Asian Stocks, Currencies Fall
May 3,2010
Asian stocks, including the Jakarta Composite Index, fell Monday after China ordered banks to raise their reserves, the latest in a series of moves aimed at curbing inflation and surging property prices. European shares opened lower.
Hong Kong’s Hang Seng index led decliners, falling 297.23 points, or 1.4 percent, to 20,811.36 while South Korea’s benchmark dropped 1.2 percent to 1,721.21.
Singapore and India each slid 0.9 percent and Australia skidded 0.5 percent after the government said it would impose a new tax on the profits of mining companies. Malaysia’s stock index was steady while Indonesia dropped 0.5 percent.
As trading got started in Europe, the FTSE 100 index of leading British shares was down 1.1 percent while France’s CAC-40 index fell 0.6 percent and Germany’s DAX dropped 0.3 percent. Stock futures pointed to modest gains on Wall Street.
Trading volume was light in Asia as the two biggest markets, Japan and China, were closed for holidays. Markets in Thailand and the Philippines were also closed.
The People’s Bank of China said Monday that the deposit reserve requirement ratio for most banks will be raised half a percentage point, starting May 10. This is the third time this year that the central bank has raised the deposit reserve minimum.
Global shares dropped despite European governments and the International Monetary Fund announcing Sunday they agreed on euro110 billion ($145 billion) in emergency loans for debt-ridden Greece on the condition Athens make painful budget cuts and tax increases.
After surging last year, Asian stock markets will likely trade sideways for the next few months as traders monitor whether economic growth in the U.S. and Europe continues as interest rates raise and government stimulus spending eases, said Timothy Wong, head of group research at DBS bank in Singapore.
“Investors are uncertain what the catalysts are going to be for the markets to more higher,” Wong said. “For the markets to move higher, you would need much higher export growth, which would be a function of what’s happening in the U.S. and Europe.”
Asian currencies, including Indonesia’s rupiah, fell, led by South Korea‘s won and Malaysia’s ringgit, on concern tighter lending curbs in China will damp demand for goods produced in the rest of the region.
The won dropped the most in three months after the People’s Bank of China yesterday raised bank reserve ratios for the third time this year, requiring the biggest lenders to set aside 17 percent of deposits from May 10. The level may climb to 18 percent, the Beijing News reported today, citing an unidentified official. China’s economy expanded in the first quarter at a pace that was “maybe a little bit too high” and lending needs to be reined in, Vice Finance Minister Li Yong said today.
“China’s measures stoke uncertainty because the market is anxious if more is needed to prevent bubbles, especially in the property sector,” said Yeo Chin Tiong, head of treasury at OSK Investment Bank Bhd. in Kuala Lumpur. “They have to do something if they are going to dodge the yuan’s revaluation.”
The won weakened 0.9 percent to close at 1,118.40 per dollar in Seoul, according to data compiled by Bloomberg. The ringgit fell 0.8 percent to 3.21 and Indonesia’s rupiah was 0.2 percent weaker at 9,027 as of 5:13 p.m. in Singapore.
Twelve-month non-deliverable yuan forwards were little- changed at 6.6150 in Hong Kong, while financial markets elsewhere in China were closed for a public holiday. The MSCI Asia Pacific excluding Japan Index of regional equities dropped 1.2 percent to its lowest level in more than a month.
The ringgit and rupiah both declined for the first time in three days on concern China’s lending curbs will cool spending in the world’s third-largest economy.
Growth in Indonesia’s overseas sales slowed to 46.6 percent in March from 57.1 percent in February, the government said today. China, including Hong Kong, is the No. 1 export destination for Korea, Malaysia and Taiwan.
Taiwan’s dollar fell in the final minutes of trading, reversing earlier gains, as the central bank bought US dollars, according to two traders, who asked not to be identified.
Elsewhere, the Singapore dollar slid 0.4 percent to S$1.3733 against the US currency. As in China, financial markets in Japan, Thailand and the Philippines were shut for holidays.
