Asian markets close lower on credit worries

(RTTNews) - The stock markets across the Asia-Pacific region closed mostly lower Tuesday, tracking Wall Street's decline overnight. The financial sector lost ground after U.S. mortgage providers Fannie Mae and Freddie Mac slumped on funding concerns. Crude oil has eased back to $141.36 a barrel in late Asian deals after gaining more than a dollar to trade above $142 a barrel in early trade.

On the currency front, the U.S. dollar weakened to upper 106-yen levels from lower 107-yen levels in early trade and mid 107-yen levels late Monday in Tokyo. In South Korea, the won surged against the U.S. dollar and finished the session at 1,032.7 a dollar compared to Monday's close of 1,042.9 a dollar. On the other hand, the Australian dollar closed weaker at US$0.9549 and the kiwi finished near three-week lows of US$0.7520-0.7530.

The Japanese market closed sharply lower after closing higher on Monday following twelve consecutive sessions of losses. The benchmark Nikkei 225 index closed down 326.94 points or 2.45% at 13,033.10 after falling below the 13,000 mark in intraday trading for the first time in nearly three months. The broader Topix index lost 29.29 points to finish at 1,283.51.

According to market watchers, the Japanese market might continue to slip this week on expected weakness in U.S. stocks ahead of second-quarter corporate earnings reports and relentlessly higher crude oil prices.

Among a slew of economic data released today, the Bank of Japan said that Japan's M2 gauge for money supply increased by 2.3% in June, faster than May's 2.1% growth and 2.0% growth expected by economists. M3, which combines M2 with CDs, time deposits, fixed savings and foreign currency deposits at all financial institutions including Japan Post Bank, rose 0.9% in June, after increasing 0.7% in May.

Meanwhile, lending by Japanese banks, excluding Shinkin banks, rose by 2.0% in June from a year earlier to 393.005 trillion yen, following a 1.6% gain in May. Bank lending has risen for 29 months in a row.

Additionally, Japan's economy watchers' index, which measures workers' perception of economic trends, declined for the third straight month in June. The major index for current conditions fell to 29.5 last month, lowest reading since October 2001 when the index hit 27.2, from 32.1 in May. According to the survey, higher prices of oil and raw materials prompted companies to hold off new hiring. The forward-looking index, which measures expectations about economic conditions in subsequent months, dipped to 32.1 in June from 35.1 in May.

Banks lost ground on the back of lingering credit concerns. Mitsubishi UFJ Financial Group plunged 3.4%, Mizuho Financial Group plummeted 3.7% and Sumitomo Mitsui Financial Group tumbled 4.1%. Top brokerage Nomura Holdings slumped 4.6% and general leasing firm Orix sank 6.3%.

Oil-related stocks were lower after crude prices fell overnight. Inpex Holdings tumbled 5.2%, Nippon Mining Holdings shed 4.1% and Nippon Oil gave away 1.8%.

Exporters closed weaker after the dollar softened against the yen. Sony dropped 4.1%, video games maker Nintendo lost 3.3%, Honda declined 0.8%, machinery maker Komatsu plunged 4.3% and Toyota fell 1.2%.

Among property developers, Mitsui Fudosan fell 3.0%, Mitsubishi Estate declined 2.5% and Sumitomo Realty and Development tanked 6.2%. Urban Corp, which surged 14.8% on Monday, closed down 12.9%.

Shares of Pioneer Corp gave away 3.2% after a report said that the audiovisual product maker aims to debut a Blu-ray Disc recorder within the year.

Among steel makers, JFE Holdings lost 3.7% and Nippon Steel dropped 3.6% after the Nikkei newspaper reported that JFE Steel, a unit of JFE Holdings, and Nippon Steel are planning to raise production of steel plate used in shipbuilding by 10% or more following strong demand.

