SYDNEY (Bloomberg) - Asian stocks fell today, paring the regional benchmark measure's first weekly advance since July. Energy and material companies declined.
The MSCI Asia Pacific Index dropped 0.1 per cent to 127.3. Most of this week's 2 per cent gain came on Sept 9, when stocks in Japan soared in a rally that analysts said was fueled by short-sellers closing bearish bets.
Investors are grappling with heightened global equity volatility as they await the Federal Reserve's decision next week and watch developments in China.
"Markets have been wild and fear is still near its zenith," said Tim Shirata, Los-Angeles based executive vice president at Guild Investment Management.
"Pessimism about China and the world economic outlook is widespread, and optimism about continued economic growth in the US is declining. We hold a lot of cash, and are waiting patiently for opportunities to invest it."
The Standard & Poor's 500 Index rebounded from a selloff Thursday amid low trading volumes. While US Federal Reserve officials have in recent weeks acknowledged global equity rout that followed China's currency devaluation, they haven't been willing to rule out a September interest-rate increase. Many economists are still predicting the Fed will increase its key rate even as rate futures traders have pared bets.
Japan's Nikkei 225 Stock Average declined 0.2 per cent, narrowing its first weekly advance in five weeks to 2.7 per cent. After the gauge's 7.7 per cent surge on Sept 9, short-term price swings in Tokyo are topping those in Shanghai for the first time this year. The Topix index climbed less than 0.1 per cent.
With Japan's economy struggling to gather momentum after a contraction last quarter, more than a third of economists see the central bank expanding monetary stimulus by next month, according to a Bloomberg News survey.
Eleven of 35 respondents see the Bank of Japan stepping up its easing on Oct 30, while two forecast a move as early as next week, the Sept 7-10 survey shows. The central bank last expanded asset purchases in October 2014.
Hong Kong's Hang Seng China Enterprises Index slid 0.6 per cent, paring its weekly gain to 6 per cent, the most in five months. The stock index was 34 per cent below its May peak on Thursday, leaving valuations cheaper than any other market in Asia, as a boom in mainland equities turned to bust.
The city's benchmark Hang Seng Index fell 0.3 per cent and the Shanghai Composite Index added less than 0.1 per cent. China's central bank Governor Zhou Xiaochuan said last weekend the plunge in Chinese equities is almost over.
South Korea's Kospi index retreated 1.1 per cent, the most among major Asian equity benchmarks on Friday. Australia's S&P/ASX 200 Index lost 0.5 per cent and New Zealand's NZX 50 Index declined 0.4 per cent.
Singapore's cash equity market is closed for a holiday today as the nation heads to the polls with Prime Minister Lee Hsien Loong's People's Action Party expected to win re-election.