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Asian stocks drop as China raises bank reserves

Asian stocks drop as China raises bank reserves
AP
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First Published: Mon, May 03 2010. 10 07 AM IST
Updated: Mon, May 03 2010. 10 07 AM IST
Singapore: Asian stocks fell on Monday after China ordered banks to raise their reserves, the latest in a series of moves aimed at curbing inflation and surging property prices.
Hong Kong’s Hang Seng index led decliners, falling 294.42 points, or 1.4% to 20,814.47 while South Korea’s benchmark dropped 1.2% to 1,720.88. Singapore slid 0.9 percent, India fell 0.7% and Australia skidded 0.6% after the government said it would impose a new tax on the profits of mining companies. Stock indexes in Malaysia and Indonesia were steady.
Trading volume was light in Asia as the two biggest markets, Japan and China, were closed for holidays. Markets in Thailand and the Philippines were also closed.
The People’s Bank of China said Monday that the deposit reserve requirement ratio for most banks will be raised half a percentage point, starting 10 May. This is the third time this year that the central bank has raised the deposit reserve minimum.
Asian shares dropped despite European governments and the International Monetary Fund announcing Sunday they agreed on euro110 billion ($145 billion) in emergency loans for debt-ridden Greece on the condition Athens make painful budget cuts and tax increases.
After surging last year, Asian stock markets will likely trade sideways for the next few months as traders monitor whether economic growth in the US and Europe continues as interest rates rise and government stimulus spending eases, said Timothy Wong, head of group research at DBS bank in Singapore.
“Investors are uncertain what the catalysts are going to be for the markets to more higher,” Wong said. “For the markets to move higher, you would need much higher export growth, which would be a function of what’s happening in the US and Europe.”
In currencies, the dollar was little changed at ¥93.90 yen from ¥93.91 while the euro fell to $1.3222 from $1.3338.
Benchmark crude for June delivery was down 8 cents to $86.07 a barrel after the contract rose 98 cents to settle at $86.15 on Friday.
In the US on Friday, the Dow fell 158.71, or 1.4%, to 11,008.61. The Standard & Poor’s 500 index declined 20.10, or 1.7%, to 1,186.68, while the Nasdaq composite index dropped 50.73, or 2% to 2,461.19.
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First Published: Mon, May 03 2010. 10 07 AM IST
More Topics: Markets | Asia | Nikkei | Hang Seng | US |