Asia Stocks Brighten, But Shanghai Drops Again

Asian stocks saw some gains Tuesday, with airlines aloft and steel makers shining, though the Shanghai market proved unable to join in the advance.

After most Asian markets fell Monday amid concerns about economic growth, South Korea’s Kospi SEU climbed 0.7% Tuesday, while Japan’s Nikkei Stock Average 100000018 rose 0.5%, and Australia’s S&P/ASX 200 index XJO gained 0.2%.

In China, Hong Kong’s Hang Seng Index HSI advanced 0.2%, but the Shanghai Composite Index 000001 traded down 0.4% after dropping 1.5% on Monday.

U.S. shares had ended mostly lower Monday, with the move ending the longest winning streak for the S&P 500 index SPX since December 2010. Read more on U.S. stocks.

“With global selling pressure evident, U.S. markets eased back from multi-month highs in the wake of renewed signs of global economic slowdown. However, the moves were fairly minor, as investors remain confident the major central banks will provide support to softening economies,” said Matthew Sherwood, head of investment market research at Perpetual.

Major movers

Some of the gains Tuesday were in sectors generally regarded as defensive and less attuned to economic growth.

Utility firms Chubu Electric Power Co. 9502 CHUEF rallied 4%, and Tokyo Gas Co. 9531  TKGSF rose 1.7% in Japan, while China Resources Power Holdings Co. 836  CRPJF advanced 2.3% in Hong Kong.

Oil futures retreated in New York on Monday, helping Asian airline shares gain ground Tuesday.

Air China Ltd. 753AIRYY climbed 2.7%, China Eastern Airlines Corp. 670CHEAF rose 0.8%, and Cathay Pacific Airways Ltd. 293CPCAY advanced 1.1%.

Likewise, All Nippon Airways Co.9202 ALNPF rose 1.1% in Tokyo, and Korean Air Lines Co. climbed 2.5% in Seoul.

Steel firms saw some more deal-related gains in Asia, with Nippon Steel Corp. 5401 NISTF up 0.6% in Tokyo a day after signing an alliance deal with Australia’s BlueScope Steel Ltd. BSL BLSFYBLSFYBLSFY, which jumped another 14.3% in Sydney.

Nippon Steel is also slated to merge in October with Sumitomo Metal Industries Ltd. 5405 SMMLF, shares of which rose 0.8% Tuesday, with the new entity to become the world’s second biggest steel producer.

Most metal-related firms lost ground in Australia, however, after the drop for most commodity futures in New York on Monday, with Fortescue Metals Group Ltd FMG FSUMF down 2% and PanAust Ltd. PNA falling 4.3%.

Banks were also under pressure in Sydney, with National Australia Bank Ltd. NAB NAUBF down 1.1% after reporting a flat quarterly profit and slight drop in revenue. Read more on NAB results.

Shipping-related firms were retreating, with Mitsui O.S.K. Lines Ltd. 9104 MSLOF falling 2.7% in Tokyo after J.P. Morgan cut its stance on the firm — and the Japanese shipping sector overall — to neutral from overweight.

“We think earnings momentum will probably deteriorate over the next 3-6 months, with sector companies lowering guidance and consensus estimates coming down,” the bank said.

“We think the start of a steep fall in rates as the slack season approaches, coupled with a large amount of capacity coming into service in 2013, will cause container rates to slump,” it said.

Among other Tokyo-listed shippers, Kawasaki Kisen Kaisha Ltd. 9107 fell 3.5%, and Nippon Yusen K.K. 9101 declined 2.3%.

Hyundai Heavy Industries Co.HYHZF, meanwhile, declined 2.7% in Korea after a downgrade to neutral from outperform at Credit Suisse.

Toshiba Corp. 6502 TOSYY fell 3.3% after it scrapped immediate plans to release devices based on a new version of Microsoft Corp. MSFT Windows software due to component delays. Read report on Toshiba’s plans for new Windows OS.

A report out Tuesday also said that the firm will sell a 16% stake in U.S. nuclear power-plant firm Westinghouse Electric Co. from its current 67% ownership. Read more on potential stake sale.

Back in Hong Kong, Swire Properties Ltd. 1972 SWRAF plunged 5.9% on news a large shareholder was selling a stake in the company. Read more on Swire Properties share placement.

BLSFY

BLSFYBroker downgrades of growth expectations were part of the reason for the weak performance of the Shanghai market on Monday.

Chinese financials were among the worst-hit on Monday, amid a weak market outlook and worries over earnings reports, and several firms fell again on Tuesday.

Also dragging on the sector, China’s state-run Financial News said in a commentary that the nation’s commercial banks face rising levels of nonperforming loans due to slower economic growth and that regulators should increase risk-prevention efforts. Read more on warning over China bank loans.

Citic Securities Co. 600030 extended a 9 %-plus drop made Monday to fall another 3.6%, even after the firm denied reports it had suffered big losses on its overseas investments, while Haitong Securities Co. 600837 lost another 2.7%.

Marketwatch