Analysts worry that Beijing may lift rates to cool inflation
By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Most Asian stock markets declined Wednesday, with Chinese stocks extending their recent heavy losses on worries Beijing may unveil more tightening measures to restrain prices.
“Today’s transaction volume is a bit smaller given the ongoing concerns over monetary tightening measures; the index may need to take perhaps another week to fully price in another rate hike before we see a meaningful rebound,” said Peng Yunliang, analyst from Shanghai Securities.
Hong Kong’s Hang Seng Index (HK:HANGSENG 23,214, -478.56, -2.02%) fell 2%, falling for the sixth time in seven sessions and suffering its biggest one-day percentage fall since late June.
China’s Shanghai Composite (CN:SHCOMP 2,839, -55.68, -1.92%) dropped 1.9%, Australia’s S&P/ASX 200 (AU:XJO 4,624, -76.02, -1.62%) lost 1.6%, South Korea’s Kospi slipped 0.1% and Taiwan’s Taiex gave up 0.7%.
A weakened yen pushed Japanese exporters higher, as the Nikkei Stock Average (JP:NI225 9,812, +14.56, +0.15%) rose 0.2%.
Markets in Malaysia, Singapore, Indonesia and India were closed for a public holiday.
Dow Jones Industrial Average (DJIA 11,024, -178.47, -1.59%) futures were up 33 points in screen trade.
Commodity-linked shares were hit across the region as European sovereign-debt troubles reined in risk appetite and pushed the U.S. dollar higher against major global currencies. Copper, zinc, natural-rubber and aluminum futures fell sharply on the Shanghai Futures Exchange.
A steep overnight fall on Wall Street also hurt sentiment.
BHP Billiton (BHP 85.04, -2.65, -3.02%) (AU:BHP 43.47, -0.98, -2.20%) dropped 2.2% and Rio Tinto (RIO 66.30, -2.93, -4.23%) (AU:RIO 83.69, -2.75, -3.18%) sank 3.2% in Sydney, Mitsubishi Materials (JP:5711 273.00, +6.00, +2.25%) lost 4% in Tokyo and Korea Zinc lost 2.9% in Seoul.
In Shanghai, Jiangxi Copper (CN:600362 35.30, -1.05, -2.89%) (JIXAY 121.49, -4.51, -3.58%) dropped 2.9%, PetroChina (PTR 124.22, -5.03, -3.89%) (CN:601857 11.35, -0.22, -1.90%) and Zijin Mining Group each lost 1.9%, and Datong Coal Industry (CN:601001 20.00, -0.62, -3.01%) lost 3%. In Hong Kong, Jiangxi (HK:358 21.90, -1.95, -8.18%) tumbled 8.2% and PetroChina (HK:857 9.53, -0.32, -3.25%) skidded 3.3%.
Selling continued on worries that Beijing could impose price controls, after the state-run Xinhua news agency cited Premier Wen Jiabao as saying China’s cabinet was drafting measures to curtail sharp increases in prices of commodities that affect people’s immediate interests.
Shares of Cathay Pacific Airways (CPCAY 14.54, +0.24, +1.68%) (HK:293 22.70, -0.10, -0.44%) ended 0.4% lower in a downbeat Hong Kong market, but continued to outperform after its fiscal-year earnings forecast on Monday.
Newly listed Shirble Department Store Holdings (HK:312 1.81, 0.00, 0.00%) fell 18% to 1.81 Hong Kong dollars (23 U.S. cents) on its first day of trading, pressured by poor broad-market conditions.
