Asian markets sold off Thursday, retreating on fears about the impact of a global recession, with South Korean and Hong Kong indexes plunging to multi-year lows while Japanese stocks managed to pare losses by the close of trading.
The benchmark Nikkei Stock Average closed down 213.71 points or 2.46% at 8,460.98 while the benchmark Hang Seng Index closed down 506.11 points at 13,760.49.
The Wall Street Journal said that Federal Deposit Insurance Corp Chairman Sheila Bair is expected to suggest in a Senate Banking Committee on Thursday that the government give banks incentives to turn troubled loans into more affordable mortgages. The report sparked buying of U.S. stock futures, which in turn set off short covering in Nikkei futures and helped the cash market trim losses.
Early in the day, the Ministry of Finance said that Japan's merchandise trade surplus fell to 95.1 billion yen in September, plummeting 94.1% on year. That was sharply lower than analysts' expectation that called for a decline of 33.9%. In August, the surplus was 327.56 billion yen. Imports soared 28.8% on year, while exports were up an annual 1.5%.
The Ministry of Finance also announced weekly numbers for capital inflow of stocks and bonds. Residents of Japan remained net buyers of foreign stocks last week and became net buyers of foreign bonds and notes. Foreigners, meanwhile, were net sellers of Japan-based stocks, bonds and notes. Japan residents bought a net 348.4 billion yen worth of foreign stocks for the week of October 12-18, and bought a net 113.6 billion yen in overseas bonds and notes. Foreign residents, meanwhile, sold a net 300.1 billion yen in Japanese stocks for the week, and were sellers of a net 792.2 billion yen in Japan bonds and notes.
Among exporters, Honda Motor tumbled 6.6%, Toyota Motor fell 3.1%, Canon plummeted 6.2%, and Sony plunged 6.3%.
Nippon Steel fell 2.2% and JFE Holdings declined 1.3%.
In the banking space, Mizuho Financial Group plunged 7.5% after a newspaper report said that the bank might delay planned share buybacks to preserve capital in the face of global financial turmoil and sliding profits. Mitsubishi UFJ Financial Group shed 3.8% and Sumitomo Mitsui Financial Group dropped 4.2%.
Hitachi Construction Machinery and Mazda Motor, heavily reliant on the European market, lost ground as the euro temporarily fell to the 123-yen level compared with the 127-yen zone Wednesday in Tokyo. Hitachi shed over 4% and Mazda slumped nearly 11%.
Commodity-related stocks also closed lower, with Inpex Holdings sinking 7.1%, Mitsubishi Corp falling 5.0%, and Mitsui & Co losing 4.1%.
KDDI Corp jumped 6.3% after the telecom operator reported a 27% gain in quarterly profit on lower handset subsidies and maintained its full-year forecast.
CHINA
The Chinese stock market closed lower amid a fresh wave of sell-offs in global markets. Investor sentiment took a beating after China Railway Group and China Railway Construction Corp reported losses due to adverse foreign exchange movements. The benchmark Shanghai Composite Index closed lower for a third day, falling 20.26 points or 1.07% to 1,875.56.
China Railway Group plunged 5.9% after the company reported losses of 1.9 billion yuan on H-share listing-proceeds held in foreign currency. China Railway Construction Corp fell 3.0% after the company booked a 320 million yuan foreign exchange loss in the third quarter as a result of the yuan's appreciation.
While banks fell, property developers were in demand after the government announced long-awaited measures to boost property transactions. The government said Wednesday that the property transaction tax will be cut to 1% for first-time individual buyers of homes smaller than 90 square meters with effect from November 1, 2008.
China Vanke gained 4.4% and Poly Real Estate Group jumped 6.4%. Among banks, Industrial and Commercial Bank of China lost 2.8%, China Merchants Bank shed 4.5%, and China Construction Bank dropped 3.9%.
Resources stocks closed weaker on worries about falling demand. Aluminum Corp of China declined 1.3% after the company revealed plans to cut its annual aluminum production by 720,000 tons or 18%. The company also said that it might further cut production depending on market conditions. Yunnan Aluminum fell 3.2% after its third-quarter net profit fell about 68% from a year earlier to 58.63 million yuan.
The energy sector finished mixed, with China Shenhua Energy advancing 2.2%, index heavyweight PetroChina plunging 5.0%, and China Petroleum & Chemical Corp falling 2.9%.
Jiangling Motors slid 1.1% after the company reported a net profit of 106.78 million yuan in the third quarter, down 52.73%.
Elsewhere:
South Korea's Kospi dropped as much as 10.3% at one point during the session, before recovering. The index finished 7.5% weaker at 1,049.71.
Taiwan's Taiex closed down 2.7% at 4,730.
Singapore's STI closed down 4.1% at 1,745.
Indonesia's Jakarta Composite Index closed down 3.1% at 1,337.
Malaysia's KLCI closed down 13 points at 891.
India's Sensex closed down 3.9% at 9,771.
Australia's S&P/ASX 200 index fell 4.4% to 3,974.40.
New Zealand's NZX 50 index gave up 3.2% to 2,807.34.
with files from other wire services
