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Wednesday, July 7, 2010

DJ Asian Shares End Mostly Lower; Samsung Elec Fails To Impress

SINGAPORE (Dow Jones)--Asian stocks largely declined Wednesday after weak U.S. data refueled worries about the strength of the global economic recovery while technology shares across the region fell, unimpressed by Samsung Electronics' forecast of a record operating profit.

"Equity markets are pricing in a very pessimistic or 'worst case' view of global economic growth, more so than the bond markets," said IG Markets institutional dealer Chris Weston.

Japan's Nikkei Stock Average fell 0.6%, Australia's S&P/ASX 200 gave up 0.5%, South Korea's Kospi lost 0.6%, Taiwan's Taiex slipped 0.2% and India's Sensex gave up 0.8% in afternoon trade.

China's Shanghai Composite Index ended 0.5% higher after enduring a choppy trading session, as gains in consumer and cement stocks offset broad declines in banks. Hong Kong's Hang Seng Index dropped 1.1%.

Dow Jones Industrial Average futures were down 55 points in screen trade. Tuesday, the benchmark DJIA ended higher but after losing most of its large initial gains in the wake of weak U.S. service-sector data.

"It's the same story from before; the market can't free itself from recent worries about slowing growth in the U.S. and China," said Samsung Securities analyst Oh Hyun-seok in Seoul.

Chinese banks declined in Hong Kong and underperformed in Shanghai on concerns about market liquidity ahead of Agricultural Bank of China's listing and after Bank of China's recently announced plans for a rights issue. Furthermore, the Chinese-language newspaper Ming Pao reported that Industrial & Commercial Bank of China -- the mainland's biggest lender by assets -- might raise up to CNY45 billion in a rights issue.

ICBC dropped 0.5% and Bank of China ended flat in Shanghai. In Hong Kong, they dropped 1.4% and 1.0%, respectively.

Shanghai-traded shares ended higher, despite the weakness in banks, as investors snapped up stocks after the state-run Securities Times reported that the National Social Security Fund appointed six fund managers to oversee new A-share investments totaling more than CNY2 billion, including China Asset Management Co., which it said received CNY500 million from the pension fund Tuesday.

Auto makers and airlines led gains with Air China up 2.3%, China Eastern Airlines rising 2.4%, SAIC Motor was up 1.1% and Beiqi Foton Motor was 1.4% higher.

"The index is consolidating after enormous falls in recent weeks. The market should be starting to reverse its risk-averse trading approach," said Wang Junqing, an analyst from Guosen Securities.

In Seoul, heavyweight and technology-sector bellwether Samsung Electronics was in the limelight and dragged on the overall market as its stock dropped 0.8%. Samsung projected a record quarterly operating profit of KRW5 trillion for the second quarter, but concerns over a possible oversupply in the memory chip market in coming quarters pressured the company's own, as well as other Asian chipmakers' shares. Hynix Semiconductor dropped 2.7% in Seoul and Elpida Memory gave up 3.3% in Tokyo, while Nanya Technology Corp. shed 0.6% in Taipei.

"Investors look concerned that Samsung's capital expenditure investments may lead to an oversupply starting from the fourth quarter, coupled with the possibly diminished demand in Europe and the U.S.," said Lee Kyung-soo, an analyst at Taurus Investment & Securities.

Hyundai Merchant Marine fell 3.6% on profit-taking after recent gains, even as the company swung to a second-quarter operating profit, on revived demand and higher freight charges.

Japanese shares declined after rising the previous three days, as investors turned cautious on exporters, which are to a large extent held hostage to the whims of the foreign-exchange market. Honda Motor gave up 1.6%, Nissan Motor gave up 2.5% and Sony Corp dropped 1.7%.

The Sydney market reversed course after opening higher, as weakness in financial issues overpowered modest gains in some mining stocks during a choppy trading session. National Australia Bank dropped 1.3% and Australia & New Zealand Banking Group gave up 1.3%, while Westpac Banking Corp. declined 0.7%. However, the resources sector extended Tuesday's gains, aided by news of Chinese plans to front-load spending in the infrastructure sector.

BHP Billiton gained 0.8% and Rio Tinto advanced 1.1%. Shares of Sigma Pharmaceuticals jumped 13.9% to A$0.45 after it received a formal takeover offer from Aspen Pharmacare at A$0.55-a-share, valuing Sigma at A$648 million. But the close was off the day's high of A$0.47 as Aspen's latest bid was lower than its previously indicated A$0.60-a-share offer.

Elsewhere in the region, New Zealand's NZX-50 gained 0.3% and Philippine stocks finished 0.4% higher. In late afternoon, Singapore's Straits Times Index had slipped 0.2%, Indonesian shares gave up 0.3% and Thailand's SET Index was off 0.1%.

In foreign-exchange markets, risk aversion pulled the euro lower against the yen to Y109.52 from Y110.42 late Tuesday in New York, and against the U.S. dollar, it was fetching only $1.2564 compared with $1.2619. The dollar was down at Y87.19 from Y87.48.

Lead September Japanese government bond futures rose 0.08 at 141.52 points as weak Tokyo stocks prompted investors to buy into safe-haven government-backed securities. The yield on the 10-year cash bond was up one basis point at 1.145%, with investors selling JGBs to lighten positions ahead of an auction of 30-year bonds Thursday.

Spot gold was at $1,187.50 per troy ounce, down $6.60 from its New York close on Tuesday. Nymex August crude-oil futures were 2 cents higher at $72 per barrel on Globex.
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