Asian Markets Weaken

123jump.com Staff
14 Aug, 2007
New York City

Asian markets traded lower on the worries that U.S. mortgage problem may last longer then first anticipated. The central banks in Japan and Australia drained liquidity from the markets as interest rates fell below target rate levels. Shanghai led the region with a gain of 1.5% and Indonesia with a loss of 1.94%. Thailand supreme Court issued arrest warrant for former Prime Minister Thaskin and his wife. Shipping and trading companies stocks in Tokyo rallied.

[R]7:00AM New York, 8:00PM Tokyo – Asian stocks traded mixed. Financials fall across the region. Chinese retail sales grow 16.4% and Japan economy in slender 0.1% growth.[/R]

Asian markets closed lower on the worries that U.S. economy may decline if housing problem spreads. The contagion effect was on the minds of investors in Asia. Indonesia led the region with a loss of 1.94% followed by losses of 1.7% in Korea, 1.4% in Thailand, and 0.75% in Australia. Shanghai led the region with a gain of 1.6% followed by 0.5% rise in Hong Kong, and 0.3% increase in Nikkei.

In Tokyo trading Nikkei closed 0.3% lower on the worries that the U.S. mortgage market problem is likely to linger longer on the minds of investors. The Japanese economy reported a slower growth at the end of previous quarter. Investors are also concerned about the sub-prime mortgage contagion effect on Japanese financial companies. The Bank of Japan drained liquidity in the system as overnight interest rate fell below its target rate. The overnight rate fell to 0.06%, well below its target rate of 0.5%. The bank mopped up 600 billion yen or $5 billion from the system after adding liquidity in the last three days.

Financials shares fell sharply in Japan. Mitsubishi UFJ led the bank stocks with a loss of 5.6%. Credit Saison Co finished 4.4% lower and Nippon paper closed down 4.21%. Industrial shares Fuji Electric and Nippon Oil Corp increased 7.64% and 6.96% respectively. Itochu Corp was up 6.87%. Trading companies and shipping companies led the gainers.

Seiyu Ltd of Japan turnover fell 1.4% to 461.56 billion in the previous interim. Seiyu reported a net loss of 6.92 billion in the first half, a decline from 54.03 billion a year ago on asset valuation losses. It now predicts a full-year 2007 net loss of 5.9 billion yen, down from 55.8 billion in 2006 and from the earlier profit forecast of 800 million.

In Sydney trading ASX fell 0.75% or 45 points to close at 5,982.50. The banking and home builder stocks led the decliners. Rams plummeted 19% after reporting that profit will be affected ‘materially’ on higher borrowing cost. JB Hi-Fi jumped 12% on the first half earnings more than doubled million on the recent acquisition in New Zealand. APN News & Media fell 2.5% after reporting growth less profit of A$72.5 million on 1.1% revenue decline to A$645 million.

In Shanghai trading stocks closed higher on Citic Securities profit expectations. The CSI 300 Index jumped 1.6% and Shanghai Composite Index gained 1.1%. Citic Securities jumped 8.5% lifting other brokerage stocks as well. Haitong Securities and Hong Yuan Securities jumped more than 7%. Consumer stocks rose steeply in China. Clothing retailer Youngor Corp up 8.1% to 30.45 yuan after first half profit increase of 220%. Gree Electric Appliances Inc rose 5.7% while Tsingtao Brewery Co up 1.9%. Retail sales in China grew 16.4% in the year to July to 699.8 billion.

In Mumbai trading Sensex fell 0.11% or 16.30 to close at 15,000.91. On trading in Bombay
Stock Exchange, 1580 stocks jumped, 1,113 declined and 88 were unchanged. Trading turnover on the exchange declined to 4,030 crore rupees from 4,157 crore rupees. Of the 30 stocks in the Sensex 16 declined and 14 gained. NTPC surged 3%, a day after the stock was added to Nifty index. ACC led the decliners in the Sensex list of stocks and ONGC led the gainers. Sugar companies stocks advanced, led by 3% increase in Shree Renuka Sugars, 2% rise in Balrampur Chini, and 1% increase in Bajaj Hindustan. Hindustan Copper jumped 5% on the news that the company is looking for international expansion and prospecting for gold mining in India. Trent, Tata Group controlled retailer, jumped 3% to 681 rupees after the reports that the company is negotiating distribution arrangement with Italian fashion house Benetton.