Asian Shares End Mostly Lower; Recovery Concerns Weigh

SINGAPORE (Dow Jones)--Most Asian markets retreated Thursday after authorities in several countries expressed concerns over the strength of the economic recovery.

The South Korean government said it will stick to an expansionary fiscal policy as external conditions and the sustainability of the global economic recovery "remain very uncertain." New Zealand's central bank governor Alan Bollard said the pickup in the economy was "slower and more vulnerable" than in Australia.

Chinese stocks outperformed amid expectations of continued improvement in several economic data due to be released next week.

The Shanghai Composite Index rose 0.9%, taking gains into a fifth successive session. The advance helped to limit losses in Hong Kong, where the Hang Seng Index slipped 0.6%. Japan's Nikkei 225 Average dropped 1.3%, Australia's S&P/ASX 200, Taiwan's Taiex and New Zealand's NZX 50 fell 0.7% each, South Korea's Kospi shed 1.8% and Philippines' main index added 1.3%.

In afternoon trading, India's Sensex had recovered from early falls and was up 1.0%, Singapore's Straits Times Index slid 0.7%, Thailand's SET Index dropped 0.6% and Indonesia's JSX index declined 0.2%.

The statements of concern from South Korea and New Zealand, coming after Wall Street stocks gave up most of their gains as the U.S. Federal Reserve said it would maintain low interest rates, added to investor caution.

"It's highly likely that after the 'nonevent' Fed decision that Asian markets will trade flat to slightly lower in coming days, with the next catalyst for stocks...being the U.S. non-farms payroll report due out Friday morning (U.S. time)," IG Markets analyst Cameron Peacock wrote in a report.

"The current pessimism gripping the market hasn't been helped by comments out of South Korea suggesting it was "unclear" whether the current economic recovery can be maintained," Peacock wrote.

"Further strong equity gains are hard to justify with higher valuations across the board in Asia - expectations will need to be moderated," said DBS Asia equity strategist Joanne Goh in Singapore.

U.S. stock futures pointing to a lower opening on Wall Street also weighed on sentiment, with the Dow Jones Industrial Average futures recently down 39 points in screen trade.

In Japan, "investors are concerned about limited gains in the U.S. market," said Fujio Ando, senior managing director at Chibagin Asset Management in Tokyo.

Sanyo Electric plunged 20.4% to 172 yen after the Nikkei reported that Sumitomo Mitsui Financial Group and Daiwa Securities Group have decided to sell their stake in the company to Panasonic Corp for 131 yen, a sharp discount to Sanyo's Wednesday closing price of 216 yen.

The selloff came although the acquisition price was set in late December after Sanyo's main shareholders agreed to accept a 4% discount to the stock price at the time. Since then, investors have bid up Sanyo's share price amid growing interest in battery technology and a broader market rally.

Nissan Motor Co. shares gained 0.3% on better-than-expected second quarter results, which were released after the market closed Wednesday. The company reported a 65% drop in net profit to 25.53 billion yen for the July-September period and raised its forecast for the full year, becoming the latest Japanese car maker to upgrade its outlook.

Banks were mostly higher after Goldman Sachs said bank stocks had likely priced in concerns that they may have to raise funds to shore up their capital. Sumitomo Mitsui Financial Group gained 1.9% and Mitsubishi UFJ Financial Group added 1.3%.

In Seoul, Doosan Heavy Industries & Construction Corp. tumbled 8.6% and Doosan Infracore lost 5.9% after reporting disappointing third-quarter earnings Wednesday.

"Some investors seem to think yesterday's technical rebound might have been overdone, so they seem to have decided to lock in profits" early in the session, said Lee Kyung-soo at Taurus Investment & Securities.

Australian banks were mostly higher despite falls for their U.S. peers, with Westpac Banking Corp. up 0.4% after Macquarie Equities upgraded the stock to Outperform. ANZ Bank dropped 0.5% as the stock went ex-dividend.

Foreign exchange markets were looking past the Fed statement and focused on monetary policy meetings for from the European Central Bank and the Bank of England, ending later in the global day as well as U.S. jobs data Friday.

The U.S. dollar was at Y90.04 from Y90.81 in late New York trade Wednesday. The euro was lower as Japanese exporters settled accounts, and was trading at $1.4820 from $1.4872 and Y133.45 from Y134.92.

The Nymex December oil futures contract was down 60 cents at $79.80 per barrel, after settling 80 cents higher Wednesday. Spot gold was at $1,085.30 per troy ounce, down $6.60 from the New York close.

-Dow Jones Newswires; +65-6415-4140; markettalk@dowjones.com

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November 05, 2009 05:06 ET (10:06 GMT)


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