A broad decline in banking stocks dragged on most Asian markets Wednesday, with concerns about China's economy adding to the selling pressure in Shanghai and Hong Kong.
The day's trading was again marked by volatility. Analysts are divided on the direction of markets, given signs of economic recovery combined with weak earnings outlooks from several companies. Investors are also wary ahead of the outcome of stress tests on U.S. banks, expected May 4.
The Nikkei 225 Index recovered 15.97 points of what it lost earlier this week, or 0.2%, to 8,727.30, after fluctuating in a range around the break-even level.
Hong Kong’s Hang Seng Index collapsed another 407.94 points, or 2.7%, on top of Tuesday’s 400-plus loss, to 14,878.45
Elsewhere, Mitsubishi UFJ Financial Group dropped 0.5% in Seoul, Cathay Financial Holding slid 2.1% in Taipei, DBS Group Holdings shrunk 3% in Singapore afternoon trading
In Asia, BHP Billiton ended 0.2% lower after its quarterly update, where it reported a slight fall in iron-ore output and steeper falls in base metals production, and said it expects market conditions to remain uncertain.
Southern Cross Equities director Charlie Aitken noted that BHP's shares have been supported by index funds winning investment mandates, but added: "I remain concerned that consensus earnings forecasts for BHP in the second half of [fiscal year 2009] and [fiscal year 2010] remain too ambitious and will need to be downgraded over the next few months."
Honda Motor fell 0.6% in Tokyo despite the Nikkei reporting that its group operating profit for the year ended March 31 is likely to come in about Y10 billion ($101 million U.S.) higher than the company previously forecast.
SMBC Friend Research Center analyst Shigeru Matsumura said a weaker yen and sales hopes were already priced in to the stock and "investors are now focusing on the fiscal year that just began, trying to figure out when the auto market will recover."
Pioneer Corp surged 17.1% after the Nikkei reported the government was mulling plans to provide Pioneer with an equity infusion of around 30 billion yen under a recapitalization program for struggling non-financial companies to be launched as early as April 30. Pioneer said it is considering applying for public funds but hadn't decided on the size of any request.
Elpida Memory soared 14.9% with the company saying it planned to request price increases of up to 50% for dynamic random-access memory chips in negotiations with clients starting late this month. The company is also considering a request for public funds.
South Korean chip makers gained after DRAMeXchange said DRAM chip contract prices increased during the latter part of April. Hynix Semiconductor shares rose 14.8%. LG Electronics added 3.8% after its first-quarter operating profit beat forecasts and it issued a comforting outlook for the second quarter.
Earlier, data showed Japan's trade with the rest of the world continued to sag in March, with exports falling 45.6% on the year and imports falling 36.7%, for a trade surplus of Y11.00 billion, largely in line with expectations.
CHINA
China’s Shanghai 300 Composite Index dumped 99.16 points, or 3.7%, to 2,576.28
"Since China announced the first-quarter economic figures, the [Shanghai] market has seen profit-taking because the 6.1% growth wasn't exciting," said Andrew To, sales director at Taifook Research.
"The GDP figure means that the government may have a hard time to maintain the economic growth target [of 8%] this year. Investors are worried that the Shanghai market may have shown some over-excitement, and expect some sharp pullback," he said.
Property and commodity stocks paced the losses, with Jiangxi Copper losing 7.2%, Maanshan Iron & Steel Co. shedding 5.7% and Guangzhou R&P Properties Co. losing 4.1% in Hong Kong. In Shanghai, Jiangxi gave up 6.1% and Maanshan lost 2.4%, while Poly Real Estate Group Co. shed 4.1%.
Financial-sector shares mostly extended losses, with China Construction Bank losing 5.9% in Hong Kong and 1.1% in Shanghai.
Elsewhere:
Singapore’s Straits Times Index shed 43.84 points, or 2.3% to 1,843.41
South Korea’s Kospi Composite Index tacked on 19.21, or 1.4% at 1,356.02
Taiwan’s Taiex Index gained 4.70 points, or 0.1%, to 5,886.11
New Zealand’s NZX 50 Index lost 1.92 points, or 0.1% to 2,662.94
Australia’s S&P/ASX 200 was down 9.20 points, or 0.3% at 3,668.20
