Asian Markets Gyrate, Close Sharply Lower

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

Asian markets closed sharply lower as investors dumped stocks. With the strength in the European markets, major indexes in Asia recovered some of the losses. Indonesia and Japan led the region with losses of 5.9% and 5.4%. South Korea dropped 3.2% and India closed 1.5% lower after opening with a loss of 4%. Hong Kong fell 1.4% but lost nearly 6%. Volatililty grippesd markets across the region.

[R]11:00AM New York, 11:00PM Hong Kong - Stocks in Australia and China gyrated on volatile U.S. markets. Other Asian markets declined further. Reserve Bank of Australia pumps A$3.9 billion into financial markets to control rising rates.[/R]

Asian shares continued to decline on deep-seated investor concerns on the U.S. mortgage market turmoil. Stocks in Australia firmed in morning trade before closing weak. Japan plunged 5.4% followed by Singapore down 3.4%. Hong Kong retreated 3.3%, Kuala Lumpur fell 2.5% and Mumbai lost 1.51%. Australia and China fell 0.7%.

In Hong Kong trading Hang Seng index fell 1.4% or 285.25 points to close at 20,387.13. At its low the index plunged more than 6% and recovered with the European markets trading. For the week the index is down 6.5% reflecting similar losses in other markets in the region. Of the 39 stocks in the index, 35 declined, 3 gained, and 1 stock was unchanged.

Hong Kong second quarter economic growth increased to 6.9% from revised rate of 5.7% in the first quarter. The government kept its inflation forecast for the year at 1.5% and raised its annual growth rate between 5% and 6% from 4.5% and 5.5%. Unemployment in the quarter fell to a four year low of 4.2% and private consumption rose 6.6%. Home sales jumped 73% from a year ago to HK$109.3 billion in the quarter.

Chinese energy companies trading in Hong Kong fell on 3% lower crude oil price in the international markets. Cnooc fell 2.6% and PetroChina declined 1.3%. China Shipping Development fell 10% and China Construction Bank lost 3.5%. Hang Lung fell 6% after reporting a sharp rise in earnings a day ago. China Life dropped 3.5%.

In Sydney trading ASX S&P 200 lost 0.71% to 5 671.00 dragged by losses in mineral shares. Of the 201 Sydney stocks, 131 shares fell, 60 up and 10 were unchanged. 18 shares lost by between 5% and 11%. Of the stocks in the index, 78 stocks declined in the range between 1% and 4.9% and top 5 gained more than 4%.

Sydney gained in early morning trading with financials recovering after heavy losses yesterday. The Reserve Bank of Australia injected a further A$3.7 billion into the financial system to hold rates rise. Rates had started to rise beyond the key bank rate of 6.5% amid growing investor concerns U.S. credit market problems will spread losses. The bank also intervened to check Aussie dollar volatility. The A$ opened at 79.08 U.S. cents, below the 80 cents mark for the first time in five months. Overnight, it fell from a high of 80.45 cents to a low of 78.20 cents.

Mining shares dropped sharply on fears the volatility in the dollar will stagnate growth and affect earnings. Of the stocks in ASX 200 index, Apa Group led the index with a plunge of 10.60% followed by Compass Resources down 9.2%. Mincor Resources fell 8.90%, Minara Resources dropped 8% and Perilya Ltd lost 7.9%. Financials recovered from previous losses because investors found them relatively cheap. Macquarie Infras led gainers in the index with 5.30% followed by Babock and Brown up 4.76% and Resmed INC rising 4.6%. Macquarie Communications gained 4.51% while Alinta Ltd rose 4.5%. Adelaide Bank pushed higher 2.66% with Macquarie Bank adding 1.66%.

The Australian Stock Exchange reported that full-year net earnings at the end of June 30th rose 116% to A$293 million. ASE will pay a final dividend of 91.5 cents. Listing revenue rose 38% to A$117.6%. The stock edged 0.60% lower.

Evans & Tate did not trade after electing voluntary suspension pending issuance of a cautionary statement. The firm is subject of takeover bids from a number of companies. Health insurer, MBF Australia announced plans to demutualise before listing on the ASE. MBF council had ratified the plans, said the company. Last year, MBF profit rose to A$181 million from A$150 million a year earlier. Analysts have valued the group at A$1 billion.


[R]10:00AM New York, 7:30PM Mumbai – Sensex in Mumbai trading fell as much as 4% after recovering to close 1.5% lower. U.S. market volatility inflicted damage to the trading in India and across the world.[/R]

Sensex in Mumbai trading fell 1.5% or 216.69 points to 14,141.52 after recovering from a loss of 578 at the opening. The index has lost nearly 6% during the week on global markets volatility emanating from credit market jitters in the U.S. Nifty Index lost 1.7% or 70.55 points to close at 4,108.05.

