Asian markets close sharply lower; KOSPI plunges 4.1%

Mon. September 01, 2008; Posted: 06:39 AM

(RTTNews) - The stock markets across the Asia-Pacific region closed sharply lower, led by technology stocks, after Wall Street tumbled Friday on the back of computer maker Dell's disappointing earnings and some weak economic data. The South Korean market plunged more than 4% and the Chinese market gave away 3%. Oil prices rose above $116 a barrel after energy firms shut down oil production in the Gulf of Mexico as Hurricane Gustav approached the US. The Malaysian market remained closed on account of National Day holiday.

On the currency front, the U.S. dollar fell to the upper 107-yen levels in late deals from upper 108- yen levels late Friday in Tokyo. The South Korean won tumbled over 3% to hit a near four-year low against the dollar on Monday after data showed the country's August exports missed market expectations. The local unit closed at 1,116 a dollar. The Australian dollar closed weaker ahead of the Reserve Bank of Australia's interest rate decision on Tuesday. The Aussie finished the session at US$0.8537-0.8542. The kiwi finished the local session weaker at US$0.6997.

The Japanese market finished sharply lower on profit taking following Friday's sharp gains. A stronger yen also weighed on investor sentiment. The benchmark Nikkei 225 index closed down 238.69 points or 1.8% at 12,834.18 and the broader Topix shed 24.07 points or 1.9% at 1,230.62.

On the economic front, a preliminary report released by the labor ministry showed that the average cash earnings for workers in Japan increased by 0.3% on year in July. The rise was slightly lower than the revised 0.4% annual increases in June, but was in line with analyst expectations.

Meanwhile, the Japan Automobile Dealers' Association said that auto sales declined 14.9% in August from the previous year to 193,902 units. Domestic sales of cars, truck and buses dropped in August for the first time in two months.

Oil and shipping stocks closed lower. Gas and oil field developer Inpex Holdings plunged 4.0%, Nippon Oil plummeted 3.8% and Nippon Mining Holdings tumbled 4.4%. Shipper Mitsui OSK Lines shed 3.1%, Kawasaki Kisen slumped 4.9% and Nippon Yusen dropped 2.5%.

Exporters fell on the back of a stronger yen. Toyota Motor lost 2.2%, Isuzu Motors plunged 4.1%, Sony fell 2.4%, and Canon and Kyocera dropped 2.6% each.

In the banking space, Mitsubishi UFJ Financial Group fell 2.5%, Mizuho Financial Group lost 1.9% and Sumitomo Mitsui Financial Group gave away 2.4%.

Tech stocks also lost ground on weakness in U.S. technology sector. Advantest lost 1.1%, Fanuc dropped 0.7%, Fujisu fell 1.2%, Matsushita Electrical Industrial plunged 2.2% and Tokyo Electron plummeted 3.4%. Bucking the trend NEC edged up 0.4%.

Mitsubishi Heavy Industries gained 0.8% after a Nikkei report said that the heavy machinery maker would spend about 15 billion yen to increase its production capacity for core nuclear power equipment.

The South Korean market plunged more than 4% to its lowest close in 17 months, led by tech stocks. The benchmark Korea Composite Stock Price Index or KOSPI closed down 59.81 points at 1,414.43, its lowest close since March 2007. The market also recorded its biggest one-day percentage fall in 7 months.

South Korea's trade deficit touched US$3.23 billion in August, mainly due to high global energy prices. A government report showed that exports rose by 20.6% from a year earlier to US$37.39 billion, while imports grew 37.0% to US$40.62 billion. The monthly deficit is the largest since the US$3.92 billion deficit reported in January.

Meanwhile, South Korea's consumer price based annual inflation stood at 5.6% in August, slower than the 5.9% recorded in July, the National Statistical Office said. Economists were expecting annual increase in consumer prices to accelerate to 6.3% in August. Month-on-month, consumer prices dropped 0.2%. Core inflation, which excludes food and fuel prices, climbed 4.7% in August from the prior year.

A weaker won weighed down stocks of those firms with high volume of foreign currency-denominated debts and also on importers of raw materials.

LG Electronics plunged 9.6%, Hynix Semiconductor tumbled 11.3%, Samung Electronics fell 1.9% and LG Display shed 6.7%. Automaker Hyundai Motor declined 2.1%.

Korean Air Line slumped 15.0% and Asiana Airlines shed 10.6%. Doosan Group extended their losses. Doosan Infracore plunged 14.8%, Doosan Heavy Industries fell 11.4% and Doosan Corp dropped 15.0%.

Banks fell, led by Kookmin Bank. The top lender plummeted 6.8% after Goldman Sachs cut its rating on its stocks to "Sell". Woori Finance tumbled 6.9% and Shinhan Financial Group gave away 3.6%.

Bucking the trend, SK Telecom rose up 0.8% and KTF added 0.4%. Steelmaker POSCO gained 0.9%.

The Chinese market closed sharply lower on Monday, led by financial stocks, as there were no government policy announcements over the weekend supporting the market. Weakness in other markets in the region due to Wall Street's steep fall on Friday also impacted investor sentiment. The benchmark Shanghai Composite Index closed down 72.23 points or 3.01% at 2,325.14, near the index's 20-month intraday low of 2,284.58.

On the economic front, China's purchasing managers' index, a measurement of activity in manufacturing sector, came in at 49.2 in August, down from 53.3 in July, indicating a contraction in the manufacturing sector for the first time since November 2005.

