By Chris Oliver, MarketWatch , Colin Ng
HONG KONG (MarketWatch) -- Asian stock indexes ended mixed Tuesday, with Chinese shares led down by property and financial stocks amid investors’ concerns that Saturday’s interest-rate increase could be the first of a series of rounds of tightening by Beijing.
“Suddenly the possibility is open that there could be two more hikes or three more hikes,” said Robert Howe, chief executive officer of hedge fund Geomatrix in Honolulu, referring to the potential for further policy announcements by the People’s Bank of China. “The market perception has changed.”
He said that most investors were not expecting Chinese authorities to raise rates again before year’s end and that selling over the past two days reflected adjustments of such measures on expected corporate earnings.
The Shanghai Composite Index dropped 1.7%, adding to the previous session’s 1.9% slide, to end at its lowest closing level in nearly three months.
Japan’s Nikkei Stock Average fell 0.6%, and South Korea’s Kospi Composite was 0.6% higher in late trade
Hong Kong’s Hang Seng Index dropped 0.9% in its first trading session following the extended weekend break. Taiwan’s main index lost 0.2% and India’s Sensex was little changed in late action. Markets in Australia and New Zealand were shut for a holiday.
In Japan, the major indexes were in the red throughout the duration of trading, pressured by the yen’s strength against the U.S. dollar and weighed by U.S. stocks’ weaker session Monday in New York.
One analyst said that while the yen’s strength in recent sessions was holding back investor sentiment, the Japanese currency was unlikely to rally back to its 80-pairing to the U.S. dollar seen in October.
Mizuho Investors Securities senior strategist Masatoshi Sato said selling was limited by the government’s industrial-output forecasts just before the market opened. The reports projected a 3.4% rise in December and a 3.7% gain in January.
“This data will alleviate concerns that the Japanese economy, now at a standstill, will decline further,” he said.
Japan’s core consumer-price index in November fell 0.5% from a year earlier, compared with a projected fall of 0.6% in a Dow Jones Newswires and Nikkei poll of economists. Industrial production in November rose 1% from the month before, in line with expectations.
HSBC Securities chief economist Seiji Shiraishi said the CPI data showed Japan was still in a strong deflationary trend. He added that it would be hard for Japan to overcome deflation given factors such as its declining population.
However, “deflation may ease (in coming months) if the global economic conditions prove strong” and “help Japan’s external demand, leading to a rise in domestic demand,” he said.
Among major exporters, Canon (CAJ 51.85, +1.13, +2.23%) (JP:7751 4,310, +40.00, +0.94%) lost 1.7% and Honda Motor (JP:7267 3,295, +30.00, +0.92%) (HMC 39.54, +0.20, +0.51%) dropped 1.1%.
Mizuho Financial Group (MFG 3.70, +0.04, +1.09%) (JP:8411 153.00, +1.00, +0.66%) added 1.3%, supported by President and Chief Executive Takashi Tsukamoto’s comments in a Dow Jones Newswires interview that the company’s efforts to meet capital-adequacy requirements were progressing and there was no need to issue additional new shares.
