HONG KONG: Asian shares slipped on Friday, while the dollar was steady after US data raised fears that a global economic recovery could lose
momentum.
The dollar held firm against a basket of major currencies as some investors shifted back to safer assets despite extremely low yields, while hedge funds were reported to be taking profits ahead of closing their books for the year-end.
Investors were unnerved by a report showing that a record one in seven US mortgages were in foreclosure or at least one payment past due in the third quarter, signaling a recovery in the US housing market will be tepid at best.
Tech shares suffered some of the heaviest losses after a US brokerage downgrade of the semiconductor industry, which helped send the US S&P 500 index down 1.3 per cent overnight. The tech sector has been one of the leaders in a strong global equities rally that has extended into its ninth month.
Taiwan's TSMC, the world's biggest contract chipmaker, fell nearly 2 per cent. "Unless Christmas sales (of technology products) are very good, we don't think the market can rebound significantly," said Alex Huang, director of Mega International Securities in Taipei.
Japan's Nikkei index slid 0.5 per cent, marking a fourth straight week of losses and its longest negative run in more than a year, as the government announced the world's second-largest economy was back in deflation. The yen like the dollar, benefited from demand for safer assets, adding pressure on shares of Japanese exporters. They included electronics giant Sony Corp, which slid 2.4 per cent to a near four-month low on doubts the company's new business strategy could deliver strong profit growth. The MSCI index of Asia Pacific stocks traded outside Japan fell more than half a per cent, though the Asia ex-Japan index remains up about 65 per cent so far this year.
Indian shares outperformed the region with a bounce of 1.4 per cent from Thursday's one-week low. Australian shares fell 1.3 per cent to a two-week closing low, as companies with large export earnings, such as Westfield Group, lost ground on concerns the US economic recovery was losing momentum. Commodity stocks also fell after leading a recent rebound on doubts whether the market had run ahead of fundamentals. Shares in Honk Kong, Shanghai and Taipei fell less than a per cent, while Seoul ended flat.
RECORD FUND INFLOWS
While some market watchers fear share prices have run up too far ahead of economic fundamentals, other analysts say the retreat from equities may only be temporary as excess global liquidity will continue to encourage fund inflows into Asia. The region's economies are showing signs of rebounding from the global financial crisis far faster than the United States, Britain and Europe, where consumer sentiment remains fragile. In Hong Kong -- which has attracted record fund inflows of more than $70 billion since October last year -- central bank chief Norman Chan warned that rapid inflows posed a dilemma for policymakers across Asia as they raise the risk of potentially destabilising asset bubbles.