Daily turnover on the BSE listed stocks increased to 6,482 crore rupees from 5,646 crore rupees and on the National Stock Exchange increased to 15,286.93 crore rupees from 11,719.28 crore rupees.

Of the stocks trading on the Bombay Stock Exchange, 1,833 declined, 888 stocks gained, and 40 remained unchanged. International institutional investors sold stocks worth 2,548.50 crore rupees (or $600 million).

Of the 30 stocks in the index, 26 declined and 4 gained.

Nagarjun Fertilisers soared 17% to 32.20 rupees on the market rumors that Reliance Industries is likely to acquire the company at 45 rupees per share. Reliance and Nagarjun denied the rumors. Siemens India jumped 1.3% to 1,200 rupees after receiving an order to build hot strip rolling mill for Jindal Steel Works.

Software exporters fell led by Satyam Computer Services 6% decline to 439 rupees followed by 3% loss in Infosys to 1,851. Infosys in the morning trading had dropped as low as 8.6% to 1,745. TCS, the largest company in the sector lost 3% to 1,055 in the sell-off. News reports suggest that the company is exploring its option to acquire back-office operation of U.K. based insurance company Prudential with locations in UK and India. In other news Educomp Solutions closed 6% lower to 2,350 rupees on the news that it has acquired 51% of online tutoring company AuthorGEN. The online presentation company is based in Raleigh, North Carolina and Chandigarh.

Metals and mining stocks fell for the second day on the fall in international price of copper and aluminum. Sterlite led the sector with a loss of 7.6% to 516 rupees followed by losses in Tata Steel of 5.5% to 544 rupees, 4.5% to 136 rupees in SAIL, 3.7% to 139 rupees in Hindalco, and 2.7% to 670 rupees in Hindustan Zinc.

Real estate stocks recovered after falling sharply in the last two sessions. Sobha Developers jumped 4.3% to 775 rupees and Unitech increased 3.6% to 483 rupees. But, DLF fell 0.5% to 581 rupees. DLF agreed to pay 1,675 crore rupees for a textile mill complex controlled by DCM Shriram, the record land transaction in the real estate industry.


[R]7:00AM New York, 8:00PM Tokyo-Massive sell-off sends Japan into doldrums, lowest levels in 6 years. Yen continue firming. The Bank of Japan injects 1.2 trillion yen to improve liquidity and stem interest rates increase.]/R]

Japanese shares hit fresh 6-year lows, as exporters, steel and ship building stocks fell relentlessly on firming yen. Early morning gains in financials were wiped off in afternoon trade, as the U.S. mortgage market problems continue causing mayhem in global shares. Japan plummeted 5.42%. Of 225 shares 200 crashed, 23 gained and 2 were unchanged. Of the stocks in the index, 33 shares fell by more 10% while 86 stocks dropped by between 5% and 9.9%. The Topix fell 5.5%.

In Tokyo trading Nikkei 225 plunged 5.42% to 15,273.68, the biggest decline in 6 years. Landslide declines in exporters mostly, underpinned the fall. The yen firmed to 111 against the dollar from 116 earlier in the week. In the morning, the yen had strengthened to 112. Yesterday it fluctuated between 114 and 113 yen per dollar. For the week the yen has gained 4.2%. The Bank of Japan injected 1.2 trillion into the market to ease liquidity and cool heating rates. Yesterday the Bank of Japan added 400 billion into financial system. But rates remained high, failing to fall below the BOJ target rate of 0.5%.

Japan and South Korea financials architects are due to meet early next week in the wake of financial markets volatility that has caused huge losses amongst investors in the region. Over 250 Japanese delegates will also visit several Asia states to discuss bilateral and investment issues. Japan will extend 400 billion-yen concessionary-rate loan to India as development aid.

Of the stocks Nikkei 225, exporters fell heaviest against a rising yen on expectations foreign earnings will crumble. Sumitomo Met min led losses crashing 16.4% followed by Mitsui ENG Shipb down 15.68%. Hitachi Zosen sank 14.68% while Japan Steelwork lost 13.9% and NGK Insulators falling 13.6%. Carmakers Toyota and Honda fell sharply too. Financials faltered to deceive having regained some lost ground in early morning trade. Most ended in the negative at close. Mitsubishi UFJ F shed 4.5%. At least 13 shares gained by between 1% and 4% while 10 increased below 1%. KDDI led up 3.7% followed by Nippon Paper GRO up 2.82% while Credit Saison inched higher 2.7%. East Japan Rail added 2.7%.

Mitsukoshi Ltd and Isetan Co. are in merger talks to be settled in the ratio 0.3 to 1, according to Nikkei Net Interactive. Isetan Co rose 0.34% in Tokyo.