Asian Market Review - Monday, August 23rd 2010

Asian Shares Soft As No Positive Catalysts Are Seen

Japan’s Nikkei 225 Index fell 62.69 points to end at 9,116.69 or 0.68% lower on Monday while Hong Kong’ Hang Seng Index also fell to 20,889.01 or down 0.4% as it hit a new 4-week low. In Shanghai, Shanghai Composite ended down as well as it settled at 2,639.37.

Regional markets followed up the last week’s theme of global economic slowdown concern, especially after the worsening of US initial jobless claims which was released on Thursday. Nikkei’s weakness also came from the government’s inaction regarding the current yen’s strength. Finance Minister Yoshihiko Noda said on Monday that he has not heard about a meeting – which has been expected by the market – between PM Naoto Kan and Bank of Japan’s governor Masaaki Shirakawa to discuss yen’s strength and the economic slowdown in Japan.

Amid losers, Daikin was hit 2.75%, Tokyo Electron was down 2.52#, while Advantest ended 2.09% lower.

Daikin later reported that its sales in Europe increased by 30% in July against previous year. For the year ending March 31, the company has now increased the sales forecast to £7.5 billion.

Hong Kong airliner Cathay Pacific went up 1.65% after the company’s HK Dragon Airlines managed to prevent a strike. Cathay Pacific settled the day at HK$19.76. Meanwhile, Sinopec was at the bottom as the refiner reported a 6.7% rise in 1H net profit to 35.46 billion yuan, slightly better than expectations. Revenue rose 75% in the first half to 936.5 billion yuan. Higher oil prices were cited behind the rise, overcoming lower margins from refining due to the government’s control over prices. Refining business posted a net profit of 5.69 billion, a 71% lower than last year’s 19.9 billion yuan.

Defensive stocks from the utilities sector gained as well. HK & China Gas was up 1.28% to HK$18.98, the railroad operator MTR Corp increased to HK$28.10, while HK Electric ended 0.84% higher at HK$47.65.

China Telecom was reportedly to have added 2.80 million mobile users in July, slightly below June’s addition of 3.02 million users. Since the beginning of the year a 21.23 million users have been added, bringing the total number of users to 77.32 million. By the end of July, total broadband users were 59.23 million. Fixed-line division however, fell by 960,000 users, bringing the total number of fixed line users down to 8.45 million.

From corporate deals, HSBC said that it was in a discussion with Old Mutual over a planned purchase of Nedbank’s stake. The company said that any agreements will require the regulatory approvals.