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Asian markets fall after Wall Street slides
Publication Date : 08-05-2014
Asian markets were a sea of red yesterday after Wall Street tumbled and worse-than-expected economic data landed from China.
The scene was set from the start after major New York indexes dropped between 0.7 per cent and 1.4 per cent on Tuesday.
Technology stocks suffered, especially on the back of social media company Twitter plunging nearly 18 per cent.
Tuesday was the end of the lock-up period preventing executives, early investors and other insiders from selling their stock, following Twitter's listing last year.
It was unclear if the plunge was due to these parties selling, or from other investors panicking at the prospect.
"US stocks took a tumble overnight following the onslaught of the technology stocks," observed Desmond Chua, analyst at CMC Markets.
NetResearch Asia said there was actually not a lot of news overnight that would normally move markets, but Wall Street fell anyway as investors rethought their equity holdings.
That meant it was not surprising that markets in this time zone opened lower and never recovered.
Japan led the way, with the Nikkei 225 plunging 2.9 per cent after reopening from a break on Monday and Tuesday.
The strengthening yen is sparking fears that exporters will be affected. Japan's currency strengthened 0.2 per cent against the US dollar yesterday to a three-week high of 101.43 yen to US$1.
Carmakers Honda and Nissan fell, as did technology firms Panasonic, Nintendo and Olympus.
Markets in Hong Kong and mainland China were more affected by data showing the muted state of the Chinese services sector, which is still growing but perhaps not fast enough to offset the manufacturing slowdown.
Hong Kong's Hang Seng Index lost 1.05 per cent, Shanghai declined 0.89 per cent and Shenzhen backtracked 1.55 per cent.
Singapore escaped lightly compared to these markets. The benchmark Straits Times Index recovered from being as much as 0.58 per cent lower, to close at 3,236.43, a fall of just 9.13 points or 0.28 per cent.
Gainers included Sembcorp Industries, which put on two cents, or 0.37 per cent, to $5.40.
The company lifted earnings in the first quarter by 4.5 per cent thanks to better performances from its three main business units of utilities, marine and urban development, it said on Tuesday. Net profit for the three months to March 31 came in at $184.8 million, up from $176.9 million a year ago.
DBS Group Research kept its "buy" call and fair value of $6.20 on Sembcorp.
"Sembcorp's group net profit broadly met our expectations as both utilities and marine reported in-line results. Urban development was the outperformer.
"We see Sembcorp continuing to build foundations for sustainable long-term growth, especially from a more diversified geographical base than before," said DBS.
Drinks company Thai Beverage fell 1.5 cents, or 2.46 per cent, to 59.5 cents as Thailand's Prime Minister Yingluck Shinawatra was deposed from office by the country's Constitutional Court.
Overall, the Thai market did not have much of a reaction to the development, with the SET Thailand index behind by only 0.1 per cent.