The South Korean market plunged, with the key KOSPI index losing nearly 3%, as investors sold banking and other blue chip stocks on interest rate hike fears. The Bank of Korea is scheduled to hold its monthly meeting on Thursday to decide the monetary policy. The benchmark KOSPI index tumbled 46.25 points or 2.93% to close the session at 1,533.47.

The market opened on a weak note, tracking Wall Street's decline overnight on the back of weakness in the financial sector, and plunged more than 4% at one point, hitting the lowest level in 15 months. However, the market clawed back some ground going into close of the trading session.

In the currency market, the local currency surged against the U.S. dollar. The South Korean won finished the session at 1,032.7 a dollar, up from Monday's close of 1,042.9 a dollar.

In the banking space, Kookmin Bank slumped 8.6% after JPMorgan Chase & Co. cut its recommendations for the lender's stocks to neutral from overweight. Shinhan Financial plunged 3.9%, Woori Finance lost 4.0% and Korea Exchange Bank dropped 3.6%. Among builders, Daewoo Engineering & Construction slumped 6.4% and Hyundai Engineering & Construction plummeted 8.5%.

In the tech sector, market leader Samsung Electronics tumbled 3.4% and LG Electronics shed 2.9%. Kia Motors tumbled 6.3% on a report that the carmaker slashed its export target for this year to 820,000 units from 888,000 to reflect sluggish demand from North American and European markets. Hyundai Motor dropped 3.0%.

The Chinese market closed higher for a second day, as commodity-related shares gained after the Shanghai Securities News reported that the government would delay the introduction of higher taxes on coal and other resources. The Shanghai Composite Index added 22.55 points or 0.81% to finish at 2,814.95 after surging 4.6% on Monday.

Beijing Shougang surged by the daily limit of 10.0% and Xinjiang Bayi Iron & Steel jumped 6.0%. China Shenhua Energy, China's largest coal producer, advanced 3.0%, Datong Coal climbed 4.3% and Yanzhou Coal Mining rose 5.6%.

Lvjing Real Estate soared 10.0% after the developer said first-half profit might surge ten-fold from a year earlier on higher sales and margins. Shanghai AJ Corp jumped by the daily limit of 10.0% after Shougang Holding (Hong Kong) agreed to buy 120 million shares in the company.

Changsha Zoomlion Heavy Industry Science & Technology Development gained 4.2% after the company said that it expects its first-half profit to double on higher sales of its equipment.

China Minsheng Banking Corp climbed 2.0% on speculation that its first-half profit might have surged more than 110% as lending, investment returns and income from asset management expanded.

Datang International Power Generation edged up 0.3%. However, Beijing Jingxi Tourism Development lost 2.2% on expectation that the company's first-half loss widened to 10.7 million yuan.

The Hong Kong market closed sharply lower on negative corporate news and broker downgrades. The benchmark Hang Seng index closed down 692.25 points or 3.16% at 21,220.81, off a low of 21,098.84.

Among major losers, Chalco slumped more than 5.6% after the company warned of output cuts at two mainland plants due to power shortages; BEA fell nearly 6.0% after Morgan Stanley downgraded the stock to underweight from equalweight; Hong Kong Exchange also plunged nearly 5.9% after Morgan Stanley cut its target price for the local stock market operator by 30% and Foxconn tumbled over 10% after CLSA downgraded the handset maker to sell from underperform. China Oilfield Services closed down 5.0% on news of its HK$19.5 billion takeover offer for Norway's Awilco Offshore.

Singapore's STI closed down 47.5 points or 1.65 at 2,886.6; Taiwan's weighted index plunged 289.3 points or 3.9% to finish at 7,051.8; Malaysia's KLCI ended at 1,121.3, down 6 points or 0.5%; and Indonesia's Jakarta composite index closed down 24.8 points or 1.1% at 2,279.0.

India's Sensex closed down 176.3 opoints or 1.3% at 13,349.6 and the broader ended down 1.0% at 3,988.55.

