Economic Fears Sink Asian Stocks, Lifts US Dollar
Asian stocks fell and the U.S. dollar rose Friday as investors chose safety on evidence the global economy remains in difficulty and the nationalization of more banks in the developed world is increasingly likely.
South Korea was a sore point in the region, with shares there leading the region lower and the won currency at its weakest since late November on fears local banks may increasingly struggle to access overseas capital markets.
The deluge of rescue packages and emergency spending from policymakers globally to support their deteriorating economies has numbed investors and even U.S. President Barack Obama's $275 billion plan to prevent foreclosures was largely shrugged off.
On the flip side, investors are also becoming more accustomed to the horror show of economic data around the world. Plummeting exports in Asia have sliced into total output, consumer spending in the developed economies shows no sign of life and unemployment is surging.
The South Korean won tumbled against the dollar as foreign investors dumped domestic stocks. The euro fell against the greenback though it remained well off a three-month low around $1.2510 reached on Wednesday. U.S. crude futures for March delivery , which expire later in the day, slipped below $39 a barrel, after posting overnight the biggest settlement gain since Dec. 31.
South Korea's KOSPI closed down 3.7 percent, posting its weakest close in more than two months, with the sliding won raising worries about higher funding costs, and shipbuilders sank on fears about possible contract cancellation. Daewoo Shipbuilding & Marine Engineering, the world's No. 3 shipmaker, tumbled 13.25 percent and Samsung Heavy Industries lost 10.2
Japan's broad-based Topix index booked its lowest close in about 25 years, falling 1.6 percent as bank shares slipped on worries about their European peers, while exporters largely failed to benefit from a weaker yen .The Nikkei 225 Average fell 1.8 percent, with banks losing ground amid growing gloom about the U.S. economy. Seven & I Holdings, Japan's largest retailer, fell over 5 percent after saying that the country's anti-monopoly watchdog was investigating whether its Seven-Eleven convenience store chain restricted franchise holders from marking down certain items.
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Australian stocks finished 1.4 percent percent lower, pressured by losses in banks such as Westpac and Macquarie after U.S. lenders dropped sharply on fears they would have to be nationalized. Caltex Australia, the country's only listed oil refiner and marketer, dropped 8.3 percent after it posted a 58 percent fall in full-year operating profit and cut its dividend.
In markets still trading, Hong Kong shares fell 2.5 percent with financials joining the global rout in bank stocks, but consumer products supplier Li & Fung bucked the downtrend on two favorable broker recommendations. HSBC was down 1.8 percent, perched right above its 10-year low hit in January after its Wall Street peers slumped to a 17-year low on fears that the U.S. government may nationalize big banks.
Singapore's Straits Times Index was down 1.8 percent. But shares of Venture Corp gained as much as 6.8 percent despite a 94 percent drop in quarterly net profit, helped by bullish analyst reports about the firm. Nomura on Friday upgraded Venture, Singapore's largest electronics contract manufacturer, to "buy" from "neutral" citing the firm's higher margins and plan to maintain its dividend of S$0.50 a share.
China's Shanghai Composite Index rose as news of government aid to industrial sectors lifted some shares sharply. But turnover continued to shrink, fueling concern that investors had become less willing to put new money into the market. Both China National Software & Service and Shanghai Baosight Software lost more than 2 percent, after surging over 6
percent Thursday after news of government aid to electronics and information-technology sectors. Many blue chips were soft, with Industrial & Commercial Bank of China and property leader Vanke both slightly lower.