Asia Stocks Fall, China Trade Highlights Slowdown

Posted March 12, 2012 by willwing

Asian stock markets fell Monday after China's trade figures underlined a slowdown in the world's No. 2 economy.

Asian stock markets fell Monday after China's trade figures underlined a slowdown in the world's No. 2 economy.

Benchmark oil remained above $106 per barrel while the dollar rose against the euro but fell against the yen.

Lackluster trade figures from China, suggesting that demand for Chinese goods was being hit by Europe's debt crisis, was felt on stock markets in Tokyo, Hong Kong, Shanghai and elsewhere.

Japan's Nikkei 225 Index fell 0.2 percent to 9,911.92 and Hong Kong's Hang Seng lost 0.4 percent to 20,997.18. The Shanghai Composite Index shed 0.5 percent to 2,427.60.

Elsewhere, South Korea's Kospi dropped 0.7 percent to 2,004.60 and Australia's S&P/ASX 200 fell 0.4 percent to 4,196.70. Benchmarks in Taiwan, Indonesia and the Philippines also fell.

On Saturday, China reported its biggest monthly trade deficit in at least a decade in February as imports rebounded after a Lunar New Year holiday slowdown in January. But the combined figures for both months showed growth in imports and exports decelerating markedly.

January-February export growth slowed to 6.9 percent over the same two-month period last year, barely half of December's 13.4 percent rate. Imports for the two months rose 7.7 percent, down from December's 11.8 percent. Weaker growth in Chinese trade could have a ripple effect throughout Asia.

"Export-related stocks such as shipping stocks and port operators got hit today" by the Chinese data, said Louis Wong, director of Phillip Securities Ltd. in Hong Kong.

Hong Kong-listed China Shipping Container Lines dived 3.3 percent and China COSCO Holdings lost 2.3 percent. Port operator China Merchants Holding fell 1.1 percent.

Investment sentiment was also tempered by news that Greece's debt reduction deal with private creditors could cause losses for banks after the International Swaps and Derivatives Association, the private organization that rules on such cases, ruled that a "restructuring credit event" occurred.

That means Greece's debt relief will trigger payouts of so-called credit default swaps, a type of insurance on bonds. But the ISDA said overall payouts will be significantly below the $3.2 billion in net outstanding credit default swap contracts linked to Greece. The exact level of payouts will be determined on March 19.

"Officials in Europe are set to finalise Greece's second bailout today but market sentiment is unlikely to be boosted as various concerns creep into the market," analysts at Credit Agricole CIB in Hong Kong said in a report.

A multibillion euro bailout, which Greece needs to avoid imminent bankruptcy, was contingent upon the successful completion of the debt restructuring deal.

Australia's big retail banks sustained limited losses. Commonwealth Bank of Australia Ltd., the nation's largest lender, shed 0.5 percent. Westpac Banking Corp., the second-largest bank, lost 0.9 percent.

Japanese industrial shares gained after the Cabinet Office released data showing that private-sector machine orders rose a seasonally adjusted 3.4 percent in January from the month before.

Hitachi Construction Machinery rose 1.2 percent, while Mitsubishi Heavy Industry Ltd. was 0.5 percent higher.

Wall Street closed modestly higher on Friday after the government's monthly report on employment bolstered hopes that the economic recovery is on track.

The Dow on finished up 0.1 percent at 12,922.02. The Standard & Poor's 500 gained 0.4 percent to 1,370.87. The Nasdaq composite average gained 0.6 percent to 2,988.34.

Benchmark oil for April delivery was down 73 cents to $106.67 in electronic trading on the New York Mercantile Exchange. The contract rose 82 cents to settle at $107.40 per barrel in New York on Thursday.

In currencies, the euro fell to $1.3090 from $1.3116 late Friday in New York. The dollar fell to 82.28 yen from 82.52 yen.

Press Information:
William Wing
5838 Coburn Hollow Road, Peoria, IL 61614
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Last Updated March 12, 2012