Shanghai stocks fell substantially Monday, as lower commodity prices, persistent worries over tightening in bank loans and weak economic data dampened investor sentiment.
Shanghai’s 300 Composite Index lost 204.19 points, or 6.1%, to 3,140.27. Metals stocks were hit hardest, with Angang Steel and Yunnan Copper dropping by the day's 10% limit in Shenzhen, while Aluminum Corp. of China and Jiangxi Copper dropped by as much in Shanghai. Sentiment was also hurt after Yunnan Copper reported a loss for the first half of the year.
The drop coincided with data showing foreign direct investment into China slumped 35.7% to $5.36 billion U.S. in July from the year-earlier period. Foreign direct investment flows for the first seven months of the year were down 20.3% compared with a year earlier,
Hong Kong shares were also weighted down by the performance as well as a steep fall in U.S. stock futures and commodity prices. In Tokyo, exporters were dragged down by the yen's strength as risk-averse investors bought the low-yielding currency in search of a perceived safe haven.
The Nikkei 225 index in Tokyo jettisoned 328.72 points, or 3.1%, to end the week’s opening session at 10,268.61.
Data showing Japan's second-quarter gross domestic product registered its first quarterly growth in five quarters, did little for the Tokyo markets. GDP grew 0.9% from the quarter before, compared with a 1.0% rise tipped in a Dow Jones Newswires poll of economists.
At least one expert, however, noted that capital expenditure by Japanese companies dropped for a fifth straight month.
Among Japanese exporters, Sony Corp. lost 4.1% and Toyota Motor Corp. gave up 2.7%.
Among commodity-related companies, BHP Billiton lost 3% and Rio Tinto shrank 4.8% in Sydney, gave up 4.8% in Tokyo and Korea Zinc Co. shed 5.9%.
In Hong Kong, the Hang Seng index collapsed 755.68 points, or 3.6%, to 20.137.65, led lower by a slump in China-related stocks.
Taiwanese stocks were also weighed by worries of rising bad debt and insurance payouts because of damage and casualties from heavy floods in the southern part of the island. Waning optimism over improved trade between Taiwan and mainland China also pulled shares lower.
The South Korean market was being pulled lower by weaker-than-expected U.S. consumer sentiment data released Friday, according to one expert. KB Financial was down 4.8% and Samsung Electronics shed 2.5%. Korean Air was down 5.1% on news of Korea's first H1N1 deaths over the weekend.
In foreign exchange markets, the yen was stronger against the euro and the U.S. dollar. One analyst said Japan's GDP result had little impact on the yen was it was largely in line with expectations. He expected the dollar to be biased lower against the Japanese currency in thin trade this week, because U.S. consumer sentiment data introduced more uncertainty over the pace of the global economic recovery, to the benefit of the safe-haven yen.
Elsewhere:
Singapore’s Straits Times Index dipped 85.53 points, or 3.3%, to 2,545.98
South Korea’s Kospi index finished the day behind Friday’s close by 44.36 points, or 2.8%, to 1,547.06
Taiwan’s Taiex staggered 137.71 points, or 2%, to 6,931.80
New Zealand’s NZX 50 Index faded 65.17 points, or 2.1%, to 3,086.08
Australia’s S&P/ASX 200 fell back 72.60 points, or 1.6%, to 4,388.40
