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| An elderly couple watch Japan’s stock quotation displayed on an electric board during afternoon trading session in Tokyo, yesterday. The Nikkei stock average dropped 102.48 points to 8,440.25 at the close |
Japan’s Nikkei average slid yesterday to mark its ninth straight week of losses, the longest such run in 20 years, after disappointing Chinese and US data deepened fears of a global slowdown in the throes of Europe’s debt crisis.
Exporters were hurt by a double whammy of data suggesting slowing demand for their products and a strong yen, which rocketed to an 11-1/2 year high against the euro and stayed firm against the dollar as investors flocked to buy the safe-haven currency.
“The problem is that although Japanese stocks are technically cheap according to historical barometers, the market has always moved more on foreign factors than domestic ones,” said Yutaka Miura, senior technical analyst at Mizuho Securities.
Canon, Mazda Motor, Nissan Motor and Sony lost between 3 and 4%.
Stocks with high exposure to China sagged after its official purchasing index (PMI) fell to a year-to-date low of 50.4 in May, the latest indicator of slowing growth in the world’s second-largest economy.
The Nikkei fell 1.2%and was down 1.6% on the week. On Thursday, it logged a drop of 10.3% in May, its worst monthly performance in two years, dogged by signs of slowing growth and shrinking global demand. It has fallen 17.7% since hitting a one-year high on March 27.
Investors sought refuge in defensives, with telecoms firms benefiting. NTT DoCoMo put on 3%, while KDDI gained 1.4% and Softbank added 1.1%.
Yahoo Japan fell 3% after Barclays Capital said it faces slowing growth after years of steady profit expansion, and its “prospects remain unclear” despite a new management team bent on emphasising its youth.
The broader Topix lost 1.5% and the index ended down 1.8% on the week, on track for a ninth straight week of losses to mark its worst weekly losing streak since 1975.
“Many investors are watching the timing to enter the market. However, as long as the knife is falling, nobody can catch it,” said Ryota Sakagami, chief strategist in equity research at SMBC Nikko Securities.
“The current problem is the tail risk from Europe ... However, (it’s) different from last year,” he said, adding that the US economy was in better shape, but that investors had high expectations for its performance.
Elsewhere in Asia, markets mostly fell yesterday.
With investors scrambling for safer haven assets such as the yen, Japan’s finance minister pledged “decisive action” if it keeps rising, indicating a fresh intervention by Tokyo.
Sydney dropped 0.30%, or 12.4 points, to 4,063.9 and Seoul eased 0.49%, giving up 8.96 points to close at 1,834.51. Hong Kong slipped 0.38%, or 71.18 points, to 18,558.34 and Shanghai was flat, edging 1.2 points up to 2,373.44.
The weak start to June came after a miserable May in which most markets gave up almost all the gains they had made since the turn of the year as the eurozone’s debt crisis came back into sharp focus.
The gloomy data sent dealers out of risk assets, pushing the euro lower.
Japanese Finance Minister Jun Azumi said yesterday he would take “decisive action” if the yen kept rising, with his remark interpreted as a threat of market intervention to curb the yen’s strength.
Japanese financial authorities have previously intervened in currency markets, including after the yen reached historic highs against the dollar last year. A stronger yen hurts exporters as it makes their goods more expensive overseas.
In other markets, Taipei tumbled 2.68%, or 195.41 points, to 7,106.09. Smartphone giant HTC shed 3.72% to T$414.0 while computer maker Acer was 1.64% lower at T$30.05.
Manila closed 0.56% lower, shedding 28.79 points to 5,062.44. DMCI Holdings fell 4.49% to 55.35 pesos and BDO Unibank ended 6.38% down at 66 pesos. Philippine Long Distance Telephone added 3.42% to 2,420 pesos. Wellington fell 1.04%, or 36.29 points, to 3,452.00. Fletcher Building slumped 4.29% to NZ$6.02 and Telecom was down 1.55% at NZ$2.54.