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Asian stocks retreat as investors keep eye on US

Regional markets * Taipei: TAIEX down 0.78 percent to 5,925.54 * Seoul: KOSPI index down 2.01 percent to 1,175.88 * Hong Kong: Hang Seng down 0.24 percent to 15,143.97 * Shanghai: Shanghai Composite Index down 0.69 percent to 1,151.98 Source: AFP

Asian stocks closed lower on Friday in cautious trade as investors kept an eye on Hurricane Rita's progress toward Texas and the major US oil and gas facilities there, fearful of a repeat of the devastation caused by Hurricane Katrina just weeks ago, dealers said.

There was some hope that Rita, which was downgraded to category four from five, might not prove as destructive as first feared but it remained a massive storm, posing risks to the US oil industry and possibly the wider economy.

On that basis and ahead of the weekend, there was no reason for any aggressive trade whilst Tokyo's closure for a public holiday also made for quiet business overall.

Losses were modest except in Seoul, which was down 2.01 percent to erase all the week's gains as foreign investors took their profits on the run up to the historic 1,200 points level.

Mumbai had another roller-coaster day, finishing flat after another bout of nerves sparked early losses.

Taiwanese share prices lost 0.78 percent to their lowest level in nearly four months as concerns over possible foreign investor sales more than offset a firmer Wall Street performance overnight.

Dealers said there was also some pressure coming from margin calls, made when investors who have borrowed money to buy stocks are forced to repay some of the funds as the market falls.

"Foreign investors apparently continued selling on the local bourse today, leading the benchmark index to sink further when there were mounting fears of margin calls," said Tom Tang (湯建源), president at Kai Yuan Securities Investment Consultant Co (開元投顧).

Select stocks saw stop-loss selling, and/or margin calls following recent share price declines.

Large-cap stocks were driven lower by foreign investors' sell orders, while some high-priced stocks came under profit-taking pressure.

The TAIEX closed down 46.52 points at 5,925.54, the lowest level since May 25, when it hit 5,888.53 points on turnover of NT$68.61 billion (US$2.07 billion).

"The broad market was marred by weak confidence and its picture in the near term will be dictated by developments in the major foreign markets, the movement of oil prices and currency prospects," Tang said.

AU Optronics Corp (友達光電) closed down NT$0.80 at NT$40.50 following a 4.97 percent fall in its American Depositary Shares.

Evergreen Marine Corp (長榮海運) shed NT$0.80 to NT$21.00 and EVA Airways Corp (長榮航空) lost NT$0.30 to NT$12.60 after a report that the Evergreen group is bracing for worst-case economic scenarios with oil prices continuing to move higher.

Seoul share prices closed 2.01 percent lower, giving back all the gains made this week, with foreign investors unloading most blue chips to take profits. Dealers said Wall Street's overnight rebound on a Hurricane Rita downgrade did little to limit the steep fall as many investors felt that the market had risen too rapidly to touch 1,200 points. The KOSPI index closed down 24.09 points at 1,175.88 in subdued trading.

"It's just a technical correction, with people just needing a cooling period to attempt psychological resistance at 1,200 points," Woori Investment Securities analyst Hwang Chang-Joong said.

Hong Kong share prices closed off their lows as property stocks rebounded in late trade on hopes that next week's government land auction will fetch high prices and trigger a rally in the sector.

"The property sector's gains in late trade were underpinned by expectations that major developers will bid aggressively in the land auction on Tuesday," said Conita Hung, head of research at Delta Asia Securities.

The Hang Seng Index closed down 35.98 points or 0.24 percent at 15,143.97.

Shanghai share prices closed 0.69 percent lower, extending losses on continuing concerns over the ongoing state-owned share sale program, with oil and gold miners hit.

Dealers said that with the long National Day holidays approaching, investors were still taking profits on the recent advance amid reports of possible internal government divisions over the state-share sale plan.

The Shanghai A-share Index fell 8.44 points to 1,210.29, and the Shenzhen A-share Index was down 3.35 points or 1.14 percent at 291.73.

The benchmark Shanghai Composite Index, which covers A and B-shares listed on the Shanghai Stock Exchange, shed 7.98 points or 0.69 percent at 1,151.98.

The yuan fell to US$8.0910 from US$8.0881, with news coming after the close of trade that the authorities had widened the trading band for the unit against the non-dollar currencies in the currency basked system introduced in July.

Sydney share prices closed little changed after a retreat by the banks was offset by solid gains in select stocks elsewhere. The S&P/ASX 200 index added 0.7 points at 4,562.4.

Singapore share prices closed 0.10 percent higher in cautious trade as investors kept an eye on the progress of Hurricane Rita and the damage it might cause to major US oil and gas facilities.

Sealers said that losses in the broader market were tempered by gains in CapitaLand and oil-related stocks, which allowed the main index to stay in positive territory.

The Straits Times Index rose 2.36 points to 2,293.04.

Malaysian share prices closed 0.13 percent lower, amid concerns over rising inflation and an absence of fresh leads. The composite index was down 1.16 points at 921.89.

Bangkok share prices closed little changed, with the market rangebound as investors watched developments in oil prices and Hurricane Rita's progress toward major US energy facilities in Texas. The composite index fell 0.33 points to 725.31 points.

In Jakarta share prices closed 0.38 percent lower as quick profit-taking in index heavyweights Astra International and Indosat erased early morning gains. The composite index fell 3.907 points to 1,012.851.

In Mumbai share prices closed flat as early losses were erased by late buying after the finance minister moved to soothe market jitters following a big fall the previous day.

Dealers said the market rally came as Finance Minister P. Chidambaram sought to reassure investors in an interview with CNBC-TV.

Chidambaram said investors should not "get worried if the stock market rises rapidly in one or two trading sessions and falls in another trading session ... The market is well regulated."

The 30-share Mumbai stock exchange SENSEX index closed up 0.01 percent or 0.95 points at 8,222.59, recovering from a low of 8,121.81 that was seen in morning trade as investors sold after Thursday's massive sell-offs.
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