Asia Shares Sink As Global Growth Fears Stir

Asia stocks fell Monday after a string of negative global developments hit sentiment, including a a disappointing U.S. jobs report and weekend comments from Chinese Premier Wen Jiabao highlighting his nation’s economic pressures.

Japan’s Nikkei Stock Average 100000018 and South Korea’s Kospi SEU each dropped 1.1%, while Australia’s S&P/ASX 200 index XJO traded down 0.9%.

In China, Hong Kong’s Hang Seng Index HSI tumbled 1.4% and the Shanghai Composite Index 000001 retreated 1.1%.

Chinese Premier Wen Jiabao said over the weekend that real-estate market curbs to discourage speculation would be a long-term policy, with the comments hitting the property sector in Hong Kong. Read more on Wen’s real-estate comments.

China Overseas Land & Investment Ltd. 688 CAOVF sank 3.2%, and Sino Land Co.83SNLAF lost 2.8%, while Hong Kong-focused Hang Lung Properties Ltd. 101 HLPPF traded down 2.8%.

However, property names traded mostly higher on the mainland Chinese bourses, ignoring Wen’s remarks to instead extend a rally from Friday, in the wake of the Chinese central bank’s surprise interest-rate cut late Thursday.

Shares of Gemdale Corp. 600383 gained 1.9% and Poly Real Estate Group Co. Ltd. 600048 rose 2.3% in Shanghai, and China Vanke Co. 200002 CVKEY added 1.5% in Shenzhen.

Stock prices in Hong Kong sometimes trade in the opposite direction of their mainland-listed peers, although trading regulations make it difficult for most investors to arbitrage or otherwise leverage the price differences.

In other weekend comments carried by Chinese state media, Wen said economic growth remained broadly stable, but that there still exists a “huge pressure to go downward.” Read more on Wen’s economic comments.

“The comments are perhaps the most negative so far and highlight concern among policy makers about how deeply the economy has slowed,” Credit Agricole strategist Dariusz Kowalczyk said.

Also Monday, Chinese government data showed consumer inflation slowing to 2.2% from a year earlier, compared to a 3% gain in May, while wholesale deflation accelerated. Analysts said the results could prompt more monetary easing from Beijing. Read more on Chinese inflation data.

A disappointing U.S. nonfarm payroll report for June sent Wall Street stocks lower on Friday and set the negative tone for Asia trading. The jobs report capped off a week of lackluster data pointing to a slowing U.S. economic recovery. Read more on Friday’s U.S. stock action.

Signs of weakness were also evident in the Japanese economy, with data out Monday revealing a smaller-than-expected current-account surplus and a surprisingly sharp drop in core machinery orders. Read more on Japan’s economic data.

Credit Agricole’s Kowalczyk said the risk-off mood was likely to continue through the Asian session.

“It seems that [the] global slowdown is continuing, and high financial risks are still there, and markets will need to see evidence of both improving before staging a sustainable recovery,” he said.

source Marketwatch