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Asian Shares Down Before US Resumes; Aussie Miners Hold Up

By Rosalind Mathieson
Last update: 8:05 p.m. EST Feb. 16, 2009
SINGAPORE (MarketWatch) — Asian shares were lower Tuesday after a U.S. holiday with shares in Seoul hurt by a slumping Korean won, though Australia’s OZ Minerals surged 27% on a A$2.6 billion takeover bid from China’s Minmetals.
“The market remains patient and very selective,” said Nigel Scott, an adviser at ABN AMRO Craigs in Australia.
The S&P/ASX 200 was down 0.2% with Japan’s Nikkei 225 off 1.1% - at its lowest intraday level for the year - and Korea’s Kospi Composite down 2.2%; New Zealand’s NZX-50 was 0.2% lower.
All eyes were on how Wall Street would fare after its Monday holiday. Investors were still concerned about the health of banks around the globe, and the broader economy, waiting for details of further steps by the U.S. administration to shore up sentiment.
Automakers Chrysler and General Motors were due Tuesday to present their long-term recovery plans to the U.S. government. The duo have received the first installment of a combined $17.4 billion in government loans and could receive the next installment if their plans pass muster.
For now, “risk aversion remains the main driver (and) it’s not difficult to see why,” said analysts at UBS.
“Policymakers keep struggling to stabilize banking systems, politicians remain slow to use fiscal policy aggressively despite the worldwide economic slump, central banks are running out of room to cut rates and consumers and companies are increasingly fearful.”
Some Australian miners were on the rise despite a fall in base metal prices in London, with Rio Tinto up 2.1%; OneSteel gained 4.5% after the company said iron ore contract prices look set to fall in the current round of negotiations, but not as much as some had been expecting.
PaperlinX jumped 38% after confirmation it was selling its Australian Paper unit to Japan’s Nippon Paper Group for A$600 million in cash.
Foster’s, the world’s second-largest wine company, was up 2.5% with its first-half net profit rising 3.2% to A$411.3 million, in line with analyst forecasts; it did though forecast second-half writedowns as it attempts to restructure its wine business.
Korean bank and steelmaker shares were down as the won fell against the U.S. dollar; Woori Finance was off 4.0% with Posco 2.2% lower.
Insurance stocks were weaker in Japan with T&D Holdings down 10%. Shipping stocks fell back a little as the Baltic Dry Index - a measure of dry bulk demand - dropped 3.2% Monday, with Nippon Yusen down 0.7%, Mitsui O.S.K. Lines down 1.3% and Kawasaki Kisen slipping 0.3%.
New Zealand’s market was being supported by a partial recovery in Fisher & Paykel Appliances, up 12.3% after a 35% fall Monday which came on news of a profit downgrade.
The Australian dollar gave up its early gains, falling to US$0.6490. The central bank indicated there was little it could do to offset the effect on the economy from the global slump, but said recent monetary and fiscal stimulus should stoke demand later in the year.
Some analysts expected the currency to be supported by interest in Australian mining assets. “Despite the credit crisis and lack of cross border funding we are seeing the story in Australia is actually quite upbeat in terms of cross border funding and resource M&A,” said Westpac chief currency strategist Robert Rennie.
The U.S. dollar was near Y91.68, from Y91.71 late in North American trade, with the euro at $1.2763, down from $1.2797, and at Y117.01, from Y117.40.
European currencies remained under pressure amid worries about the region’s economic health, while the yen was shrugging off the doubts over Finance Minister Shoichi Nakagawa after his odd behavior at a weekend Group of Seven briefing, for which he later apologized. Nakagawa said he intended to remain in his job with reports he had the support of government leaders.
Japanese government bonds gained with March futures up 0.22 at 139.22 points.
Spot gold was $1.80 higher from London, at $944.30 a troy ounce.
March Nymex crude oil futures were down 54 cents on Globex at $36.97 a barrel, in sluggish trade after the U.S. holiday.