Asia Falls Led by China on C.Bank Tightening

Asian stock markets were weaker across the board on Tuesday afternoon, despite the gains by major indices on Wall Street, which snapped a three-day losing streak.

China’s key stock index led the decliners in Asia, losing more than 2 percent, as the fall in bank shares accelerated on news that several Chinese lenders, who had been ordered to raise their reserve requirement ratios, will have to do so on Tuesday. China Construction Bank lost 1.4 percent while China Merchants Bank gave up 1.2 percent.

The Shanghai Composite Index fell as far as 3,021.941 points and was last quoted down 2.05 percent.

Japan’s Nikkei Average [JP;N225  10425.74  -86.9502  (-0.83%)   ] returned from the lunch break to fall 0.8 percent, as investors grew cautious ahead of the earnings season and economic indicators such as U.S. growth data. Gains in resource stocks such as Inpex Corp cushioned losses.

KDDI, Japan’s No.2 telecom firm, tumbled more than 7 percent after it said it would pay $4 billion for a controlling stake in Jupiter Telecommunications, the country’s biggest cable TV firm.

The Bank of Japan will end a two-day policy review on Tuesday, but market players expect its decision to have little impact on the market. The BOJ is seen likely to keep interest rates at 0.1 percent and to hold off on new initiatives at its meeting, having introduced a new funding operation last month after a period of intense government pressure for action to support the fragile economy.

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Japan’s earnings season also heats up this week, with big-name companies including Canon due to report later in the week.

The broader Topix gave up its morning gains to fall 0.7 percent in the afternoon session.

Pacific Metals and other resource-linked shares climbed after gold rose toward $1,100 an ounce on Monday, while oil prices rose to $75 a barrel partly helped by a weaker dollar. Pacific Metals jumped 3 percent to 657 yen and Toho Zinc advanced 1.4 percent to 441 yen, while trading house Mitsubishi Corp rose 0.9 percent to 2,288 yen.

The stabilizing yen helped some of the blue-chip exporters, with Advantest Corp up 1.1 percent to 2,534 yen and Kyocera Corp adding 0.6 percent to 8,100 yen.

Shares of KDDI sank 7.4 percent to 489,000 yen to become the top drag on the Nikkei 225. Jupiter Telecommunications, known as J:Com, fell 7.2 percent  to 90,000 yen after jumping 14.4 percent the previous day.

Seoul shares gave up opening gains to turn lower on Tuesday, weighed by losses in major exporters including Samsung Electronics, with weaker than expected domestic growth data dampening sentiment further.

The Korea Composite Stock Price Index (KOSPI) shed 1.7 percent to 1,641.89 points.

The South Korean economy grew a seasonally adjusted 0.2 percent in the fourth quarter over the third quarter, compared with a 0.5 percent rise forecast in a Reuters poll.

But shares in Lotte Shopping rose 2.17 percent after parent Lotte Group said on Monday it would take over the convenience store chain Buy The Way from private equity firm Unitas Capital for about $235 million, in a move to challenge sector leader FamilyMart.

In the rest of Greater China, the Hang Seng Index sank 1.4 percent as overall sentiment remained  cautious, weighed down by falls in the tech sector after a profit warning from Foxconn International. Shares of the contract mobile phone maker tumbled nearly 7 percent after the firm issued a profit warning on Monday saying it expects a “significant decline” in consolidated net profit for the full year of 2009 due to lower demand and weaker pricing.

Jia Sheng Holdings soared as much as 66.67 percent to a record and was the top percentage gainer in Hong Kong after the firm said it would buy a patented Lithium and Yttrium-based batteries products producer and distributor for HK$2.75 billion, a deal to be settled in cash, issue of shares and convertible bonds.

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China Oil and Gas Group fell as much as 14.67 percent and was the most actively traded stock in Hong Kong on news that the company was selling 500 million new shares to raise HK$606 million ($78.01 million) to fund investments in natural gas and coalbed methane businesses.

The Taiwan Weighted was down 2.7 percent, with technology shares including Compal Electronics lower amid concern about the global economy and investor reluctance to trade without more indications of stronger tech recovery.

In Southeast Asia, property stocks were in the spotlight after Keppel Land handed in a stronger-than-expected full year report card. The stock gave up 1.2 percent despite the news, in line with the broader market decline.

The Straits Times Index lost 1.6 percent while the KL Composite shed 0.4 percent.

Australia markets are closed for Australia Day public holiday.

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