Asian markets sink on worries over oil prices, US outlook
Tuesday, May 27, 2008 6:04Hong Kong shares were also dragged down by a plunge in China Mobile, the mainland’s largest mobile service provider, on worries about increased competition after China announced that it was restructuring its telecommunications sector. The blue-chip Hang Seng Index fell 586.76 points, or 2.4 percent, to 24,127.31.
Traders said turnover has been relatively low lately, indicating trade would remain sluggish in the near future, as oil prices are likely to climb further and the U.S. economy slows.
«Trading is sluggish, as there’s no clear picture for both local and regional markets,» said Linus Yip, a strategist at First Shanghai Securities.
China Mobile shares tumbled 8.2 percent to HK$114.90. China’s three other Hong Kong-listed telecom operators _ China Unicom, China Netcom and China Telecom _ are also involved in the restructuring, but remained suspended from trading Monday.
In Tokyo, the benchmark Nikkei 225 index dropped 322.01 points, or 2.3 percent, to 13,690.19.
«What underlined selling was ongoing concern over inflation as oil prices still remained very high,» said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC Co. in Tokyo.
Crude oil futures rose to a record above $135 a barrel last week and were trading above US$133 a barrel in Asian electronic trading late Monday.
Investors were also anxious after the Dow Jones industrial index lost 1.2 percent on Friday. Investors in Asia closely watch the U.S. economy because it is a major export market.
Sony Corp. fell 2.6 percent while electronics maker Kyocera Corp. lost 2.1 percent. Japan’s top automaker, Toyota Motor Corp., declined 2.5 percent and its rival Honda Motor Co. dropped 3.3 percent.
The Australian share market fell for a third day to an almost three-week low on concerns higher crude oil prices, a stronger Australian dollar and inflation will crimp economic growth and company earnings. The benchmark S&P/ASX 200 index dropped 1.1 percent to 5,707.
Pakistan’s benchmark stock index plunged to its lowest level in eight months amid investor anxiety over political and economic uncertainty. The 100-share benchmark index at the Karachi Stock Exchange tumbled 426.96 points, or 3.3 percent, to 13,011.74, the lowest since Sept. 11, 2007.
Ahsan Mahnati, director of equity at Shahzad Cahmdia Securities, said the market was reacting to an unconfirmed newspaper report that Asif Ali Zardari, the head of the main ruling party, would ask President Pervez Musharraf to quit in a meeting with the former army general.
The power struggle between the president and Pakistan’s newly elected civilian leaders comes as the economy is slowing and the value of the rupee is sliding.
On the Chinese mainland, the Shanghai benchmark index fell to a one-month low on renewed worries over further monetary tightening. The benchmark Shanghai Composite Index fell 108.55 points, or 3.1 percent, to 3,364.54, the lowest sice April 23.
Financial shares were among the worst hit, with Haitong Securities plunging by the daily 10 percent limit and Industrial & Commercial Bank of China sinking 3 percent.
But makers of telecommunication equipment surged following a government announcement of a major reorganization of the state-controlled industry. Investors expect the reshuffle to boost the equipment makers’ sales.
Ningbo Bird jumped 10 percent to 5.04 yuan and Unicom Guomai Communications also surged 10 percent, to 9.67 yuan.
Trading remained suspended in China United Telecommunications _ which holds a stake in China Unicom and is the only listed telecom operator in the mainland.
In currencies, the dollar was quoted at 103.32 yen midafternoon in Tokyo, slightly up from 103.28 yen in New York late Monday. The euro stood at US$1.5762, compared with US$1.5770 in New York.
