Date: Wednesday 07 Jul 2010
Asian stocks headed lower Wednesday on concerns that the US economic recovery may be running out of steam.Exporters such as Honda, Nissan and Sony – all of which regard US as a key market – were sold off in the wake of a disappointing June reading of the Institute for Supply Management’s US non-manufacturing index, which fell to 53.8% from 55.4% in May. Economists had been expecting a reading of 55%.
Another big exporter, Korean electronics giant Samsung, proved the occasional truth of the old stock market adage of “Buy on the rumour, sell on the fact,” as its shares fell after the company announced an 87% jump in second quarter operating profit.
The market had expected the results to be good and immediately started fretting over whether the company could sustain such a growth rate for the rest of the year.
Shipping lines such as Mitsui OSK and Kawasaki Kisen sank lower as the Baltic Dry Index, which measures shipping costs for commodities, fell 4%, the 28th trading in a row in which the index has fallen, its longest losing streak in six years.
The index is now 49% lower than when it started the losing streak, with the main cause due to concerns about waning demand for iron ore from China.
There were some bright features in Japan, however. Fujifilm, once best known for camera film but now more focused on the film used on liquid crystal display panels, got a lift from a broker upgrade, while Japan’s oil refiner, JX Holdings, was wanted on news it is talks with China Petroleum and Chemical to build a lubricant plant in China, according to newspaper reports.
The Nikkei 225 fell 58 points to 9,279.
In Hong Kong focus was on the banking sector on the day it was reported that theAgricultural Bank of China will seek to raise at least $19.2bn through its flotation.
Reports indicate that the company has set a price of HK$3.20 per share for its flotation, just above the mid-point of the indicated range of HK$2.88 to HK$3.48.
Elsewhere in a generally soft banking sector Industrial & Commercial Bank of Chinatook a tumble on reports that it is planning a rights issue.Concerns about the imposition of new tax in China on energy exploration hit offshore oil explorer Cnooc.
The Hang Seng index fell for the fifth time in six days to 19,857, down 227.
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