U.S. will soon cut its record stimulus and that capital outflows from emerging markets will accelerate.
Mazda Motor Corp. (7261), the Japanese carmaker that gets 30 percent of its revenue in North America, fell 4.3 percent. Tokyo Electric Power Co. tumbled 21 percent as radiation-contaminated water continued to spill from its damaged Fukushima nuclear facility. Emerging markets dominated the biggest drops on the regional index, with animal-feed producer PT Charoen Pokphand Indonesia plunging 28 percent. Everbright Securities Co. fell 19 percent in Shanghai after its erroneous buy orders roiled Chinese stock markets last week.
The MSCI Asia Pacific Index fell 2.2 percent this week, the steepest drop since the five days ended June 21, to 131.39 as Federal Reserve minutes showed policy makers support the reduction of $85 billion in monthly bond purchases. The regional gauge rose 1.4 percent yesterday, for its only gain this week, as reports from Europe, the U.S. and China boosted confidence in the economic recovery. The MSCI Emerging Markets Index slumped 2.7 percent.
“It seems there’s obviously unanimous, broader support for tapering and it seems the prospect of tapering sooner rather than later is a good excuse for markets to have a correction,” Don Williams, chief investment officer at Platypus Asset Management Ltd. in Sydney, which manages about $1.2 billion, said in an Aug. 22 interview. “The market is correcting and that might continue for some time.”
Stocks on Asia’s benchmark index were valued at 12.8 times estimated earnings on average, compared with multiples of about 15.1 for the Standard & Poor’s 500 Index and 13.9 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
Japan’s Topix index slid 0.1 percent this week. Tokyo Electric led declines, tumbling 21 percent to 508 yen as a spill of contaminated water escalated into the biggest crisis at its Fukushima plant since the facility was smashed by a tsunami in March 2011.
Hong Kong’s Hang Seng Index (HSI) fell 2.9 percent this week. China’s Shanghai Composite Index slid 0.5 percent as Everbright Securities tumbled 19 percent to 9.84 yuan after its president resigned following erroneous buy orders which the company estimates caused a loss of 194 million yuan ($31.7 million).
South Korea’s Kospi Index (KOSPI) fell 2.6 percent, while Taiwan’s Taiex Index dropped 0.7 percent. Australia’s S&P/ASX 200 Index gained 0.2 percent. Atlas Iron Ltd. (AGO), a producer of the ore, slumped 17 percent to 80.5 Australian cents after its full-year profit missed analyst estimates.
Minutes released this week from the Federal Open Market Committee’s July meeting showed officials were “broadly comfortable” with Chairman Ben S. Bernanke’s plan to start reducing bond buying this year if the economy improves, with a few saying tapering might be needed soon.
U.S. policy makers will probably pare $85 billion in monthly bond purchases at the FOMC’s Sept. 17-18 meeting, according to 65 percent of economists surveyed this month by Bloomberg.
Mazda slumped 4.3 percent to 404 yen in Tokyo this week, while HSBC Holdings Plc (5), Europe’s largest bank, which received a fifth of its revenue from North America last year, slid 2.8 percent in Hong Kong.
PT Charoen Pokphand dropped 28 percent and property developer PT Lippo Karawaci Tbk declined 23 percent this week in Jakarta as emerging markets slumped. More than $1.5 trillion was wiped off the value of emerging equities since a peak on May 8 through Aug. 22, according to data compiled by Bloomberg.
Some investors are seeing opportunities amid the sell-off. South Korean and Chinese shares are the most attractive for Bill Maldonado, who directs stock investments for HSBC Global Asset Management Ltd.
“It seems almost foolhardy in the face of the current volatility to be that positive but in reality, we are,” Maldonado, Asia-Pacific chief investment officer for the unit of the London-based bank, which manages $413 billion, said in an Aug. 21 interview. “The two big outliers today, which look both very cheap and very profitable, are China and Korea.”
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