Korean Airlines Co. declined 2 percent in Seoul. Tokyo Electron Ltd., a Japanese semiconductor equipment that gets 16 percent of its revenue from South Korea, sank 2.1 percent. Mitsubishi Corp., which gets more than half of sales from commodities, slipped 1.4 percent after oil and copper futures dropped. Sun Hung Kai Properties Ltd., the world’s biggest developer, gained 1.5 percent, rebounding from losses after Hong Kong announced stepped up measures to curb speculative activity in the city’s housing market.
The MSCI Asia Pacific Index declined 0.8 percent to 130.09 as of 7:36 p.m. in Tokyo, after falling as much as 1.3 percent earlier. The MSCI Asia Pacific excluding Japan Index fell 0.4 after rising earlier as markets in China, Hong Kong and Singapore rebounded.
“The market seems to be bouncing back after overreacting a bit to the Korean tensions yesterday,” said Matt Riordan, who helps manage about $6.6 billion at Paradice Investment Management Pty. in Sydney. “Come tomorrow, we should be back to the fundamentals and trying to interpret what’s been going on out there. Suddenly the European debt issues are back to the forefront.”
The MSCI Asia Pacific Index has fallen 3.5 percent from a two-year high set on Nov. 8 amid speculation China will intensify efforts to tame inflation and on concern Ireland’s debt crisis will spread in Europe. Ireland’s debt rating was lowered two steps by Standard & Poor’s today, with a negative outlook, as a bailout of the country’s banking system is set to escalate the government’s borrowing needs.
Korean Skirmish
Japan’s Nikkei 225 Stock Average dropped 0.8 percent after a holiday yesterday. South Korea’s Kospi Index declined 0.2 percent. Australia’s S&P/ASX 200 Index lost 0.1 percent. Markets in South Korea, Australia and New Zealand had closed for trading when news of the clash between North and South Korea broke.
China’s Shanghai Composite Index climbed 1.1 percent. Hong Kong’s Hang Seng Index rose 0.6 percent. Singapore’s Straits Times Index gained 0.5 percent. Declines on those markets deepened yesterday as news of the Korean skirmish broke.
North Korea fired artillery shells yesterday at the South Korean island of Yeonpyeong near the disputed border between the two countries, killing two soldiers and setting houses ablaze in the worst attack on its neighbor in at least eight months.
South Korea returned fire and scrambled fighter jets as President Lee Myung Bak vowed to respond “sternly.” The clash came 11 days after North Korea showed a uranium-enrichment plant to visiting U.S. scientists.
‘Escalation of Violence’
The U.S. and South Korea will hold joint military drills off the Asian country’s west coast from Nov. 28 to Dec. 1, U.S. forces in South Korea said today in an e-mailed statement. The nuclear-powered aircraft carrier USS George Washington will join the drills, which are “defensive in nature,” according to the statement said.
“There’s been a lot of big headlines crossing the wires in the last couple of weeks that are shaking investors,” Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees $55 billion, said on Bloomberg Television. “Anytime there’s escalation of violence, it creates a concern. That combined with the timing of the disclosure of North Korea’s nuclear facilities makes it much more disturbing.”
Korean Air slid 2 percent to 72,100 won and Asiana Airlines slipped 1.6 percent to 9,720 won. LG Corp., the holding company of South Korea’s fourth-largest family-run industrial group, dropped 1.2 percent to 84,500 won.
Futures on the Standard & Poor’s 500 Index rose 0.1 percent today. The index slid 1.4 percent yesterday, its biggest decrease in a week, and more than 15 times as many stocks declined as advanced amid concern Europe’s debt crisis is intensifying and growing speculation China will boost interest rates.
Copper, Oil
Tokyo Electron fell 2.1 percent to 5,150 yen in Tokyo. Advantest Corp., the world’s biggest maker of memory-chip testers that gets more than 25 percent of its revenue from South Korea, dropped 1 percent to 1,700 yen.
Mitsubishi Corp. fell 1.4 percent to 2,115 yen. Inpex Corp., Japan’s biggest energy explorer, declined 2.1 percent to 438,000 yen. Rio Tinto Group, the world’s third-biggest mining company, dropped 1.3 percent to A$82.49.
Crude oil for January delivery lost 0.6 percent yesterday in New York to settle at $81.25 a barrel, and copper futures dropped 1.1 percent. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum fell 1.6 percent yesterday. Gold futures jumped 1.5 percent, the biggest gain for a most-active contract since Nov. 4.
China Dongxiang Group Co., owner of rights to the Kappa sportswear brand in China, slumped 13 percent to HK$3.60 in Hong Kong, the biggest drop on the MSCI Asia Pacific Index. JPMorgan Chase & Co., Deutsche Bank AG and Royal bank of Scotland Plc cut their ratings on the stock after the clothier reported slower growth in orders for the second quarter of next year.
Among stocks that advanced, Sun Hung Kai climbed 1.5 percent to HK$125.90 in Hong Kong. Cheung Kong (Holdings) Ltd., Hong Kong’s second-biggest developer, increased 2.2 percent to HK$113.90. A gauge of property stocks in Hong Kong tumbled this week after Financial Secretary John Tsang on Nov. 19 imposed additional stamp duties to reign in home values in the city.
Hana Financial Group Inc., South Korea’s fourth-largest financial company, surged 7.3 percent to 39,700 won. The company offered as much as 4.8 trillion won ($4.2 billion) for Lone Star Funds’ stake in Korea Exchange Bank in what would be South Korea’s biggest domestic acquisition in four years.
Lynas Corp., an Australian mining company, jumped 10 percent to A$1.53. The company agreed with Japan’s Sojitz Corp. to supply about 25 percent of Japanese demand for rare earth metals, Executive Chairman Nick Curtis said on a media conference call. Sojitz advanced 9.1 percent to 168 yen.
Source: http://www.businessweek.com/news/2010-11-24/asian-stocks-pare-decline-as-shares-rebound-after-rout-on-korea.html
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