Stocks and Markets in the News | Asian Markets: Asia stocks head lower, as Japan leads losses

By Chris Oliver and Sarah Turner, MarketWatch 

HONG KONG (MarketWatch) — Asian stocks ended mostly lower Friday, as Japanese financials and utilities dragged the Tokyo market downward, while strong gains in telecom shares helped lift Hong Kong to a positive close. 

Japan’s Nikkei Stock Average JP:100000018 -1.43%  closed 1.4% lower, while Australia’s S&P/ASX 200 index AU:XJO -0.18%  lost 0.2% and the Shanghai Composite index CN:000001 -0.74%  fell 0.7%.

Hong Kong’s Hang Seng Index HK:HSI +0.42%  ended 0.4% higher, while South Korea’s Kospi KR:SEU -0.0016%  finished little changed. 

In spite of the upbeat session for China-focused shares in Hong Kong, an analyst at Daiwa Capital Markets said the mainland economy continues to decelerate, with little evidence on the radar to support the view of a recovery. 

“It’s very difficult to be decisively optimistic at this point,” Daiwa’s economist for Asia excluding Japan, Kevin Lai said. “The market is playing off the expectation of further stimulus, but we have to wait for [U.S. Federal Reserve’s] next meeting for direction.” 

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The weekly performance was mixed, with the Hang Seng Index and the S&P/ASX 200 each rising 2.9%, while the Kospi advanced 0.6%. The Shanghai Composite dropped 0.8%, while the Nikkei Average finished the week with a 0.6% loss. 

In Tokyo, power companies saw heavy selling, as Hokkaido Electric Power Co. JP:9509 -5.14%   HKEPF -41.39%  fell 5.1%, Chubu Electric Power Co. JP:9502 -5.84% CHUEF -22.91%  dropped 5.8%, Kansai Electric Power Co. JP:9503 -5.60%  gave up 5.6%, and Tokyo Electric Power Co. JP:9501 -1.52%   TKECF +3.75%  lost 1.5%. 

Financials also retreated sharply. Tokio Marine Holdings Inc. JP:8766 -3.38% TKOMF -0.34%  and Dai-ichi Life Insurance Co. JP:8750 -3.42%   DCNSF %  gave up 3.4% each. 

Among banks and brokerages, Daiwa Securities Group Inc. JP:8601 -4.35% DSECF -15.44%  dropped 4.4%, and Shinsei Bank Ltd. JP:8303 -6.32% SKLKF -5.98%  sank 6.3%. 

Shares of Mitsubishi UFJ Financial Group Inc. JP:8306 -3.41% MTU +1.69%  fell 3.4%, suffering an additional drag after Morgan Stanley reported its second-quarter profit fell 50%. Mitsubishi UFJ holds a more than 20% stake in the U.S. firm, according to FactSet. 

Louis Capital Markets strategist Michael Hsia said massive flooding on the southern island of Kyushu led the insurers lower, while the utilities dropped over increasing concern about opposition to the restart of nuclear power stations. 

Financial firms and insurers, among others, were also weighed by falling yields for Japanese government bonds. 

“With the JGB yield at an all-time low here, they’re having issues finding the returns they need,” Hsia said. 

Over in Hong Kong, an overnight rally in oil prices and concerns about earnings hurt airline stocks. China Eastern Airlines Corp. HK:670 -1.82% CHEAF -9.72%  fell 1.8%, Cathay Pacific Airways Ltd. HK:293 -1.66% CPCAY -0.77%  surrendered 1.7%, and China Southern Airlines Co. HK:1055 -0.51% ZNH +1.82%  retreated 0.5%.

Energy shares extended their recent strong run, with Inpex Corp. JP:1605 +1.35% IPXHY +3.41%  up 1.4% in Japan, and Beach Energy Ltd. AU:BPT +5.34%   BEPTF +11.01% higher by 5.3% in Sydney.

In Hong Kong, shares of Cnooc Ltd. HK:883 +0.89% CEO +2.88% ended up 0.9%, and China Petroleum & Chemical Corp., better known as Sinopec HK:386 +1.88% SNP +1.68% , added 1.9%.

Shares of China Unicom (Hong Kong) Ltd. HK:728 +3.59%  jumped 7.2% to rank as the best performing Hong Kong blue chip, after the company released monthly operating data showing net 3G subscribers grew by 3.03 million for June, an 11% rise from May.

Shares of China Telecom Corp. HK:728 +3.59% CHA +5.23%  rose 3.6%.

Oil strengthened for the seventh straight session in New York to end at levels not seen since mid-May, with a flare-up in Middle East tension giving the commodity added strength. Read more on oil.

South Korea, meanwhile, saw some strength technology shares as LG Display Co. LPL -0.63%  rose 2.4%, and SK Hynix Inc. jumped 4%, ahead of their earnings due out next week. Kia Motors Corp. KIMTF +8.02% , which is also to report earnings next week, rose 0.9%.

U.S. shares ended Thursday’s session with gains, helped once more by well-received corporate earnings as well as German approval for Spain’s bank-sector bailout. Read more on U.S. stock trade and German aid approval. 

 

Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong. Sarah Turner is MarketWatch's bureau chief in Sydney.