Asian shares trade lower as worries persist

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Chinese stocks fought off the gloom enveloping the rest of the region on Wednesday amid growing hopes that Beijing would soon introduce a fuel tax that would help the profit margins of refining companies.

The Shanghai composite index gained 6.1 per cent to 2,017.47. Sinopec led the market higher with a limit-up 10 per cent gain to Rmb8.37. PetroChina gained 7.5 per cent to Rmb11.91.

Expectations rose that the government would introduce the tax soon following a local newspaper’s interview with the director-general of the Energy Research Institute of the National Development and Reform Commission, who said it was a “great time” to levy the tax.

Financial stocks also rallied, with Citic Securities up 6.4 per cent at Rmb8.37, China Merchants Bank 6.4 per cent higher at Rmb13.84 and Shanghai Pudong Development Bank up 7.5 per cent at Rmb14.76.

However, markets elsewhere generally retreated amid nagging concerns over the global economic outlook.

In Tokyo, the Nikkei 225 Average dropped 0.7 per cent to 8,273.22, while the broader Topix lost 1 per cent to 827.43. Banks weighed heavily on the Topix following Mitsubishi UFJ’s profit decline, while Sumitomo Mitsui Financial joined Mizuho and MUFG in issuing preference shares to help bolster its balance sheet.

MUFG’s shares dropped 6.4 per cent to Y511, while Sumitomo Mitsui dropped 7.9 per cent to Y314,000. Mizuho Financial fell 7.5 per cent to Y212,500.

The slightly firmer tone of the yen weighed on technology and exporter stocks in addition to worries about the global outlook. Sony dropped 2.7 per cent to Y1,950, while Nissan dropped 2.8 per cent to Y346, after Carlos Ghosn, chief executive, told a newspaper that second-half profits could fall to zero.

Investors reacted negatively to the announcement that game companies Koei and Tecmo would merge. Koei shares lost 6.1 per cent to Y882 and Tecmo shares fell 11.4 per cent to Y775.

Mazda shares dropped 1.1 per cent to Y182 following the official announcement that Ford would sell 20 per cent of its stake in the Japanese carmaker to Mazda and 20 other companies.

In Australia, the S&P/ASX 200 index dropped 0.7 per cent to 3,499.6 as the ban on short selling of non-financial companies was lifted. Macquarie once more bucked the downward trend and rallied for a second day following its half-year earnings report. Its shares rose 4.8 per cent to A$25.16.

Other banks gained, with ANZ Banking up 6 per cent at A$13.82 and Westpac 4.5 per cent higher at A$16.25.

But Babcock & Brown slid 19.4 per cent to A$0.25 after the investment and asset manager announced a restructuring plan that included selling assets, sharply reducing its headcount and negotiations with banks to restructure its debt facilities.

In Hong Kong, the Hang Seng index dropped 0.8 per cent to 12,815.80, while the index of China Enterprise stocks, or H shares, lost 1.7 per cent to 6,489.12.

Construction Bank of China suffered a second day of losses amid continued concerns that Bank of America may be considering selling part of its existing holding. The stock fell 3.4 per cent to HK$3.75.

But there were gains for telecoms equipment manufacturers. ZTE rose 12.5 per cent to HK$14.20 and China Communications Services rose 10.1 per cent to HK$4.25 after reports that China Mobile had given contracts to companies including ZTE to build the second phase of its 3G network.

In Seoul, the Kospi index fell 1.9 per cent to 1,016.82 while the weighted index in Taipei shed 0.5 per cent to 4,284.09.

Technology companies were hurt with Samsung Electronics falling 1.7 per cent to Won427,500, Hynix Semiconductor losing 6.8 per cent to Won7,560 and LG Electronics falling 4 per cent to Won69,100.

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