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Asian stocks slide on high crude price

Asian stocks slide on high crude price
AFP
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First Published: Tue, May 27 2008. 01 00 AM IST
Updated: Tue, May 27 2008. 01 00 AM IST
Hong Kong: Asian shares tumbled on Monday as soaring oil prices fanned fears that inflation would slow growth, with Chinese stocks sliding more than 3% after another earthquake shook investors.
The Shanghai bourse fell 3.13% after a strong aftershock in south-west China following 12 May’s devastating Sichuan earthquake. Sunday’s aftershock toppled 70,000 houses and killed at least six people.
Elsewhere, Japanese shares closed down 2.3% as investors took their cue from a US slide of about 1% on Friday, as concerns grew that high crude costs would hit consumer spending and cut corporate profit growth.
Hong Kong shed 2.4%, India slipped a little more than 1.8%, Taiwan ended almost 1.5% lower, South Korea slid 1.5% and Australia closed down more than 1%. Investors fear surging fuel and food costs will force governments to raise interest rates further to curb inflation, eventually slowing economic growth.
Oil rose in Asia on Monday and was trading at around $132 (Rs5,623) per barrel, not far from the all-time high above $135 hit last week amid concerns about inadequate output despite robust demand.
Some Asian countries have already cut fuel subsidies, or are planning to do so as oil prices stretch their budgets. Experts say such moves threaten higher inflation and even risk social unrest.
Indonesian President Susilo Bambang Yudhoyono on Monday defended a near 30% fuel price hike in his country, saying the move, which has sparked widespread protests, was necessary to avoid an economic meltdown. The Indonesian stock market closed nearly 2% lower.
Other small markets also fared badly, including a slide of more than 2% in Thailand.
Japanese Nikkei-225 index dropped 322.01 points to end at 13,690.19. The broader Topix index of all first-section shares gave up 32.51 points, or 2.36%, to 1,344.18.
The Hang Seng index fell 586.76 points at 24,127.31. Turnover was $9.83 billion. Ben Kwong, chief operating officer at KGI Securities (Hong Kong) Pvt. Ltd, said China Mobile pressured the key index.
Aside from “overreaction” to telecom industry restructuring news, the stock was also dragged down by futures-related activity, he said.
China Mobile lost 8.15%, and China Telecom, China Netcom and China Unicom remained suspended from trade pending announcements related to restructuring.
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First Published: Tue, May 27 2008. 01 00 AM IST