The Australian stock market closed sharply lower, paring early gains and extending Monday's 1.6% decline. The market opened flat and briefly traded in positive territory, before losing ground to finish at its lowest levels since August 2006. The benchmark S&P/ASX 200 index closed down 69.6 points or 1.4% at 4,932.9 and the broader All Ordinaries index lost 69.3 points or 1.4% to finish at 5,022.4.

On the economic front, a monthly survey released by National Australia Bank showed that Australian business confidence fell to the lowest level in seven years in June, with the index falling to minus 9 points from minus 4 points in the previous month.

Banks closed weak on lingering credit market worries. Commonwealth Bank lost 1.7%, Westpac fell 2.4%, ANZ plunged 3.1% and National Australia Bank dropped 2.7%. St George bank gave away 1.9%, while investment bank Macquarie Group tumbled 4.7%.

Index leader BHP Billiton declined 0.6%, but its takeover target Rio Tinto added 0.2%. Gold miners were weak, despite higher gold prices in Sydney. Lihir Gold gave away 1.3% and Newcrest Mining fell 2.4%.

Among energy stocks, Woodside Petroleum declined 2.4%, Oil Search lost 1.5% and Santos slumped 3.1%.

In the retail sector, David Jones plunged 3.6% and Coles owner Wesfarmers slipped 0.1%, but Woolworths added 1.5%.

Among news driven stocks, struggling fund manager Allco Finance Group jumped 4.4% after the company sold Singaporean real estate assets for A$138 million, Challenger Infrastructure Fund dropped 0.4% after its second biggest shareholder stepped up its campaign to wind up the fund by serving notice for an extraordinary general meeting and toll road operator Transurban Group gained 3.4% after the company reported an increase in annual revenue from tolls and fees on its roads in Australia and the United States.

The New Zealand stock market closed higher, despite a disappointing quarterly survey of business opinion that pointed at a fall in gross domestic product over the next two quarters. The benchmark NZX50 index closed up 39.14 points or 1.24% at 3,160.59 reversing Monday's 1.2% decline. The broader NZX All Capital Index rose 38.73 points or 1.21% to finish at 3,194.21.

New Zealand Institute of Economic Research or NZIER's quarterly survey of business opinion indicated that New Zealand's business confidence, though negative, was steady at a 33 year low as the outlook of individual firms deteriorated in the second quarter, suggesting a recession in the economy.

The data showed that a net 64% of the country's businesses, or 54% on a seasonally adjusted basis, felt that the general business conditions would worsen in the coming six months. The figure compares with a net balance of 56% of firms expecting a deteriorating business situation in the March survey.

On a seasonally adjusted basis, the survey showed that a net 18% of firms reported a decline in their own activity and a net 18% expect their trading activity to fall in the next three months.

Meanwhile, a report from Hudson, released earlier, showed a 9% drop in the number of employers saying they expect to add employees in the coming half-year, marking the steepest decline since 2002.

Top stock Telecom jumped 2.7%, the second-ranked Contact Energy advanced 1.6% and Fletcher Building surged 5.0%. In the retail sector, Hallenstein Glasson was unchanged, while The Warehouse Group gained 0.8% and Michael Hill rose 1.3%. Pumpkin Patch fell 2.6%.

Among other major gainers, Auckland International Airport soared 4.3%, Goodman Fielder surged 4.1%, Lion Nathan jumped 4.5% and energy stock Vector climbed 1.0%.

Notable losers included, Cavalier Corp. 2.2%, Goodman Property Trust 1.7%, Guinness Peat Group 1.5%, ING Property Trust 2.3%, Kiwi Income Property Trust 1.7%, Pike River Coal 3.7% and Tower 1.0%.

Mainfreight rose 1.8%, extending Monday's 1.7% gains. New Zealand Oil and Gas added 1.2% after crude oil climbed back above $142 a barrel in Asian trade Tuesday. Oil dropped sharply on Monday and returned some of last week's record rally. Light sweet crude for August closed at $141.37 a barrel, down $3.92 on the New York Mercantile Exchange.

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