Sun, Nov 28, 2010 - Page 10 News List

Korean tensions send stocks in Asia downward

Agencies, with staff writer

Asian stocks fell for a third consecutive week after North Korea fired artillery shells into South Korea, swelling concern that tensions will escalate.

The MSCI Asia-Pacific Index declined 2.1 percent to 128.92 this week. The gauge slid on Tuesday after government and media reports that North Korea fired dozens of artillery rounds into South Korean territory.

“Markets are factoring in the likelihood of some sort of additional action by the North Koreans,” said Tim Schroeders, who helps manage about US$1 billion at Pengana Capital Ltd in Melbourne. “What was initially dismissed as a one-off skirmish is now making people a little bit nervous.”

South Korea’s KOSPI slid 2 percent this week, its biggest weekly decline since August. Hong Kong’s Hang Seng Index sank 3.1 percent, the biggest drop among major equity indices in the Asia-Pacific.

The Shanghai Composite Index retreated 0.6 percent in China, where the central bank increased the reserve ratio for the second time in two weeks to cool inflation.

In Japan, where markets were closed on Tuesday for a holiday, the Nikkei 225 Stock Average climbed 0.2 percent while the broader TOPIX index lost 0.3 percent.

The MSCI Asia-Pacific Index is little changed this month. It has risen about 7.4 percent this year on speculation earnings growth will outweigh China’s measures to tackle the fastest inflation in two years and Europe’s fiscal deficit crisis. Stocks on the gauge are valued at 14 times estimated earnings on average, compared with 23 times at the start of the year.

In Hong Kong, developers led declines among the Hang Seng Index’s four industry groups.

Hong Kong Financial Secretary John Tsang (曾俊華) on Nov. 19 raised the stamp duty and increased deposits, the toughest measures yet to rein in gains in home values, which have soared 50 -percent since January last year. Hong Kong Monetary Authority Chief Executive Norman Chan (陳德霖) said down payments for some homes will be increased, the second boost in requirements this year.

“Government measures to cool property prices are showing some effect, and developers are headed for a long decline,” said Francis Lun (藺常念), general manager of Hong Kong brokerage Fulbright Securities (富昌證券) in Hong Kong.

Taiwan’s TAIEX closed down 0.45 percent on Friday as market sentiment was overshadowed by yesterday’s special municipality elections, dealers said. For the week, however, it rose 0.07 percent.

The weighted index fell 37.84 points on Friday and closed at the day’s low of 8,312.15, off a high of 8,371.27, on turnover of NT$111.51 billion (US$3.67 billion).

The market opened up 0.25 percent and moved to the day’s high on follow-through buying from the previous session before pressure set in from political uncertainty ahead of the polls, dealers said.

“With the political uncertainty, investors tended to pocket gains or stay on the sidelines, just watching,” Concord Securities (康和證券) analyst Allen Lin said.

Lin said that as Wall Street was closed overnight for the Thanksgiving holiday, the local bourse drifted without clear direction, with daily trading volume remaining moderate.

“In addition to local political concerns, worries over the debt problems in Europe continued to add jitters to the market,” Lin said.

Other markets on Friday:

Manila ended down 1.07 percent, or 43.91 points, from Thursday at 4,053.58.

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