Reply #15: China storms depress Asian markets [View All]

[Ghost Dog]

Asia-Pacific markets fell on Wednesday as worries about the state of the global economy sharpened ahead of the US Federal Reserve's meeting, which is widely expected to result in a further cut in interest rates. Markets had started mildly higher, tracking Wall Streets gains overnight but the mood changed sharply as the day progressed.

South Korea led the region's decline by closing 3 per cent lower after investment bank Macquarie said orders for new vessels from the country's shipyards would slow. Hong Kong ended down 2.6 per cent and Singapore's Straits Times index closed 1.6 per cent lower at 3,000.03. Shanghai dropped 0.9 per cent to its lowest since early August as heavy snow continued to disrupt China.

The MSCI Asia Pacific index was 1.2 per cent lower by late afternoon in Tokyo, after gaining as much as 0.8 per cent earlier.

"There's been some pretty nasty price action and turnarounds," said Malcolm Wood, Asia Pacific equity strategist at Morgan Stanley in Hong Kong. He said volumes were low but nevertheless the change in mood was "perplexing". Markets seemed to be worried about the effect of the bad weather in China on inventory levels and production, he said, and nervous about what the Fed might do at its meeting later.

Gold remained volatile, dropping by a half per cent in early trading and then bouncing back to recoup most of its losses. Asian trading wound down at $922.83 an ounce for immediate delivery.

In Tokyo, the Nikkei 225 average fell by 1 per cent to 13,345.03 and the broader Topix closed 0.6 per cent lower at 1,320.11. Energy companies and steel producers led the decline. Tokyo Gas slid 4.8 per cent to Y480 and Nippon Steel closed 2.5 per cent lower at Y632.

In South Korea, the Kospi slid by 3 per cent to 1,589.06, its lowest close since May. The index has dropped 18.2 per cent since the beginning of the year. The country's shipbuilders, some of the biggest in the world, led the market downwards. Macquarie cut the ratings for four of them to "underperform" from "outperform" on concerns that shipping lines might find it difficult to raise funds to buy new vessels.

Hyundai Heavy Industries, the world's biggest shipyard, slumped by 10.5 per cent to Won286,000, taking its share price back to levels last seen in the first wave of subprime turmoil on Asian markets in August. Samsung Heavy Industries lost 10.4 per cent to trade close to a nine-month low of Won25,400.

In Hong Kong, the Hang Seng index closed 2.6 per cent down at 23,653.69 after rising as much as 1.4 per cent earlier. The Hang Seng index was 1.5 per cent lower at 23,918.72 by lunchtime. Billionaire Lee Shau-kee affected sentiment by downgrading his predictions on the Hang Seng index.

/... http://news.yahoo.com/s/ft/20080130/bs_ft/fto013020080428535653