Asian shares close mostly lower on Chinese fall yesterday; Shanghai rebounds
Feb. 28, 2007
Shares across the Asia-Pacific region closed mostly lower after the steep drop on Chinese markets yesterday followed by the fall on Wall St overnight -- although the Shanghai markets bounced back today on bargain hunting, dealers said.
Tokyo shares ended sharply lower. Dealers said some investors showed an appetite for buying, so reducing the losses, while others stayed on the sidelines, waiting to see how the markets in Europe and the US perform tonight.
The blue chip Nikkei 225 Stock Average finished 515.80 points or 2.85 pct lower at 17,604.12, off a low of 17,382.79 and a high of 17,843.61.
The TOPIX index of all first-section issues dropped 58.59 points or 3.23 pct to settle at 1,752.74, off a low of 1,719.15 and a high of 1,785.05.
Hiroichi Nishi, equity chief general manager at Nikko Cordial Securities, said investors had been 'waiting for some trigger for adjustment.' A sharp rise in the yen also weighed on the market, he said. Nishi said that after a slight rise in the Shanghai market today, the Tokyo market had recouped some of its losses, but investors were waiting to see how the US and European markets performed.
Australian shares closed sharply lower following an 8.8 pct slump on the Shanghai market yesterday and the fall on Wall St, dealers said.
Dealers said few Australian companies avoided the negative sentiment today, including the index leading resource stocks BHP Billiton (NYSE:BHP) and Rio Tinto which have large exposures to the Chinese resource-led boom.
The S&P/ASX 200 closed down 161.3 points or 2.69 pct at 5,832.5 - now well below Monday's record close of 6,044.0. The index managed to end above the day's low of 5,786.8.
Over February, the key index remained up 59.1 points or 1.00 pct despite today's sell-off and continued to hold a 162.7 point or 2.9 pct gain for investors so far in 2007.
Hong Kong shares were sharply lower in afternoon trade in response to the falls in mainland China and Wall St, dealers said.
They said the budget speech of Hong Kong Financial Secretary Henry Tang provided good news with tax relief measures but failed to lift the market due to prevailing concerns over US and China bourses.
At 3.45 pm the Hang Seng Index was down 460.82 points or 2.29 pct at 19,687.05.
In mainland China, A-shares in Shanghai and Shenzhen closed sharply higher on the back of bargain-hunting after yesterday's slump, with property, telecom and power stocks leading the gainers, dealers said.
Nearly 200 companies closed up by their daily limits of 10 pct.
'The market was boosted by bargain-hunting interest after yesterday's plunge, as investors were reassured by the government's denial of a rumored tax on stock investment gains,' said Wang Mingzhi, an analyst at GF Securities.
According to the rumors, the government was to impose taxes on capital gains from stock investment income. The Ministry of Finance and the State Administration of Taxation announced today that there are no plans to levy such a tax.
Analysts said the slump yesterday is temporary and it will be a matter of time before the market picks up again.
'The slump is only a temporary thing. Soon people will realize that nothing has changed - liquidity is still abundant, the yuan is still rising and corporate earnings are still growing, so the long-term prospects are still promising,' said Wu Dazhong, an analyst at Shenyin Wanguo Securities.
The Shanghai A-share Index was up 114.99 points or 3.95 pct to 3,025.75 and the Shenzhen A-share Index was up 29.06 points or 3.94 pct at 767.35.
Seoul shares closed sharply lower on broad sell offs, with sentiment undermined by the sharp corrections seen across global stock markets, dealers said.
The market tumbled by nearly four pct to fall through the 1,400 point level at one stage, with downbeat current account and industrial output data fuelling the decline, they added.
The KOSPI index closed down 37.26 points or 2.56 pct, at the day's best level of 1,417.34. The low was 1,393.96.
