Nov
29
Australian and Asian Stock Markets Continue Decline
November 29, 2009 | Tagged current stock, dow jones stock, finance stock, futures, share stock, stock prices, stock dividend, stock exchange, stock index, stock market, stock markets, stock price, stock ticker, stock volatility, stocks, value stock | Leave a Comment
SHANGHAI'S key stock index yesterday posted its biggest daily drop in three months, led by lenders on concerns that lower capital adequacy ratio due to explosive lending will force them to unveil large financing plans.
The decline came after the gauge tumbled 3.45 percent on Tuesday amid uncertainties about China's economic recovery. The Shanghai Composite Index lost 3.62 percent, or 119.18 points, to 3,170.98, the steepest single-day decline since August 31 and its lowest close in three weeks. Turnover rose to 254.5 billion yuan (US$37.42 billion) from 218 billion yuan on Wednesday.
The index may continue to remain sluggish with weak heavyweights such as banking and property shares until the annual central economic work conference due at the end of this month, which would set the macro-economic outlook for 2010, analysts said.
“Investors are cautious before the central government's annual conference, at which the government is expected to decide whether to maintain or exit the current stimulus measures, including preferential tax policies on home and car purchase as well as the relatively loose monetary policy,” said Wang Fen, a Shanghai Securities Co analyst.
Lenders led the decline yesterday as they have come under pressure recently.
“If state-owned banks were to accelerate fundraising to replenish their capital after a lending boom, that will pose pressure on the stock market's liquidity,” said Wu Yonggang, a Guotai Juan'an Securities Co analyst.
The Bank of China said this week that it was studying options to raise capital, the Industrial Bank Co said it planned to raise 18 billion yuan next year in a rights offer, and China Merchants Bank Co was seeking 22 billion yuan by the end of this year.
Analysts also attributed the drop to technical correction.
“The index has risen nearly 400 points this month, which is not backed by earnings prospects or favorable macro-economic news,” said Pan Lanlan, a Nanjing Securities Co analyst.
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The decline in the world markets continued on Monday, with the Asian and Sydney, Australia stock markets experiencing declines. On the Sydney Securities Exchange (ASX), the S&P/ASX 200 declined by 60.2 points to close at 3,809.2, representing a 1.56% decline and taking Aussie stocks to a four-year low. Two Fridays ago, the Sydney market experienced what the Sydney Morning Herald labeled “Black Friday,” after the S&P/ASX200 index lost 336.6 points equivalent to 5.8% in total capitalization to close at 3,809.2. On that day, the capitalization dropped below A$1 trillion.
Sydney, Australia is 15 hours ahead of New York City.
The All Ordinaries stock index, which is a broader spectrum of stocks, declined by 63.3 points to close at 3768.3, representing a 1.65% drop. The S&P/ASX200 today and the All Ordinaries are at their lowest levels since November 2, 2004 and October 27, 2004, respectively.
Australian financial experts were relieved that the decline on the ASX weren't worse. The blood-letting was much more intense in the Asian markets. Tokyo's Nikkei 225, Seoul's Kospi stock index, and Singapore's Straits Times index were down by 11%, 9% and 7%, respectively. Hong Kong's Hang Seng stock index was down 10%.
The declines were linked to the drop of the Dow Jones Industrial Average on Friday, October 24th. After declining by up to 500 points, the Dow closed down 312.30 points at 8378.95, representing 3.59% of market capitalization.
In related news, the Australian dollar gained in value, trading at 61.19/26 US cents, at 5PM Monday. The Aussie dollar had closed at 63.88/94 US cents at the end of Friday, but offshore trading over the weekend had driven its value down to 60.60 US cents, the lowest level since A$1.00 was 60.30 US cents on April 15, 2003.
The Australian dollar has depreciated 37% since mod-July 2009, when it traded at 98.49 US cents.
Meanwhile, price of gold increased on the Asian markets, as investors sought a hedge against the roiling markets. After reaching $US746.91 an ounce in Singapore, the price of gold for immediate delivery settled at $US737.40/oz. in afternoon trading. On Friday, the price had dipped below $US700/oz.
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