Tech Stocks Drag Asian Markets Down
By Kenan Machado
The selloff in Asia-Pacific equities deepened in midday trading, as the weakness in commodity prices added to the slide in tech stocks.
Analysts have attributed the declines of the past week to profit-taking in parts of the stock market that scored big gains this year.
"The mind-set now is so used to low volatility that a healthy correction of 2%-3% is making people talk," said Paul Kitney, chief equity strategist for Asia Pacific at Daiwa Capital Markets.
Hong Kong's Hang Seng Index has fallen more than 5% from its recent 10-year high, cooling a market that has been among the world's best performers in 2017. The index was down 1.3% midday.
Some of that market's biggest gainers were among its biggest losers Wednesday.
Sunny Optical, a maker of lenses and optical-related products, was recently 7.6% lower, while Geely Automobile was down 7.3%. Both stocks have more than tripled this year. Apple supplier AAC Technologies, which has doubled this year, was off 6.6%.
Japanese stocks extended losses after the midday break, with the Nikkei falling as much as 2.2% amid the yen's strength. The U.S. dollar fell to Yen112.15 from Yen112.60 earlier.
The weakness in tech stocks and the up-to-3% overnight slide in metals prices added to pressure Wednesday.
But Australia's S&P/ASX 200 held up relatively well despite declines of about 2% for mining companies Rio Tinto and BHP Billiton. The index closed down 0.4%, as country's big banks rebounded around 0.5%.
Broadly speaking, "we are starting to see a little bit of diversification outside of the highly concentrated names" as the year draws to an end, Mr. Kitney said, adding that the recent pullback in some hot areas, notably tech, was healthy.
The tech-heavy Taiex index in Taiwan was recently down 1.6% and South Korea's Kospi declined 1.1%.
Following tech-driven stock gains this year, investors have become skittish about tax implications from U.S. legislation, said Douglas Morton, head of research for Asia at Northern Trust Capital Markets. But "little has changed fundamentally in our opinion."
Still, investors have been cautious this week as Republicans continue work on the tax policy.
S&P 500 futures were recently down 0.1%.
Elsewhere, oil futures were down about 0.4% in Asia and the U.S. gasoline benchmark fell 1% after an industry group said inventories jumped in America last week.
Write to Kenan Machado at [email protected]