Among banks, China Merchants Bank slumped 6.6% and Shanghai Pudong Development Bank fell 5.8%. China Life Insurance shed 4.0% and CITIC Securities lost 5.0%.

Property stocks closed lower, with China Vanke falling 3.0% and Gemdale losing 4.0%.

Panzhihua New Steel & Vanadium plunged by the 10% daily limit after the company announced that it and parent company Panzhihua Iron and Steel Group suffered undetermined losses in the 6.1-magnitude earthquake that hit Panzhihua in southwestern China's Sichuan province on Saturday.

Aluminum Corp of China declined 3.7% after the company reported a 65.6% drop in first-half net profit. China Shenhua Energy dropped 1.6% after despite a 43.6% increase in first-half net profit to 14.15 billion yuan.

The Hong Kong market closed lower on worries over corporate earnings prospects. The benchmark Hang Seng index closed down 355.58 points or 1.67% at 20,906.31.

Esprit Holdings tumbled 6.0%, extending last week's steep falls, after Lehman Brothers downgraded the global fashion apparel retailer. Among other exporters, personal-computer maker Lenovo fell more than 6% after Dell warned of declining global technology spending.

Index heavyweight China Mobile hit over 52-week low amid continuing worries over its future earnings growth. China Mobile closed down 2.3%.

The Australian stock market closed slightly lower, ending a three-day winning streak. Banks closed higher ahead of the Reserve Bank of Australia's interest rate decision on Tuesday. The benchmark S&P/ASX 200 index closed down 17.3 points or 0.3% at 5,118.3 after closing up nearly 1.5% on Friday. The broader All Ordinaries index lost 15.5 points or 0.3% to finish at 5,200.0.

On the economic front, Australia's current account deficit decreased in the second quarter of 2008. The Australian Bureau of Statistics reported that the deficit narrowed to A$12.774 billion from an upwardly revised first-quarter figure of A$19.842 billion, marking the first reduction in nearly two years.

Among other data released today, TD Securities and Melbourne Institute inflation report showed a 0.1% increase in inflation in August. On an annualized basis, the group put the inflation at 4.2%. The full-year figure is lower than the 4.6% rate reported for July.

Meanwhile, Australia's manufacturing sector contracted for a third consecutive month in August, according to a report from the Australian Industry Group and PricewaterhouseCoopers. The group's Performance of Manufacturing Index increased 0.1 points to a reading of 47.0. Readings below 50.0 indicate contraction in the sector.

Banks closed higher on rate cut hopes. ANZ Banking Group added 0.2%, Commonwealth Bank rose 0.5%, and National Australia Bank and Westpac advanced 0.6% each. St. George bank edged up 0.2% and investment bank Macquarie Group jumped 2.2%.

Funds managed by investment firm Babcock & Brown fell on uncertainty about their business outlook. Babcock & Brown Power slumped 18.0 afterit said late Friday that it could be next in line to break away from Babcock & Brown management rights.

Big miners closed lower on weaker base metals prices. Index leader BHP Billiton fell 0.8% and its takeover target Rio Tinto lost 2.0%. However, small-cap iron ore stocks rose. Atlas Mining jumped 14.9% and its rival Sundance Resources surged 17.7%.

Among gold miners Lihir Gold dropped 0.4% and Newcrest Mining plunged 3.1%. Energy stocks also closed mixed. In the energy sector, Woodside Petroleum fell 2.6% and Santos declined 2.2%, while Oil Search advanced 1.7%.

Retailer David Jones rose 0.5% and Wesfarmers gained 2.3%, but Woolworths shed 2.6%.

Zinc and lead producer Perilya plummeted 6.6% after the company said Friday, after the close of trade, it it lost A$140 million in 2008 as sales fell by a quarter. Alumina tumbled 10.3% after the company completed a rights offer, raising A$644 million.

The New Zealand stock market closed higher for the third consecutive trading session. After a gap down opening, led by Telecom and Fletcher Building, the market staged a remarkable recovery and moved into positive territory by mid afternoon. The benchmark NZX 50 index closed up 4.46 points or 0.13% at 3,357.70, recovering from the day's low of 3,321.42 hit in opening trade on the back of a weak lead from Wall Street. The broader NZX All Capital index added 6.68 points or 0.20% to finish at 3,399.38.

On the economic front, traders had little data to digest on Monday.

Top stock Telecom closed down 1.2%, recovering from a 4.3% plunge in opening trade. The stock went ex-dividend today. However, Fletcher Building extended an opening loss of 2.5% to finish down 3.7%. Contact Energy closed unchanged. In the retail sector, Hallenstein Glasson advanced 1.7% and The Warehouse Group added 0.6%, while Pumpkin Patch and jeweler Michael Hill closed flat.

PGG Wrightson slipped 0.4%. The rural services company signed a South Island distribution agreement with bulk fuel supplier Southfuels and established a new joint venture, Northfuels, to provide the same service in the North Island.

Other major gainers included AMP 2.6%, Cavalier 3.2%, Goodman Fielder 2.8%, The New Zealand Refining Co 2.6%, Pike River Coal 3.2%, Rakon 3.9%, SkyCity Entertainment 3.3%, Skellerup 4.4%, Rakon and Lion Nathan 2.9%.

Other top losers included Vector 2.2%, Air New Zealand 2.6%, Telstra 3.5%, and Vector 2.2%.

Other Asian markets:

Taiwan's Taiex closed down 3.3% at 6,813; Singapore's STI closed down 1.0% at 2,713; Indonesia's Jakarta Composite index closed flat at 2,164; and India's Sensex closed down 0.5% at 14,498.

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