Asian markets tumble, led by financials; Sensex plunges nearly 5%

(RTTNews) - Stock markets across the Asia-Pacific region plunged Tuesday, led by India and Taiwan, after Wall Street closed lower for a second day on Monday. Financial stocks in Asia slumped on fears over the fall out form the U.S. credit market crisis, despite the U.S. government's plan to rescue troubled mortgage lenders Fannie Mae and Freddie Mac. Adding to the concerns, crude oil continued to trade above $145 a barrel.

On the currency front, the dollar weakened against most major Asian currencies. The greenback fell to mid 105-yen levels in late Tokyo deals, while the Australian dollar spiked to a fresh 25-year high to finish the local session at US$0.9748. The New Zealand closed higher at US$0.7658, but the South Korean won closed lower at 1,008.2 a dollar.

The Japanese market plunged, with the key Nikkei index closing at its lowest level since April 1. Banks fell on concerns about the credit market crisis in the U.S. and exporters lost ground as the yen rose against the dollar. The benchmark Nikkei 225 index closed down 255.60 points or 1.96% at 12,754.56. The index slipped below the 13,000 mark for the first time since April 15. The broader Topix index of all the Tokyo Stock Exchange First Section issues fell 27.60 points or 2.2% to finish at 1,253.12.

The Bank of Japan's policy board, meanwhile, unanimously decided to keep the key policy rate unchanged at 0.5%. The central bank said in its monthly report on economic and financial developments for June that the domestic economy was slowing due to rising energy and material costs and said that although the economy will likely continue to slow for a while, it will begin to grow gradually after that.

In the banking sector, Mitsubishi UFJ Financial Group plunged 5.3%, Mizuho Financial Group plummeted 5.0% and Sumitomo Mitsui Financial Group tumbled 6.1%.

Among exporters, Toyota Motor shed 2.5%, Toshiba fell 3.0%, Advantest slumped 4.3%, Honda Motor lost 2.8%, machinery maker Komatsu gave away 1.8%, Sony lost 1.4% and Canon dropped 2.6%.

Property developer Mitsui Fudosan plunged 4.9% and Mitsubishi Estate tumbled 3.7% following a drop in sales of newly built condominiums in June. Japan's Real Estate Economic Institute said Tuesday that the number of condominium units registered for sale in metropolitan Tokyo declined 30% to 4,004 in June from a year earlier.

Oil & gas miner Inpex Holdings gained 0.8, but Nippon Mining Holdings plunged 3.7% and Nippon Oil lost 1.9%.

The retail sector was mixed. Aeon dropped 2.3% and Seven & I Holdings fell 1.6%, but Fast Retailing surged 3.2%.

The South Korean market plummeted, with the key KOSPI falling to 15-month lows. Reports that South Korean financial companies had a preliminary $550 million in total exposure to the struggling Fannie Mae and Freddie Mac also added to the gloom.

Earlier in the day, the Yonhap News Agency quoted Vice Finance Minister Kim Dong-soo as saying that South Korean consumer prices might continue to rise in the second half, even if crude oil prices are brought under control, due to greater costs for making goods and providing services.

Meanwhile, South Korea's revised trade deficit widened to US$430 million from an earlier estimate of $280 million in June due mainly to increased oil imports, government report showed Tuesday. Exports were revised downward to $37.32 billion in June from the previous $37.44 billion, while imports reached $37.75 billion, up from an earlier estimate of $37.72 billion.

The benchmark Korea Stock Price Index tumbled 49.29 points or 3.2% to end at 1,509.33. The index closed its lowest close since April 2007 and recorded its biggest single-day percentage drop since February.

In the financial sector, Shinhan Financial Group plunged 5.2%, Woori Finance Holdings tumbled 5.8% and Hana Financial Group fell 3.9%. Airlines extended their falls on record fuel costs. Korean Air Lines slumped 6.4% and Asiana Airlines dropped 2.6%.

In the tech sector, market heavyweight Samsung Electronics lost 2.5% and LG Electronics sank 6.2%. Among builders, Hyundai Engineering & Construction shed 6.9% and GS Engineering & Construction plunged 12.4%.

Bucking the trend, KT&G added 0.7% after Tong Yang Investment Bank raised its target price on KT&G by 8.4% and stuck to its 'buy' rating.

The Chinese market closed sharply lower, led by banks and property developers. The local market was impacted by the slump in regional markets. The benchmark Shanghai Composite Index closed down 98.81 points or 3.43% at 2,779.45.

A warning from the National Development and Reform Commission Monday that upward pressure on prices remained strong, though favorable conditions were in place to help keep Chinese inflation under control, also dented investor sentiment. The market expects consumer price index growth to slow to 7.1% in June, down from 7.7% in May and the near-12-year high of 8.7% recorded in February.

Among banks, Bank of Beijing tumbled 6.1% despite the bank forecasting a 120% increase in first-half net profit on year-over-year basis. Bank of Nanjing plunged 6.2% on news that its 531.21 million A-shares would come out of lockup and be available for trading from July 21. Industrial and Commercial Bank of China fell 3.4% and China Construction Bank lost 4.1%.

In the property space, China Vanke plummeted 7.2% and Poly Real Estate Group sank by the 10% daily limit. Brokerages were also lower, with Guoyuan Securities falling 6.5% after the company said that its unaudited first-half net profit declined more than 50% from a year earlier. CITIC Securities shed 5.9%.

Oil refiner China Petroleum & Chemical Corp dropped 1.3% and index heavyweight PetroChina shed 2.1%.

