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Nikkei Markets

Asian stocks end week lower as rate hike bets lift dollar

Chinese bank shares tumble on call to boost lending to private companies

HONG KONG (Nikkei Markets) -- Asian stocks outside of Japan fell Friday, ending the week lower, as lingering concerns over Sino-American trade relations and rising U.S. borrowing costs clouded investor sentiment.

   The Nikkei Asia300 Index fell 1.8% to 1,203.35 on Friday, ending the week 2.1% lower. Technology stocks have been under pressure this week, with Apple suppliers sliding amid concerns over slowing demand. Hon Hai Precision Industry, Pegatron, and Largan Precision fell 6%, 5.8%, and 12.6%, after Apple forecast a weaker-than-expected December quarter. The Nikkei Asian Review this week reported, citing sources, that Apple has asked the suppliers to halt plans for additional production lines dedicated to its iPhone XR model.

   In Friday’s trading in Taipei, Hon Hai fell 0.7%, while Pegatron climbed 0.6%, and Largan lost 3.8%. Tencent Holdings, which jumped 16.8% last week, shed 8% over the last five days. It dropped 4.9% on Friday.

   The day’s losses came after the U.S. dollar and Treasury yields climbed overnight, following the Federal Reserve’s policy review. The central bank stood pat on rates, but kept its guidance for further gradual rate increases. It is widely expected to raise rates for a fourth time this year at its December meeting.

   Friday’s losses wiped out the gains recorded earlier in the week by the Nikkei Asia300 Index after U.S. mid-term elections resulted in a split Congress. The verdict raised hopes for “less monetary tightening in near future,” according to Jonathen Chan, a market analyst at CMC Markets and Stockbroking. “However, a more hawkish stance was reflected in the FOMC statement and told a different story, and a rise at the next interest rate decision is highly likely.”

   Markets will likely remain sensitive to any evidence associated with further economic expansion, and the strength of the U.S. dollar may continue to influence investor thinking in the short run, he added.

   Mainland banks retreated in Hong Kong on Friday on Beijing’s push for lending to the private sector. China Banking and Insurance Regulatory Commission Chairman Guo Shuqing called for an increase in credit support to private companies, suggesting that at least 50% of new corporate loans go to them in the next three years, according to state media reports.

   China Construction Bank declined 2.4%, while Bank of China lost 2.6%, and Industrial & Commercial Bank of China retreated 2.7% on Friday.

   Chinese automakers Great Wall Motor, Guangzhou Automobile Group, and Dongfeng Motor Group fell 3.1%, 6.1%, and 3%, respectively, after data from the China Association of Automobile Manufacturers showed car sales in the mainland fell 11.7% in October from a year earlier. Car sales had declined 11.6% in September and 3.8% in August, according to Reuters.

   Electronic parts maker Compal Electronics fell 2% in Taipei despite reporting a 15% increase in October sales from a year earlier.

   Regional energy producers pulled back after Brent crude prices fell 2% on Thursday. PetroChina and CNOOC lost 2.3% and 4.4%, respectively, in Hong Kong, while PTT Exploration and Production declined 1.4% in Bangkok.

   --Suzannah Benjamin

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