Wednesday, 17 June 2009

Asian shares fall as recovery hopes fade

Asian shares fall as recovery hopes fade
Asian stock markets tumbled on Tuesday, with Hong Kong's benchmark down more than 3pc, after weak US manufacturing figures knocked confidence in a quick recovery from global recession.

Published: 6:52AM BST 16 Jun 2009

Oil retreating from eight-month highs dragged commodity stocks lower in Asia while top manufacturers such as Japanese automaker Toyota fell on the weak data.

Indexes in big Asian markets such as Japan and Hong Kong have gained 40pc or more since early March, powered by ample liquidity and signs the economic slump has leveled out.

But as the rally gathered pace, it became increasingly vulnerable to any evidence that a recovery wasn't unfolding as quickly as investors hoped.

Wall Street faltered overnight on one such sign, with the Dow Jones industrials posting its biggest drop in nearly a month.

A monthly index of manufacturing conditions around the New York region fell to minus 9.4 in June from minus 4.6 the previous month, underscoring that any recovery in the world's largest economy — a critical market for Asian exporters — will be tepid and slow.

"All the global stock markets have been overbought so the manufacturing data was a trigger, an excuse to sell and take some profit," said Peter Lai, investment manager at DBS Vickers in Hong Kong.

"I don't believe the economy will recover so fast," he said. "China and Asia will be the pioneers of the recovery but I don't see it happening until the first or second quarter of 2010."

Japan's Nikkei 225 stock average shed 256.83 points, or 2.6pc, to 9,782.84, and Hong Kong's Hang Seng slid 584.39, or 3.2pc, to 17,914.57. South Korea's Kospi dropped 1.1pc to 1,396.62.

Elsewhere, Australia's index lost 1.8pc, Singapore retreated 1.9pc and the Philippine market dived 3.8pc.

Oil's decline hit commodity stocks with Chinese offshore oil producer CNOOC plunging 5.1pc in Hong Kong and BHP Billiton, the world's biggest mining company, off 2.1pc in Sydney trade.

Benchmark crude for July delivery fell 54 cents to $70.08 a barrel in Asia trade, taking a breather from a three-month rally that has doubled the price of oil. Last week, it rose above $73.

In the US on Monday, the Dow Jones industrial average tumbled 187.13, or 2.1pc, to 8,612.13, returning to a loss for the year. The broader Standard & Poor's 500 index dropped 2.4pc to 923.72, and the Nasdaq composite index sank 2.3pc, to 1,816.38.

Markets in Europe also closed down. London's FTSE 100 fell 2.6pc, Germany's DAX 3.5pc, and France's CAC 3.2pc.

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