News Column

Asian Stocks Fall On Political Woes

May 27, 2014

CANBERA (Alliance News) - Asian stocks fell broadly on Tuesday, as investors weighed growing diplomatic and economic tensions between China and Vietnam and the political turmoil in Thailand. While Japanese shares rose for a fourth day, tracking firm cues from Europe, the markets elsewhere ended subdued awaiting direction from a slew of US data, when trading resumes on Wall Street later in the day following the Memorial Day holiday weekend.

Japan's Nikkei Index rose 0.2% to 14,637, a fresh seven-week high, as exporters were buoyed by a weaker yen. The broader Topix Index ended flat at 1,195 in thin trading. Honda Motor edged up 0.1%, Mazda Motor added 0.2% and Panasonic gained 0.4%, while heavyweight Fast Retailing rose 0.8%, Fanuc advanced 0.9% and SoftBank Corp gained 0.4%.

Sony Corp shares ended largely unchanged after rallying more than 3% the previous day. Fuji Heavy Industries added a percent on a Nikkei report the maker of Subaru cars will likely beat its medium-term profit target. Unitika plunged 19.30% after seeking financial aid from its lenders.

China's Shanghai Composite Index dropped 0.3% to 2,035, as banks declined on a report by the 21st Century Business Herald that loan growth at China's top four state-owned banks has slowed sharply due to the sluggish economy and slowing capital inflows. Property developers gained ground on reports China has allowed some cities to relax curbs on home purchases. Hong Kong'sHang Seng Index slipped 0.1% to 22,944.

Australian shares erased early gains to end little changed. The benchmark S&P/ASX 200 Index rose 0.2% in early trading before reversing direction to close down 0.02% at 5,512, weighed down by weak consumer confidence and household financial stress data.

Banks gave up most of their early gains before closing on a mixed note. ANZ slipped 0.4% and NAB shed 0.7%, while Commonwealth edged up 0.2% and Westpac added half a percent. Suncorp Group dropped 2%. The insurer and banking service provider flagged AUD500 million in write-downs in its life insurance business, reflecting deteriorating market conditions facing the industry.

Rio Tinto rose 0.4% after the mining giant struck a deal with the African government of Guinea to develop a USD20 billion iron ore project. Fortescue Metals Group, Alumina and OZ Minerals rose 1-3%, while BHP Billiton edged down marginally and Regis Resources lost 2.2%. ALS soared 8.8% after reporting better-than-expected full-year earnings.

Seoul shares fell to their lowest level in two weeks, as investors sat on the sidelines assessing the economic recovery in China and the US. The benchmark Kospi average fell 0.6% to 1,998. While domestic financial institutions remained net sellers, overseas investors bought shares worth a net 22 billion won, extending their buying streak to the 11th straight session, preliminary data showed.

In economic news, an index measuring confidence among South Korean consumers fell to its lowest level in eight months in May, the Bank of Korea said. The index showed a score of 105, down from 108 in April.

New Zealand shares eased slightly in thin trading as investors choose to sell existing shares to apply for upcoming initial public offerings next month. The benchmark NZX-50 Index slid 0.2% to 5,146. Air New Zealand led the declines on the exchange, falling 1.8% to USD2.16, while Trade Me Group dropped 1.4%, Diligent Board Member Services lost a percent, Telecom Corp declined 0.9% and Fletcher Building shed 0.8%. Tower slipped 0.6% after the general insurer reported a 70% decline in first-half profit.

On the economic front, the New Zealand Institute of Economic Research warned that slumping house sales are a significant risk to optimistic outlook for the economy. In its quarterly predictions, the institute said it expects growth of 3.5% this year, driven by increased spending and investment by households and businesses.

Elsewhere, India's Sensex was down 0.8% on profit taking after recent sharp gains. Singapore's Straits Times Index was down 0.2%, while Malaysia's KLSE Composite was up 0.3% and the Taiwan Weighted average rose 0.2%.

European stocks hit six-year highs on Monday and the euro edged higher, as investors shrugged off strong gains for anti-austerity parties in European Parliamentary elections, with analysts saying the elections will have no impact on the region's economic policies or on the euro's standing in currency markets.

More hints of easing next week from European Central Bank President Mario Draghi also buoyed investor sentiment. The German DAX rallied 1.8% and France's CAC 40 advanced 0.8%, while the UK market was closed for a public holiday.

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Source: Alliance News

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