Hong Kong: Most Asian stock markets fell on Monday, as new figures showed Japan’s economy contracted at its quickest pace in 35 years and the Group of Seven (G-7) finance ministers warned that the global slump will drag on through most of the year. European shares opened lower.
Dark days: A board shows share prices in Tokyo, Japan. Exporters were hurt as data showed the country’s economy sank deeper into recession. Kim Kyung-Hoon / Reuters
Japan’s worse-than-expected fourth quarter gross domestic product numbers were a sobering reminder of the toll on Asia’s export-driven economies as world demand collapses amid the worst slump in decades. The world’s second biggest economy shrank 3.3% from the previous quarter, or at an annual pace of 12.7%.
Investors also seemed disappointed after finance chiefs from G-7 developed countries finished their meeting in Rome with pledges to work together to boost growth and unemployment, but stopped short of concrete measures.
Increasingly, investors are unconvinced that governments around the world are acting quick enough to solve the credit crisis, plummeting consumer demand and other problems at the heart of the economic slowdown, analysts said.
“The global recession is deeper than anticipated. At the same time, policymakers are failing to deliver measures to address the problems,” said Dariusz Kowalczyk, chief investment strategist for SJS Markets Ltd in Hong Kong. “It seems that what they’re doing is too little, too late.”
Japan’s Nikkei 225 stock average edged down 29.23 points, or 0.4%, to 7,750.17, and Hong Kong’s Hang Seng Index dropped 98.79 points, or 0.7%, to 13,455.88. South Korea’s Kospi Composite Index lost 1.4% to 1,176.23.
India’s benchmark tumbled 3.6% after the government, proposing its interim budget, offered no new stimulus measures. Markets in Australia and Singapore also retreated.
Bucking the trend, Shanghai’s benchmark rose 3% to a 22-week high to extend China’s recent rally.
As trading started in Europe, Britain’s FTSE 100 Index was down 0.1%, while benchmarks in Germany and France shed 0.4%.
In Japan, several exporters were hurt by the data showing the economy sank deeper into recession. The result represents the steepest drop for Japan since the oil shock of 1974 and outpaced annual pace declines of 3.8% in the US and 1.1% in the euro zone. A survey of economists by Kyodo news agency had projected an 11.6% contraction.
“It’s clearly very shocking data,” said Clive McDonnell, head of Asia strategy at BNP Paribas Securities (Asia) Ltd in Hong Kong. “The drop is certainly beyond our own quite negative expectations. (Japan’s) policy response has not been as effective.”
Shares in Toyota Motor Corp. lost 0.7%, while electronics heavyweight Canon Inc. slid 1.2%. Sony Corp. lost 1.3%.
Meanwhile, mainland China’s gains spread across an array of industries, with some resource firms especially strong. Baoshan Iron and Steel Co. Ltd, the country’s biggest steel maker, soared to hit the daily limit of 10%.
Since the start of the year, Shanghai’s index has surged at least 31%. But analysts say the rise has been driven not by economic fundamentals but by a surge in bank lending that has sent money flowing into the market.
“The economic fundamentals are not strong enough to support the market’s rise,” said Zhang Xiang, an analyst for Guodu Securities Co. Ltd in Beijing. “The market is in an irrational state, which is not going to last long.”
Weighing on most Asian markets were declines on Wall Street last week.
On Friday, the Dow fell 82.35 points, or 1.04%, to 7,850.41, its lowest close since 20 November. Broader stock indicators also fell, with the Standard and Poor’s (S&P) 500 Index down 8.35 points, or 1.00%, to 826.84. The S&P 500 ended the week off 4.8%.
US equity markets are closed on Monday for Presidents Day. Wall Street futures sank in Monday trade, with Dow futures down 0.2% and S&P futures losing almost 0.3%.
In the coming days, investors will be watching US President Barack Obama, expected to sign the country’s $787 billion (Rs38.32 trillion) economic stimulus measure on Tuesday.
Obama plans to outline steps to stem home foreclosures on Wednesday, though analysts say investor enthusiasm surrounding the pending announcement is fairly low.
Oil prices were steady after soaring 10% last week, trading 5 cents higher at $37.56 for a barrel of light, sweet crude for March delivery. The contract rose $3.53 to settle at $37.51 a barrel on the New York Mercantile Exchange on Friday.
Tomoko A. Hosaka in Tokyo and researcher Bonnie Cao in Beijing contributed to this story.