Asian equity markets suffered heavy losses Monday as nervous investors braced for a slew of big U.S. earnings reports in the coming week, though merger-and-acquisition related news boosted shares of China Eastern Airlines and Kirin Holdings
Japan's Nikkei 225 index opened the week with its ninth straight downward session, falling emphatically, 236.95 points, or 2.6%, to 9,050.33, amid political uncertainty. The decline came a day after the Liberal Democratic Party suffered a big defeat in a Tokyo election, and following reports that Prime Minister Taro Aso and the LDP have decided to dissolve the Parliament and call general elections on Aug. 30.
In Hong Kong, the Hang Seng Index plummeted without a parachute, losing 453.79 points, or 2.6% to 17,254.63
In Tokyo action, Kirin Holdings surged 7.8%, after people familiar with the situation said that Kirin and Suntory Holdings were in merger talks. A united entity would be the largest in both the Japanese beer and soft-drink markets and one of the world's biggest beverage firms.
Such a deal would be "a huge threat" to other competitors, said Tokai Tokyo Research Center analyst Tomonobu Tsunoyama, Asahi Breweries ended up 2.5% and Sapporo Holdings rose 6.1%, with traders citing hopes for further consolidation in the sector.
There was also some unease about CIT Group, a lender to almost one million mostly small and midsize businesses across the U.S. People familiar with the matter said it was preparing for a possible bankruptcy filing after so far failing to win a government guarantee to help it borrow.
Energy stocks were lower in Japan on weakness in crude-oil prices, with Inpex down 2.5%. In Hong Kong, Cnooc fell 2.8% and PetroChina sank 3.5%.
Financial stocks fell in Taiwan, with Cathay Financial shrinking 6.7% after reporting that their second-quarter unaudited net profit dropped 84%.
Worries over how long it might take before Taiwan's financial sector enjoyed closer links with China also weighed on shares, with the Commercial Times quoting Mainland Affairs Council Minister Lai Shin-yuan as saying China and Taiwan won't start talks on a trade pact until next year.
Fortescue Metals gained 2.7% in Sydney, on news it shipped more iron ore in the three months to June 30. The company's chief executive also said iron ore production would continue to rise, with a solid order book in the near term and a positive outlook for the market in the medium term.
The euro was at $1.3960 U.S., from $1.3949 U.S. late in New York on Friday, and at 128.96 yen, from 128.90 yen. The U.S. dollar was at 92.35 yen, from 92.39 yen.
Spot gold was bid at $910.90 U.S. an ounce, down $2.10 from New York levels. Investec Australia said concerns about U.S. economic growth were putting gold under pressure as deflation fears added to worries over broad-based commodities weakness stemming from U.S. regulatory pressure to limit speculation in energy, metals markets. August crude-oil futures were at $59.60 U.S. a barrel, down 29 cents from New York levels
CHINA
China’s Shanghai Composite Index slid 37.30 points, or 1.1%, to 3,361.01.
Fundraising was on the radar in Shanghai, with news of China State Construction Engineering's coming $6-billion U.S. IPO. Analysts said the size of the IPO is in line with expectations but the timing suggests the regulator wants to cap too fast a rise in the stock market.
Shares of China Eastern Airlines climbed 2.9% in Hong Kong, while in Shanghai trading, both China Eastern and Shanghai Airlines rose by their daily limit of about 5%. The carriers said China Eastern Airlines would take over Shanghai Airlines through a share swap in a deal worth $1.3 billion U.S.
Elsewhere:
Singapore’s Straits Times Index gave back 41.34 points, or 1.8%, to 2,266.64
South Korea’s Kospi index fell back 50.50 points, or 3.5%, to 1,378.12
Taiwan’s Taiex collapsed 239.04 points, or 3.5%, to 6,530.82
New Zealand’s NZX 50 Index let go of 1.39 points, or 0.1%, to 2,736.89
Australia’s S&P/ASX 200 fell 56.60 points, or 1.5%, to 3,737.50
