Hong Kong: Most Asian stock markets pulled back on Monday, as firmer oil prices led many investors to worry about company profits and the world economy.
Japan’s Nikkei 225 Stock Average lost 1.2% to 12,938.50 points—the first time the index has closed under the 13,000 level since 18 July. Hong Kong’s blue-chip Hang Seng index ended 1.5% lower at 22,514.92 points. South Korea and China were down 2% or more.
Losing out: Nissan Motor’s plant in Fukuoka, Japan. The company reported a nearly 43% drop in net profit in the latest quarter. (Photograph by Robert GilHooly / Bloomberg)
Steady oil prices in Monday trade touched off more concerns about inflation and the effect of higher costs on corporate balance sheets.
On Friday, Nissan Motor Co. Ltd--Japan’s third largest carmaker--reported a nearly 43% drop in net profit in the latest quarter, the result of a rising yen and accounting provisions for the declining value of leased vehicles.
In the US, meanwhile, jobs and manufacturing data released on Friday portrayed an economy that was still sluggish as it entered the second half of the year.
“There is a general malaise about economies slowing down around the world,” said Francis Lun, general manager of Fulbright Securities Ltd in Hong Kong. “No one seems to be doing well.”
Late afternoon in Singapore on Monday, the September contract for light, sweet crude oil was near $125 a barrel in electronic trading on the New York Mercantile Exchange.
In Japan, investors continued to sell stocks this week after driving the Nikkei down 2.11% on Friday.
Automakers fell particularly hard, following news at the end of last week that the US auto sales slumped to a 16-year low in July as car makers were unable to keep up with consumers’ growing demand for smaller, more fuel-efficient vehicles.
Nissan lost 4.8%, and Mazda Motor Corp. plunged 8.8% after posting a 13% drop in North American sales during the month.
Also taking a beating was major trading house Mitsui and Co. Ltd, which shed 8.6%. The company said on Monday that its net profit for the first quarter through June fell 43.1%.
Banks continued their retreat as well, with Sumitomo Mitsui Financial Group Inc. down 6.9% and Mizuho Financial Group Inc. slumping 4.7%.
In China, stocks fell on Monday amid mounting scepticism over the prospects for a rally in share prices ahead of the Beijing Olympic Games.
The launch of subscriptions for an initial public offering (IPO) by China Southern Locomotive, the country’s biggest train maker, also sapped buying power, analysts said. The benchmark Shanghai Composite index fell 2.1% to 2,741.74 points. The Shenzhen Composite index lost 2.4% to 815.81.
China Southern’s IPO could mean as many as three billion new shares on the Shanghai Stock Exchange. With billions of shares already due to begin trading after the expiration of lockup periods, the new offering was straining liquidity, analysts said.
Large capitalized shares were broadly lower, with Baoshan Iron and Steel Co. Ltd down 4.9% and Industrial and Commercial Bank of China 1.9% lower.
Investors sold to lock in profits, seeing little potential for a major rally before the Olympics begin on Friday, given the recent spate of bleak economic news from the US and the absence of any significant market-boosting moves by Chinese authorities.
“There are only four days left, so people were taking profits because they all know the start of the Games means the end of any rebound,” said Zhai Peng, a strategist for Guotai Junan Securities (Hong Kong) Ltd in Shanghai.
Major refiner Sinopec Shanghai Petrochemical Co. Ltd fell 2.2% following unconfirmed reports that it was preparing an offer for London-traded Imperial Energy Corp. Plc., an independent oil and gas exploration and production firm with holdings mainly in western Siberia. Imperial Energy later confirmed it had received an approach regarding a cash offer.
As in China, airlines and refiners in Hong Kong lost ground as oil rose. Cathay Pacific Airways Ltd dropped 1.9% and China Southern tumbled 4.8%. Sinopec was off 2.3%.
Worries about slowing global trade dragged down stocks related to shipping, with portoperator Cosco Pacific Ltd plunging 5.9% and China Shipping Development Co. Ltd shedding 4.8%.
In currencies, the dollar gained slightly to 107.81 yen late Monday afternoon from 107.68 late Friday.
The greenback climbed against the euro, which was trading at $1.5586 from $1.5564.