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18th November, 2008
BANGKOK, Thailand: Asian stock markets were narrowly mixed Monday as confirmation Japan had slipped into recession emphasized the gloomy outlook for the world economy.
A weekend meeting of world leaders in Washington to discuss reform of the stricken global financial system provided a symbolic show of unity between rich and emerging nations but produced few concrete measures.
“The case for investing in global equities is weak right now,” said Andrew Yates, foreign institutional sales vice president at Asia Plus Securities in Bangkok.
“Trading volumes are very low. We don’t have the big selling that we had before but then there is no significant buying either,” he said. “Valuations are cheap but if you are a fund manager it’s better to wait another six months before coming back into the market as valuations will still be low and by then you will have a clearer idea about what is happening in the world economy.”
Japan’s benchmark Nikkei 225 stock average edged up 34 points, or 0.4 percent, to 8,496.33, while Hong Kong’s Hang Seng index also gained 0.4 percent to 13,598.84 points.
Australia’s main index slid 2.5 percent and India’s Sensex tumbled 3.8 percent.
Regional markets were awash in bad news but none of it was entirely unexpected.
The Dow Jones industrial average tumbled 3.8 percent Friday after another session of volatile trading, while Japan’s economy, the world’s second-largest, slid into a recession for the first time since 2001 as companies sharply cut back on spending in the third quarter.
U.S. stock index futures were up slightly. Dow futures were up 20, or 0.2 percent, to 8,391, while S&P futures were up 0.3 percent to 864.40.
Tokyo said Monday that Japan’s economy shrank at an annual pace of 0.4 percent in the July-September quarter, meaning the country now joins the 15 nation euro-zone as officially in recession, defined as two straight quarters of contraction. The Organization for Economic Cooperation & Development, a club of rich nations, has said it expects the U.S. to slide into recession as well.
But with many companies having already announced significant downgrades to earnings forecasts, the Japanese market took the news of a second straight quarter of economic contraction in its stride.
In Tokyo trading, Toyota Motor Corp. was down 1 percent, Mitsubishi UFJ Financial Group was down 2.4 percent, while Honda Motor Co. was up 1.4 percent.
Some analysts believe that much of the bad news has been priced into Asian stock markets, though a quick rebound was unlikely.
“With much lower equity prices currently compared to the last 12 months, there would likely be more buyers at these levels should foreign funds rush for the exit again,” Song Seng Wun, a Singapore-based analyst with CIMB said in a report Monday. “Hence we believe that the bulk of the damage is already done, although any recovery will still be tentative,”
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