By Virginia Harrison, MarketWatch
SYDNEY (MarketWatch) — South Korea led sharp losses for Asian stock markets on Friday, as risk appetite evaporated on a fresh wave of concerns about global growth, with exporters among the worst performers.
South Korea’s Kospi KR:0100 -6.20% plunged 4.8%, Australia’s S&P/ASX 200 index AU:XJO -3.27% declined 2.8% and Hong Kong’s Hang Seng Index HK:HSI -2.92% fell 2.3%.
Japan’s Nikkei Stock Average JP:NIK -2.45% lost 1.8% while China’s Shanghai Composite CN:000001 -1.55% dropped 1.3%.
“Fear is the word. There’s no confidence in anything,” Tom Kaan, director of equity sales at Louis Capital Markets in Hong Kong said. “It’s a situation of catching the falling knife, and unfortunately the knife is very sharp,” Kaan said.
Asia’s losses mirrored a sharp sell-off in the U.S. on Thursday where fears about the health of the economy were heightened after factory activity in the Philadelphia region weakened to the lowest level in more than two years. Read more on Philly Fed.
Deutsche Bank downgraded its China growth outlook on Friday, saying the slowdown and even potential for recession in Europe and the U.S. now outweighed domestic credit tightening as the biggest risk to China’s economy, and comes on the heels of a downgrade to global growth forecasts by Morgan Stanley.
“China needs people to buy their goods before they can grow. If the rest of the world slows down, China will slow down,” Kaan said. “We are in a recession. How deep it is, and how long, is the question we need to be addressing,” he added.
Exporters hit
The yen USDJPY -0.01% held below the 77-level, challenging Japanese exporters. Citizen Holdings Co. Ltd. JP:7762 -4.59% shed 3.3%, Honda Motor Co. JP:7267 -3.18% HMC -5.87% slid 2.4% and shares in Canon Inc. JP:7751 -2.39% CAJ -4.14% fell 2.5%
“With a weak outlook and a strong yen, export growth will probably be soft for some time to come. In the short term the strength of the yen will be a further barrier to export-led expansion,” strategists at Capital Economics said.
Korean exporters were hit harder amid the turbulent growth outlook, with Hyundai Motor Co. Ltd. HYMLY 0.00% plunging 8.9%, Kia Motors Corp. down 6.5% and LG Electronics Inc. LGEIY 0.00% off by 6.2%.
In the energy sector, Oil Search Ltd. AU:OSH -5.21% OISHY +0.09% slumped 4.9% and Woodside Petroleum Ltd. AU:WPL -3.69% WOPEY -7.19% shed 3.8%, while PetroChina Co. HK:857 -4.41% PTR -4.19% lost 3.3% in Hong Kong, as benchmark Nymex crude oil futures extended earlier falls, and hovered around $81 a barrel.
Asian financial stocks tracked weakness in the U.S. and Europe. Nomura Holdings Inc. JP:8604 -3.70% NMR -3.75% shed 3.1% in Tokyo, Hong Kong heavyweight HSBC Holdings PLC HBC -5.96% HK:5 -3.38% fell 3.1%.
Bank of Communications Co. HK:3328 -4.17% BCMXY -10.72% declined 3.7%. The lender kicked off interim earnings for the large Chinese lenders with a profit growth above expectations, but disappointed by cancelling an interim dividend payout.
In Sydney trading Australia & New Zealand Banking Group AU:ANZ -4.31% ANZBY -4.75% sank 3.8%, after it delivered a trading update which showed mild rise in third-quarter profit and a 39% drop in trading income.
Macquarie Group Ltd. AU:MQG -5.13% MQBKY -6.37% slumped 5.0% and Westpac Banking Corp. WBK -5.44% AU:WBC -3.63% dropped 2.7%.
Billabong International Ltd. AU:BBG -24.95% BLLAY -5.12% plunged 22.8% after the surfwear retailer, which is heavily exposed to currency fluctuations, posted an 18% fall in full year profit and withdrew guidance.
Telecom stocks offered a rare bright spot, as investors sought out defensive sectors, with Telstra Corp. Ltd. AU:TLS -1.60% TLSYY -3.09% surging 5.3% in Sydney trading, South Korea’s SK Telecom Co.’s SKM +1.54% gaining 1.4% and KT&G Corp.’s KT +1.84% adding 2.2%.
