European markets also expected to open lower ahead of a report likely to show the US is bleeding jobs.
Asian stocks fall as global economy slows
HONG KONG // Most Asian stocks fell today in the face of a rapidly slowing global economy though hopes for more policy action to support growth brought markets back from their lows. Major European share markets were expected to open as much as one per cent lower, according to financial bookmakers, ahead of the latest US payrolls report that is widely expected to show the world's largest economy continuing to bleed jobs.
No industry was considered a safe bet yet and investors have found few consistent havens except for the yen and some government bonds, with the financial crisis expected to see the world's developed economies headed for the first full-year contraction since World War Two. Toyota Motor Corp shares dropped 9.2 per cent after the world's top car maker cut in half its net profit forecast for fiscal year 2008 because of dwindling demand.
Central banks met limited success as they scrambled to get ahead of deteriorating conditions, though their unconventional and persistent actions won some applause. The Bank of Korea cut interest rates for the third time in a month, following half-point cuts yesterday from the European Central Bank and the Swiss National Bank. The Bank of England also slashed its key rate by 1.5 percentage points yesterday, much more than the market expected, bringing borrowing costs down to the lowest since the 1950s.
"The rate cuts send a signal on how committed the central banks are in reviving the global economy," said Jackson Wong, an investment manager at Tanrich Securities in Hong Kong. "They inspire some confidence among investors." The MSCI index of Asia-Pacific stocks outside of Japan slipped 0.4 per cent, a small victory after falling nearly 3 per cent earlier. However, the index was set to post a small decline on the week. It had risen just four weeks in almost six months and has lost about 55 per cent this year in what is shaping up to be the worst bear market the region has ever experienced.
Japan's Nikkei share average pared losses to end down 3.6 per cent. For a second day, major exporters such as Canon and Honda, were among the biggest drags on the index. South Korean stocks also fought back from early losses, climbing 3.9 per cent, after the central bank rate cut boosted bank stocks and exporter shares rose. Hong Kong's Hang Seng index was barely changed in volatile trade, as investors flipped back and forth between optimism about more government efforts to bolster growth and expectations for more earnings weakness.
Hong Kong Exchanges & Clearing stock, down 5.5 per cent, was the top drag because of grim expectations the company's quarterly results next week will reflect poor market conditions. The US president-elect Barack Obama will hold his first news conference since his victory earlier this week, and some in the market were bracing for hints at policy direction to stem the financial crisis. "Yesterday people were worried about the US but today they are looking forward to seeing if he'll announce something that will help the market," said Andrew Orchard, Asia-Pacific equities analyst with Royal Bank of Scotland in Hong Kong.