MW: Tokyo falls, Shanghai up; merger lifts Nippon oil
By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) -- Asian stocks erased gains and traded mostly lower Thursday as investors assessed whether the latest round of interest rate cuts will boost business. Shares of China Life led Chinese financial stocks higher after Beijing indicated it would increase liquidity in the banking system.
Japanese stocks ended lower in a session dominated by M&A activity, including a tie-up involving Nippon Oil, and as Panasonic revised its bid for Sanyo Electric. Regular flight service resumed to Bangkok's international airport after a more than one-week shutdown.
The U.S. dollar lost ground against the Japanese yen, falling to 92.81 in late Asian business hours from 93.37 yen mid-morning.
"The market is still looking for fresh stimulus and awaiting a clear picture on the interest rate front," said Marco Mak, head of research at Tai Fook Securities in Hong Kong. He added that investors were waiting to see if and by how much the Federal Reserve would cut rates later this month for clues in the direction of Hong Kong interest rates.
Indonesia's central bank cut interest rates a quarter-point Thursday, lowering its key rate to 9.25%, becoming the fourth central bank in Asia to announce cuts this week. Earlier in the day New Zealand's unveiled a record 1.5-percentage-point interest rate cut, bringing the official cash rate to 5%, a five-year low.
"It is appropriate to deliver this reduction quickly to support the economy and keep inflation from falling below the target band," New Zealand Reserve Bank Gov. Alan Bollard said in a statement.
Shares of Nippon Oil and Nippon Mining Holdings jumped 3.4% and 11.3% after the firms agreed to merge, in a deal that will create one of the world's top 10 listed oil companies.
Rio Tinto's shares failed to catch any upside draft, falling more than 10%, as investors reportedly fretted the miner will need to sell additional shares to shore up its balance sheet.
Taipei-listed shares of Acer, the world's third biggest maker of personal computers, fell more than 1% after two technology research firms forecast weaker global PC shipments next year, owing to the weak economy and tighter credit conditions.
Stocks in Shanghai led the region higher as investors were heartened by indications from Beijing Wednesday that it's ready to use additional stimulus measures to offset downward pressure on the economy, including changes in required reserves, interest rates and the exchange rate of the yuan, the Chinese currency. The leading Shanghai Composite share benchmark closed 1.8% higher at 2,001.50.
"These are clear statements of intent that China will aggressively defend growth," wrote SocGen's Asia forex and rates strategist, Patrick Bennett, in a note Thursday.
Financial shares were among the top performers in Hong Kong, as investors judged the sector a likely winner from the new plan, which includes measures to stabilize the stock market and pump liquidity into the banking system.
Shares of Industrial & Commercial Bank of China were up 2.3%, and China Life Insurance (TICKER:HK:2628) climbed 1.2%.
"There are a lot of other measures to be introduced shortly," said Alex Tang, head of research at Core Pacific-Yamaichi in Hong Kong. He added that this round of stimulus will focus on extending credit to consumers and small businesses, unlike Beijing's earlier plan, which directed spending at infrastructure projects.
Australian beachwear maker Billabong International fell 18% after cutting its full-year earnings-growth estimates by about half.
Thailand's central bank slashed interest rates by larger-than-expected 1-percentage point Wednesday. The move followed the Reserve Bank of Australia which cut rates Tuesday by 1 percentage point to 4.25%, its lowest level since 2001.
The Nikkei 225, Japan's leading share benchmark, closed 1% lower at 7,924.24.
The Hang Seng Index ended 0.6% lower at 13,509.78 and the China Enterprises Index, a gauge of Hong Kong-listed China shares, closed little changed at 7,227.19.
Australia's S&P/ASX 200 also closed nearly flat for the day, easing 0.04% to 3,532.40, while Thailand's SET Index fell 0.5% to 390.91 and Indonesia's JSX Composite added 1.1% at 1,205.32.
India's Sensex Index jumped 4.7% to 9,156.68 in late trade.
Investors also took inspiration from the action on Wall Street overnight, where the Dow Jones Industrial Average ended higher, helped by a late-session burst, during a day that saw data point to a rebound in mortgage refinancings and reports the Treasury is considering a plan that would lower mortgage rates. The Dow added 172.6 points, or 2.1%, finishing at 8,591.69.
Shares of Sanyo Electric were down 12.4% after the Nikkei newspaper reported Panasonic Corp. had raised its buyout offer per share by less than 10%. Panasonic's shares were down 5.2%.
Gainers in Sydney included investment advisory Babcock & Brown, , shares of which jumped 88% after the firm secured A$150 million in financing for a year, as it proceeds with restructuring.
Light sweet crude oil futures for January fell as much as 96 cents to $46.64 a barrel in electronic trade. The front-month contract ended at a nearly four-year low of $46.79 a barrel on the Nymex Wednesday, easing 17 cents in a retreat for the fourth straight session.
Among other regional indexes, the South Korean Kospi fell 1.6% to 1,006.54, New Zealand's NZSX-50 up 0.9% at 2,730.68, Taiwan's Taiex fell 1.2% at 4,254.96 and Singapore's Straits Times was up 0.2% at 1,643,68.
