By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Most Asian markets fell Friday after another selloff on Wall Street amid worries the Federal Reserve would cut its stimulus, with mainland Chinese stocks finishing lower after witnessing a dramatic surge earlier in the day.
The Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP +2.07% ended the day 0.6% lower at 2,068.45 after an extremely volatile session, during which it swung to a 5.6% jump from a 1% loss earlier in the day, before sliding back into losses.
Multiple traders and media accounts cited an unintended “fat finger” execution of a 7 billion yuan ($1.13 billion) order at a local brokerage as the cause for the sudden spike in Shanghai stocks. The Shanghai Stock Exchange Friday afternoon confirmed that the investment strategy department at Everbright Securities Co. had encountered a problem in its arbitrage system, according to a Xinhua news report.
“Chinese markets turned on a dime and went crazy, which was interesting just as everyone was settling into a quiet afternoon. ... The rumor and intrigue that centered on the move was huge, with dealers phoning around the houses trying to work out exactly what occurred,” said IG Markets chief markets strategist Chris Weston.
/zigman2/quotes/206980083/delayed 601857 4.27, +0.04, +0.95%
/zigman2/quotes/202525815/delayed 601398 4.98, +0.04, +0.81%
“Whatever the outcome, these sorts of moves do not help confidence,” he said.
The surge in the Shanghai index had coincided with a flare-up in shares of several companies, including the two largest stocks on the bourse by capitalization — PetroChina Co. and Industrial & Commercial Bank of China Ltd. Both stocks briefly rose around 10%, before also giving up those gains.
The Shanghai-listed shares of PetroChina /zigman2/quotes/206980083/delayed CN:601857 +0.95% /zigman2/quotes/205108732/composite PTR -1.22% inched 0.1% higher, while those of ICBC /zigman2/quotes/202525815/delayed CN:601398 +0.81% /zigman2/quotes/202401350/composite IDCBY -0.41% ended unchanged from Thursday’s closing level.
KGI Asia Chief Operating Officer Ben Kwong said the resilience of stocks in Hong Kong and Shanghai came as investors looked for better investment opportunities after the recent sell-off in U.S. markets.
“Hong Kong and Shanghai have pretty much been left behind, and had previously underperformed because of [worries about] the economic slowdown and the debt problems. But recent data is pointing to stabilization. That’s why funds are looking for an excuse to get into these markets for higher returns,” Kwong said.
Other regional markets also came off their highs, with Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.47% ending 0.1% lower.
Elsewhere, Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +0.18% ended down 0.8%, while South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +0.26% fell 0.2% and Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.32% dropped 0.8%. Taiwan’s Taiex ended the day 0.5% higher.
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New Zealand stocks fell, meanwhile, following reports that a powerful earthquake had rocked the country. The NZX 50 dropped 0.4% as trading resumed after a temporary halt.
The Shanghai Composite ended the week 0.8% higher despite Friday’s losses, while the Hang Seng Index was among the region’s best weekly performers with a 3.3% gain. Also posting weekly gains, South Korea’s Kospi added 2.1%, Australia’s S&P/ASX 200 climbed 1.2% and the Nikkei Stock Average edged 0.3% higher.
Friday’s broad losses in Asia came after the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.88% tumbled 225 points overnight for its second consecutive triple-digit fall, following a jump in Treasury yields. Cisco Systems Inc.’s /zigman2/quotes/209509471/composite CSCO -1.39% planned layoffs and a cut in Wal-Mart Stores Inc.’s /zigman2/quotes/207374728/composite WMT -1.02% forecasts also weighed on the Dow industrials.
Shares of several firms that have a significant international exposure fell across the region.
In Tokyo, Yamaha Motor Co. /zigman2/quotes/208499076/delayed JP:7272 -0.31% /zigman2/quotes/207509062/composite YAMHF -1.57% dropped 1.8%, Sharp Corp. /zigman2/quotes/203224600/delayed JP:6753 +1.88% /zigman2/quotes/200401218/composite SHCAY +0.96% fell 1.9%, and construction-equipment maker Komatsu Ltd. /zigman2/quotes/204002437/delayed JP:6301 +0.77% /zigman2/quotes/206435044/composite KMTUF +0.14% shed 2.4%.
Samsung Electronics Co. /zigman2/quotes/209800866/delayed KR:005930 -0.34% /zigman2/quotes/202367843/composite SSNLF 0.00% lost 0.4%, and LG Electronics Co. /zigman2/quotes/209966407/delayed KR:066570 -0.77% gave up 1.9% in Seoul, while in Sydney, sportswear firm Billabong International Ltd. finished 3.6% lower.
Stocks and bonds take a tumble
Stephen Wood of Russel Investments discusses the down day in the U.S. markets.
Also losing ground in Sydney, Australia & New Zealand Banking Group /zigman2/quotes/205482049/delayed AU:ANZ -1.44% /zigman2/quotes/203732563/composite ANZBY -1.89% fell 3% after the bank said margins in its Asian business were likely to fall in the second half of the fiscal year through September, due to lower interest rates.
However, gold miners advanced after precious-metal futures jumped overnight in the U.S.
Newcrest Mining Ltd. /zigman2/quotes/203840223/delayed AU:NCM +0.18% /zigman2/quotes/206026738/composite NCMGF +1.17% rose 4%, and Perseus Mining Ltd. /zigman2/quotes/205179925/delayed AU:PRU +3.30% soared 20% in Sydney, while Zijin Mining Group Co. /zigman2/quotes/204517000/delayed HK:2899 +6.10% /zigman2/quotes/209836076/composite ZIJMF +4.08% rose 1.7% in Hong Kong, and Zhongjin Gold Corp. /zigman2/quotes/207741711/delayed CN:600489 +1.89% added 1.3% in Shanghai.
Several energy shares also outperformed after crude-oil prices climbed in the U.S., with Inpex Corp. /zigman2/quotes/206689846/delayed JP:1605 -0.15% /zigman2/quotes/206936121/composite IPXHF -5.64% adding 1.3%, and Japan Petroleum Exploration Co. /zigman2/quotes/201212147/delayed JP:1662 -1.16% rising 2.6% in Tokyo.