Shanghai Led Decliners in Asia

123jump.com Staff
07 Sep, 2007
New York City

Asian stocks closed mixed in the session. Central Banks in Japan and China drained liquidity from the markets. China offered 3-year bonds at 3.71% worth Rmb151 billion. Japan drained $1.7 billion from the system. Russia signed a multi-year agreement with Australia to purchase uranium. Earlier China signed a similar deal with Australia to purchase natural gas. Tokyo stocks fell nearly 3% for the week but stocks in India rebounded. Shanghai led the declining markets in the region.

[R]8:00AM New York – 8:00PM Hong Kong – Asian markets closed mixed for the day but fell during the week’s trading.[/R]

Asian markets closed lower in anticipation of employment report from the U.S. and higher bank reserves in China.

Indonesia led the region with a gain of 0.9% followed by increases of 0.6% in Singapore and 0.5% in Australia. Philippines and Taiwan edged up a fraction. Shanghai led the declining markets in the region with a loss of 2.2% followed by losses of 1% in Thailand, 0.3% in Hong Kong and 0.2% in India and South Korea.

China drained liquidity from the financial system by offering bill sales at 3.71%. The People’s Bank of China sold Rmb 151 billion for a three year maturity. Central bank is struggling to control rise of money supply on rising exports. The current liquidity mopping is in line with the bank’s target to keep lending growth below 15%. Japan also drained liquidity from the financial system by selling bond sale of $1.7 billion.

China Communications Construction reported first half sales increase of 24% to Rmb 58.7 billion and net income increased 170% to Rmb 2.74 billion from a year ago. The first earnings report as a public company was bolstered by international expansion and diversifying project work for railroad, airports and subway systems. Domestic investment in highway and port building is robust but expected to slow down in the coming years. The largest port building and construction company is controlled by an arm of the government and the stock has more than doubles since its listing on the Shanghai exchange.

China Oilfield Services jumped 12% in Hong Kong trading after the news that the company is likely to receive listing approval in Shanghai. The company plans to raise funds in the mainland exchange to take advantage of investors’ enthusiasm and higher earnings multiple. The Shanghai listed stocks are trading four times the earnings multiple in Hong Kong where stocks trade at 16 price to earnings multiple.

Australian government will permit BHP Billiton and other local companies to sell nuclear fuel to Russia. The deal is expected to generate A$1 billion a year. Russia has agreed as a condition not to sell the reprocessed fuel to Iran or for military purpose. Russian companies have invested nearly $5 billion in Australian mining companies. Australia exports more than A$520 million of uranium in the year 2006 and is likely to raise its production by 50% in the next three to five years. Earlier China signed a deal with Australia to purchase liquefied natural gas for A$35 billion.

[R]7:00AM New York, 8:00PM Tokyo - Shares in Japan extended losses to end the week in the red on renewed U.S housing market woes. Japan forex reserves hit $932.2 billion. Imported vehicle sales rise 9.1% in August. Honda recalls 63,000 cars.[/R]

Tokyo shares capped a week of losses dropping 0.83% Friday after U.S housing data showed the number of mortgage borrowers to default, or make late payments climbed to 14.82% in the second quarter from 13.77% in the first quarter. For the week, Japan lost Nikkei 225 lost 2.7% and Topix fell 3.2%. Of the 225 stocks, 170 dropped, 51 gained while 4 traded unchanged. Of the index shares 44 stocks fell above 2% while 12 shares rose over 2%.

In Tokyo Nikkei 225 lost 0.83% or 134.84 to 16,122.16 in volatile trading, as the yen gained strength. Financials fell on concerns the sub-prime market problems were far from over. The yen rose to 115.14 per dollar from 115.38 yesterday, and over 116 earlier in the week. Against the euro, yen finished up at 157.45 from 157.95 Thursday. Because of the gains, some exporters dragged.

The Finance Ministry reported today that Japan’s foreign currency reserves surged for third month running to a record $932.2 billion in August, up $8.44 billion from July of this year. The rise was helped by valuation gains in holding of U.S. treasuries and lower interest rates.

Japan''s imported vehicle sales including those built by Japanese carmakers abroad rose 9.1% in August to 18,100 units from a year ago, according to data released by the Japan Automobile Association Thursday. The increase is the fourth consecutive in as many months. Imports of foreign brands alone, however, fell 5.5% to 14,406 cars, falling for the 14th month in a row due to weaker sales of new models.

Of the Nikkei 225 index stocks Fast Retailing led the decliners with a fall of 4.3% followed by Resona Holdings down 4.04%. NSK Ltd ended down 3.73%, Nikon Corp shed 3.7% while Nippon Oil Corp lost 3.61% after BBC reported Thursday the firm would start paying in yen for Iranian oil. The first payments for crude oil contracts will be made in October. Iran has been increasingly selling oil in currencies other than dollar because of political differences with the U.S. over its nuclear program.

Of the index shares, financials fell. Mizuho Financial closed down 3.42% while Softbank Corp, Sumitomo Trust and Banking Co Ltd, Shinsei Bank Ltd and Sumitomo Mitsui Ltd lost 3.2%, 3.1%, and 3% respectively.

In other Tokyo stocks, Mitsubishi UFJ Nicos led gainers rallying 4.5% followed by Shionogi & Co up 3.33% and Astellas Pharmacy rose 3.13%. Mitsumi Electrical Co rose 2.9% while Daikin Industries closed up 2.32%.

Rising metal and crude oil prices lifted refiners and miners. Inpex increased 1.9% and Japan Petroleum Exploration soared 6.5%. Sumitomo Metal & Mining advanced 2.23%.

Honda Motor Co closed down 0.8% after announcing Thursday that it will recall more than 63,000 vehicles due to faulty brake-light system and speedometers. The automaker said it will recall the Civic and Civic Hybrid sedans as well as Stream minivans manufactured between August 2005 and January 2007. Honda said it received a total of 155 reports from customers about the two types of defects. It said in some cases excess lubricating oil on the telescoping steering wheel system meant drivers were not able to move the gear shift lever from the park position, affecting the brake-light system.