Associated Press/Bloomberg
May 3,2010
Asian stocks, including the Jakarta Composite Index, fell Monday after China ordered banks to raise their reserves, the latest in a series of moves aimed at curbing inflation and surging property prices. European shares opened lower.
Hong Kong’s Hang Seng index led decliners, falling 297.23 points, or 1.4 percent, to 20,811.36 while South Korea’s benchmark dropped 1.2 percent to 1,721.21.
Singapore and India each slid 0.9 percent and Australia skidded 0.5 percent after the government said it would impose a new tax on the profits of mining companies. Malaysia’s stock index was steady while Indonesia dropped 0.5 percent.
As trading got started in Europe, the FTSE 100 index of leading British shares was down 1.1 percent while France’s CAC-40 index fell 0.6 percent and Germany’s DAX dropped 0.3 percent. Stock futures pointed to modest gains on Wall Street.
Trading volume was light in Asia as the two biggest markets, Japan and China, were closed for holidays. Markets in Thailand and the Philippines were also closed.
The People’s Bank of China said Monday that the deposit reserve requirement ratio for most banks will be raised half a percentage point, starting May 10. This is the third time this year that the central bank has raised the deposit reserve minimum.
Global shares dropped despite European governments and the International Monetary Fund announcing Sunday they agreed on euro110 billion ($145 billion) in emergency loans for debt-ridden Greece on the condition Athens make painful budget cuts and tax increases.
After surging last year, Asian stock markets will likely trade sideways for the next few months as traders monitor whether economic growth in the U.S. and Europe continues as interest rates raise and government stimulus spending eases, said Timothy Wong, head of group research at DBS bank in Singapore.
“Investors are uncertain what the catalysts are going to be for the markets to more higher,” Wong said. “For the markets to move higher, you would need much higher export growth, which would be a function of what’s happening in the U.S. and Europe.”
Asian currencies, including Indonesia’s rupiah, fell, led by South Korea‘s won and Malaysia’s ringgit, on concern tighter lending curbs in China will damp demand for goods produced in the rest of the region.
The won dropped the most in three months after the People’s Bank of China yesterday raised bank reserve ratios for the third time this year, requiring the biggest lenders to set aside 17 percent of deposits from May 10. The level may climb to 18 percent, the Beijing News reported today, citing an unidentified official. China’s economy expanded in the first quarter at a pace that was “maybe a little bit too high” and lending needs to be reined in, Vice Finance Minister Li Yong said today.
“China’s measures stoke uncertainty because the market is anxious if more is needed to prevent bubbles, especially in the property sector,” said Yeo Chin Tiong, head of treasury at OSK Investment Bank Bhd. in Kuala Lumpur. “They have to do something if they are going to dodge the yuan’s revaluation.”
The won weakened 0.9 percent to close at 1,118.40 per dollar in Seoul, according to data compiled by Bloomberg. The ringgit fell 0.8 percent to 3.21 and Indonesia’s rupiah was 0.2 percent weaker at 9,027 as of 5:13 p.m. in Singapore.
Twelve-month non-deliverable yuan forwards were little- changed at 6.6150 in Hong Kong, while financial markets elsewhere in China were closed for a public holiday. The MSCI Asia Pacific excluding Japan Index of regional equities dropped 1.2 percent to its lowest level in more than a month.
The ringgit and rupiah both declined for the first time in three days on concern China’s lending curbs will cool spending in the world’s third-largest economy.
Growth in Indonesia’s overseas sales slowed to 46.6 percent in March from 57.1 percent in February, the government said today. China, including Hong Kong, is the No. 1 export destination for Korea, Malaysia and Taiwan.
Taiwan’s dollar fell in the final minutes of trading, reversing earlier gains, as the central bank bought US dollars, according to two traders, who asked not to be identified.
Elsewhere, the Singapore dollar slid 0.4 percent to S$1.3733 against the US currency. As in China, financial markets in Japan, Thailand and the Philippines were shut for holidays.
Associated Press/Bloomberg