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Asian markets hit by IMF growth revision

October 11, 2012

HONG KONG, Oct 10: Asian markets mostly fell on Wednesday as investors reacted to losses on Wall Street after the IMF cut its global growth forecast, predicting the slowest rate in three years.

Japanese shares were also hit by the strong yen, with selling stoked by news the country’s top carmakers saw sales in China slump in September owing to a diplomatic spat between Tokyo and Beijing.

Tokyo tumbled 1.98 per cent, or 173.36 points, to 8,596.23 — its lowest since August 3. Sydney lost 0.32 per cent, or 14.6 points, to close at 4,490.7 and Seoul was off 1.56 per cent, or 30.82 points, at 1,948.22.

Hong Kong ended flat, edging down 17.68 points to 20,919.60, but Shanghai rose 0.22 per cent, or 4.71 points, to 2,119.94.

The IMF on Tuesday further cut its growth estimates for the world economy this year and next, citing the ongoing European debt crisis and stuttering the US growth. The latest Global World Outlook, which noted that Asia was being hit by a slowdown in China, also warned that conditions could worsen if the eurozone problems were not dealt with.

It followed a similar downward revision for Asia’s growth by the World Bank and the Asian Development Bank.

“Markets have gone a bit too far and people are starting to get worried about the growth outlook,” said Matthew Sherwood, head of investment market research at Perpetual in Sydney.

On Wall Street the Dow lost 0.81 per cent, the S&P 500 slid 0.99 per cent and the Nasdaq shed 1.52 per cent, with sentiment also depressed by concerns over the upcoming corporate earnings season.

Global markets have enjoyed strong gains recently after the US, Japanese and European central banks unveiled monetary easing schemes to kickstart lending and jobs. Japanese shares were hit again as the IMF report led dealers to buy the safe-haven yen.

“Japan got its first ‘IMF shock’ on Tuesday, but the fallout in the US market will serve as a double-whammy,” said Hiroichi Nishi, general manager of equities at SMBC Nikko Securities.

“Combined with the rise in the yen, stocks will be in full retreat,” Nishi told Dow Jones Newswires.

On currency markets the euro slipped to $1.2850 and 100.66 yen in early European trade from $1.2881 and 100.77 yen in New York late on Tuesday. The dollar was at 78.30 yen from 78.23 yen.

Car giants Toyota, Nissan and Honda were hit by a dive in Chinese car sales as an islands row between China and Japan continues.

Toyota saw monthly sales in China, the world’s biggest car market, slump 48.9 per cent year-on-year last month, while Nissan sales there tumbled 35.3 per cent and Honda dropped 40.5 per cent.

On Tokyo’s Nikkei index, Toyota Motor ended down 1.9 per cent, with news also emerging that it had recalled more than seven million cars over a fire risk from its electric windows.

Honda Motor lost 1.1 per cent but Nissan Motor added 1.2 per cent.

Oil prices were lower. New York’s main contract, light sweet crude for delivery in November, fell 42 cents to $91.97 a barrel in the afternoon and Brent North Sea crude for November delivery shed seven cents to $114.43.

Gold was at $1,762.50 at 1050 GMT compared with $1,772.30 on Wednesday.

In other markets: Singapore closed down 1.05 per cent, or 32.10 points, at 3,033.81. Wilmar International fell 1.60 per cent to Sg$3.07 and Keppel Corp. shed 1.41 per cent to Sg$11.18.

Wellington lost 0.51 per cent, or 19.85 points, to 3,888.14. Fletcher Building dipped 1.92 per cent to NZ$7.16 and Chorus slipped 1.19 per cent to NZ$3.32.

Manila closed 0.47 per cent lower, shedding 25.30 points to 5,369.60. Philippine Long Distance Telephone lost 0.22 per cent to 2,724 pesos and Ayala Corp. fell 1.38 per cent to 430 pesos.

Jakarta was flat, nudging down 0.24 points to 4,280.01. Bank Rakyat fell 1.3 per cent to 7,600 rupiah, Bank Negara lost 1.3 per cent to 3,825 rupiah, and cigarette maker Gudang Garam rose 3.4 per cent to 51,600 rupiah.

Kuala Lumpur was 0.24 per cent, or 3.92 points, off at 1,659.40. Axiata Group lost 0.3 per cent to 6.71 ringgit, while Sime Darby shed 0.6 per cent to 9.72 ringgit. YTL added 0.6 per cent to 1.76 ringgit.

Bangkok fell 0.24 per cent, or 3.13 points, to 1,289.35.

Mumbai slid 0.86 per cent or 162.26 points to 18,631.1. State Bank of India fell 2.46 per cent to 2,224 rupees, Kingfisher Airlines fell 4.58 per cent to 11.45 rupees.

Taipei was closed for a public holiday. —AFP