Asian stocks may pace US losses on credit jitters
Wednesday, 15 August 2007
SAN FRANCISCO, Aug 14 (MarketWatch): Asian stocks may mostly open lower on Tuesday, following downturns in US stocks, but are expected to show volatility as jittery investors contemplate whether it's the time to stop worrying about credit-related woes.
"People are afraid of troubles in credit markets. If the US markets go down, people think that's a cue to take money out," said Shigeki Makino, chief investment officer of Putnam Global Equity Fund, which has about $750 million investment in Asia. "But there are really not many reasons for them to do this as fundamentals are not bad."
September futures for the Nikkei 225 Index recently traded at 16,730 on the Chicago Mercantile Exchange, down from Monday's close of 16,780 on the Osaka Stock Exchange and 16,750 on the Singapore Exchange, indicating a weak start for their underlying index Tuesday.
New Zealand's NZX 50 index was slightly up in Tuesday's early-morning trading.
US subprime loan-related losses are fairly minimal and won't have much impact on Japanese banks, said UBS analyst Shoji Hirakawa in a research note Monday.
"Any direct loss to be incurred by Japanese financial institutions, which mainly invest in highly-rated securities, appears to be even more limited," said Hirakawa.
"We do not believe that the selling of Japanese stocks by funds to avoid risk will last long," he added.
On Wall Street, stocks trimmed an earlier advance Monday as investors weighed news that a Goldman Sachs hedge fund suffered a 27 per cent loss of its value year-to-day. Goldman also said the firm and others are making a $3 billion investment in the fund. See full story.
The New York Federal Reserve injected $2 billion in liquidity into the market on Monday. The European Central Bank provided around 47.5 billion euros ($65 billion) in loans, while the Bank of Japan added more than $5 billion.
Bank of Communications Co. China's fifth-largest bank by assets, will join Hong Kong's benchmark Hang Seng Index from Sept. 10, the index compiler HSI Services Ltd. said in a statement.
Shares of Bank of Communications, which is 18.6 per cent-owned by HSBC Holdings PLC, aren't likely to rise sharply Tuesday, because its inclusion had been widely expected, Dow Jones Newswires said, citing traders.
HSI Services said Bank of Communications would have a weighting of 3.01 per cent, bigger than that of Bank of China Ltd. The number of constituents in the HSI will rise to 40 from 39 following the addition.
In Australia, the country's largest carrier Qantas Airways Ltd. said it has prepared $40 million to cover potential fines relating to its role in fixing air cargo surcharges, Financial Times reported. The news came after British Airways and Korean Air were each fined $300 million by the US Department of Justice, the newspaper said.
"People are afraid of troubles in credit markets. If the US markets go down, people think that's a cue to take money out," said Shigeki Makino, chief investment officer of Putnam Global Equity Fund, which has about $750 million investment in Asia. "But there are really not many reasons for them to do this as fundamentals are not bad."
September futures for the Nikkei 225 Index recently traded at 16,730 on the Chicago Mercantile Exchange, down from Monday's close of 16,780 on the Osaka Stock Exchange and 16,750 on the Singapore Exchange, indicating a weak start for their underlying index Tuesday.
New Zealand's NZX 50 index was slightly up in Tuesday's early-morning trading.
US subprime loan-related losses are fairly minimal and won't have much impact on Japanese banks, said UBS analyst Shoji Hirakawa in a research note Monday.
"Any direct loss to be incurred by Japanese financial institutions, which mainly invest in highly-rated securities, appears to be even more limited," said Hirakawa.
"We do not believe that the selling of Japanese stocks by funds to avoid risk will last long," he added.
On Wall Street, stocks trimmed an earlier advance Monday as investors weighed news that a Goldman Sachs hedge fund suffered a 27 per cent loss of its value year-to-day. Goldman also said the firm and others are making a $3 billion investment in the fund. See full story.
The New York Federal Reserve injected $2 billion in liquidity into the market on Monday. The European Central Bank provided around 47.5 billion euros ($65 billion) in loans, while the Bank of Japan added more than $5 billion.
Bank of Communications Co. China's fifth-largest bank by assets, will join Hong Kong's benchmark Hang Seng Index from Sept. 10, the index compiler HSI Services Ltd. said in a statement.
Shares of Bank of Communications, which is 18.6 per cent-owned by HSBC Holdings PLC, aren't likely to rise sharply Tuesday, because its inclusion had been widely expected, Dow Jones Newswires said, citing traders.
HSI Services said Bank of Communications would have a weighting of 3.01 per cent, bigger than that of Bank of China Ltd. The number of constituents in the HSI will rise to 40 from 39 following the addition.
In Australia, the country's largest carrier Qantas Airways Ltd. said it has prepared $40 million to cover potential fines relating to its role in fixing air cargo surcharges, Financial Times reported. The news came after British Airways and Korean Air were each fined $300 million by the US Department of Justice, the newspaper said.