Most Asian markets fall on Bhutto death

2007-12-28 05:12:43 Xinhua English

BANGKOK, Thailand - Most Asian markets fell Friday amid anxiety over the assassination of Pakistani opposition leader Benazir Bhutto and lingering worries about the outlook for the US economy.

Bhutto's death on Thursday, just ahead of Jan. 8 elections, sent shock waves through international markets on worries that global instability may follow, although some analysts said the impact is likely to be limited.

"The sudden event has caught worldwide attention because Pakistan is not any other developing country. It is a nuclear-power country. However, we view the current response to the event to be short-term," Westcomb Securities said in a note.

While Pakistan's stock market was closed, the market reaction in neighboring India was muted. Mumbai's Sensex index dipped 9.77 points, or 0.05 percent, to close at 20,206.95.

In Tokyo, Japan's stock market wrapped up the year with a sharp drop. The Nikkei 225 index fell 256.91 points, or 1.7 percent, to 15,307.78 points.

For the year, the Nikkei lost 11.1 percent, its first annual decline in five years.

Japanese investors remain worried about the American economy - a vital export market - amid the subprime mortgage crisis. A report from Goldman Sachs that said write-downs at US banks, including Citigroup Inc., Merrill Lynch & Co. and JPMorgan Chase & Co., may deepen, helped to squelch sentiment.

Also, a less-than-expected rise in US durable goods orders exacerbated concerns about the US economy. In New York Thursday, the Dow Jones industrial average dropped 1.4 percent to 13,359.6.

The Nikkei is likely to stagnate during the first half of 2008 but has a chance of recovering once the US credit crunch settles down later in the year, said Kenichiro Yoshida, senior economist at Mizuho Research Institute in Tokyo.

"A pessimistic view is prevalent about the Nikkei," said Yoshida. "Looking ahead to next year, we must keep our eyes on Wall Street."

Trading in Tokyo is scheduled to reopen on Jan. 4 after the New Year's holidays.

In Hong Kong, jitters over Bhutto's assassination and continued concerns about the US economy dragged down the benchmark Hang Seng Index by 472.33 points, or 1.7 percent, to 27,370.6 points.

"I would suggest investors to avoid buying any stocks now amid the uncertain market outlook," said Castor Pang, a strategist at Sun Hung Kai Financial.

In Hong Kong, heavyweight China Mobile dropped 2.6 percent on concerns it may soon face a more competitive environment following a potential restructuring of the Chinese mainland's telecom sector. China Netcom fell 4 percent.

Hong Kong winds up the year's trading on Monday and will be closed Tuesday for New Year's Day, as will all other Asian markets.

In Tokyo currencies, the US dollar was trading at 112.78 in late afternoon trading, down sharply from 113.69 yen late Thursday in New York.

Indonesian shares end year's final trading session 0.2 percent lower at 2,745.826 in moderate volume. The benchmark index gained 52 percent for 2007.

Chinese mainland shares ended the 2007 trading year lower on Friday on both domestic and international market concerns.

After gaining 2,586.09 points since the last trading day of 2006, the benchmark Shanghai Composite Index dropped 0.89 percent, or 47.3 points, to close at 5,261.56 points.

Heavyweights slumped. PetroChina, the largest-cap stock on the Chinese market, dropped 1.37 percent to 30.96 yuan ($4.25).

Tourism and hotel stocks rose on expectations that the upcoming Lunar New Year holidays, which fall in early February, would bring benefits.

Analysts attributed part of Friday's declines to weakness in the international markets.

The Hushen 300 Index, which accounts for 60 percent of the Chinese stock market's value, dropped 0.55 percent, to 5,338.27 points.

The combined turnover on the Shanghai and Shenzhen bourses dropped to about 190 billion yuan from Thursday's 200 billion yuan.

The benchmark index almost doubled in 2007, peaking at a record high of 6,124 points on October 16, after which it slumped and then fluctuated around 5,300 for most of the rest of the year.

Chinese investors' psychology seesawed with the market for much of the year, but analysts said that domestic share investors were becoming more accustomed to market fluctuations. Their growing sophistication meant the market was unlikely to experience such dramatic movements in 2008, said Liu Fenghua, fund manager with Galaxy Asset Management Co., Ltd..

The number of stock accounts increased 37.79 million to 112.59 million by December 26, of which 112.1 million were held by individuals, according to statistics from the China Securities Depository and Clearing Co., Ltd..

Institutions became a major stabilizing factor in the market over the past year and now hold up to 46 percent of total market capitalization.

Most analysts believed that China's bull market would continue in 2008 but the opportunities for speculative profit would be more limited. And with the government expected to persist with its tightening policies, investors were expected to become more selective.

Many investors would look to stocks related to consumer goods, since both macro policies and rising consumption would support those sectors in 2008, said Avelyn Yang, deputy head of investment management with China International Fund Management Co., Ltd..