Bucking the trend, Shandong Gold-Mining gained 2.0% after the company projected over 400% growth in first-half net profit.

The Hong Kong market closed sharply lower, with the key index suffering its biggest fall in 5 weeks. The benchmark Hang Seng index closed down 839.69 points or 3.81% at 21,174.77.

The financial sub-index fell 1,405.5 points or 4.25% to 31,696.79, as HSBC lost 3.1%, Hang Seng Bank plunged 3.9% and BOC Hong Kong shed 2.2%.

Among China banks, ICBC fell 4.3%, Bank of China shed 4.3% and China Construction Bank declined 4.5%.

Mainland property firms were lower, with Agile Property slumping 9.3%, Guangzhou R&F Properties tumbling 9.1% and China Overseas Land falling 5.5%. Among local property firms, Sino Land dropped 6.3%, Sun Hung Kai Properties lost 4.1% and Henderson Land slipped 4.1%.

The Australian stock market fell, led by the big banks. The market extended Monday's 1.2% losses after Wall Street closed lower for a second day Monday on lingering concerns about the U.S. credit market crisis. Energy stocks and gold miners mostly gained as oil stayed near a record and the precious metal surged overnight.

The benchmark S&P/ASX200 index closed down 105.3 points or 2.1% at 4,815.7, hitting its lowest closing level in two and a half years. The index has dropped 24% since the beginning of the year, putting it on course to post its first annual loss since 2002. The broader All Ordinaries lost 97.8 points or 2.0% to finish at 4,910.1.

On the economic front, minutes of the Reserve Bank of Australia's July meeting showed that the central bank is growing more confident that decade-high interest rates will restrain future inflation, reinforcing views monetary policy is on hold.

Meanwhile, the Australian Bureau of Statistics reported that the value of construction work done in Australia fell sequentially in the first quarter, reflecting a decline in all types of construction activities. The total value of construction activity declined a seasonally adjusted 1% to A$16.48 billion in the first quarter compared to the previous quarter.

Banks closed sharply lower, with Commonwealth Bank of Australia losing 3.5%, ANZ plunging 3.8% and National Australia Bank tumbled 4.2%. Westpac shed 3.4% and its takeover target, St George, fell 3.3%. Investment firms Macquarie Group slumped 7.4% and Babcock & Brown sank 5.7%.

Energy stocks were mixed. Woodside Petroleum added 1.2% and Santos edged up 0.1%, but Oil Search declined 1.0%. Among gold miners, Newcrest Mining gained 1.1% and Sino Gold surged 12.3%, while Lihir Gold dropped 1.8%.

The big miners closed weaker, with index leader BHP Billiton and Rio Tinto losing 1.3% each.

Centro Properties Group jumped 6.5% after the company said that it would sell some of its U.S. shopping malls for A$714 million and use the proceeds to pay debt. Asset manager Allco Finance Group soared 10.7% after the company said that it had reached an agreement with its bankers on a new debt facility that did not contain any market capitalization clause.

The retailers were weaker, with Woolworths plunging 3.8%, Wesfarmers tumbling 4.3%, David Jones slumping 5.6% and Harvey Norman easing 0.7%.

The New Zealand stock market closed sharply lower, extending Monday's 1.35% decline. The market opened on a firm note, but slipped into negative territory following the release of worse-than-expected inflation data. The benchmark NZX 50 Index closed down 39.6 points or 1.3% at 3,040.5, hitting a new three-year low. The NZX All Capital Index lost 20.0 points or 0.6% to finish at 3,109.45.

Data released by Statistics New Zealand showed that New Zealand's consumer price index or CPI jumped 1.6% in the second quarter, recording the largest quarterly rise in eighteen years. Analysts expected CPI to rise 1.4%. For the year, inflation hit 4.0% against market expectation for a 3.8% increase.

Statistics New Zealand also said that food prices increased 1.3% in June. Food prices rose 2.2% in the June quarter. On an annual basis, food prices rose 8.2%, the highest in eighteen years.

Top stock Telecom slipped 0.3%, while Contact Energy plunged 3.5% and Fletcher Building plummeted 3.2%. The retailers were mixed, with The Warehouse Group rising 1.0%, Hallenstein Glasson adding 0.8%, Michael Hill losing 1.3% and Pumpkin Patch plunging 2.1%.

Other major losers included Auckland Airport 2.6%, Goodman Fielder 3.5%, ING Property Trust 2.4%, New Zealand Exchange 2.1%. PGG Wrightson 2.0%, Pike River Coal 2.8% and Rakon 4.7%.

SkyCity fell 2.0% though the company said that it was on track to achieve an after-tax profit of NZ$108 million-NZ$110 million for the year ending June 30, excluding a NZ$60 million writedown in the value of its cinema business.

Energy stock TrustPower gave away 0.3%, but Vector was unchanged. Among dual-listed stocks, Westpac tumbled 3.0% and ANZ Banking fell 2.5%, while AMP remained unchanged.

Among major gainers, Air New Zealand and Property For Industry rose 0.9% each, Cavalier and Freightways added 1.4% each, and Ebos and Ryman Healthcare advanced 1.2% each.

Other Asian markets:

Taiwan's Taiex closed down 4.5% at 6,834; Singapore's STI closed down 2.5% at 2,830; Malaysia's KLCI closed down 1.4% at 1,127; Indonesia's Jakarta Composite index closed down 2.0% at 2,214; and India's Sensex plunged nearly 5.0%.

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