Chinese shares notched a fresh record high on Tuesday, bucking a move lower in most regional markets in response to fresh subprime fears and disappointingly low sales of new houses in the US that may signal a downturn in the world’s largest economy.
Shares in the Philippines and South Korea managed gains, but Singapore dropped 1.1 per cent thanks in part to DBS admitting further exposure to collateralised debt obligations. Bad news on refinancing from mortgage lender Rams Homes Loans helped pull down Australian shares.
“We had the short sharp wobble and now we have had an equally short sharp rebound,” said Hugh Young, head of Aberdeen Asset Management in Singapore. “One feels there will be a flow of more bombs at the end of the month when people report asset values that have been marked to market.”
The Japanese stock market edged lower, weighed down by a slightly stronger yen and the poor US home sales figures. The Nikkei 225 declined 0.1 per cent to close at 16,287.49, while the broader Topix was down 0.2 per cent at 1,584.60.
By late afternoon in Tokyo the dollar was trading at Y115.6, slightly lower than a day before.
In China, the Shanghai Composite Index closed 0.9 per cent higher at 5,194.69 after touching a lifetime high of 5,209.51. The market has rallied by 43 per cent since early July and by 94 per cent since the beginning of the year.
Gains were led by China Life Insurance, which rose by the 10 per cent daily limit to Rmb56.09 after reporting a 160 per cent rise in first-half profit.
The Shenzhen index closed at a lifetime high of 1,435.46, up 0.1 per cent. It has risen 160 per cent since January.
South Korea posted a second day of gains on news of big orders for shipbuilders. The Kospi 200 advanced 1.5 per cent, paced by engineering and steel stocks.
Investors in the Philippines returned from a public holiday to hunt for bargains and catch up with Monday’s gains in the region. The Philippine Stock Exchange index closed 1.4 per cent higher at 3,251.77. PLDT rose 2 per cent to Peso2,590.00, while shopping mall developer and owner SM Prime Holdings advanced 4.6 per cent to Peso11.50.
In Singapore, DBS shares sank 3 per cent to S$19.80 as the bank revealed further exposure to collateralised debt obligations. Other bank shares also suffered: UOB fell 2.4 per cent to close at S$20.50 and OCBC lost |0.6 per cent to S$8.55. The Straits Times index dropped 1.1 per cent to 3,350.32.
In Australia, Rams Home Loans dropped as much as 13.8 per cent to a low of A$1.00 after it said it would try to sell mortgage-backed bonds in Australia since failing to refinance US$5bn of short-term debt in the US earlier this month. The shares closed down 9.5 per cent at A$1.05. The poor state of the US housing market hurt stocks with exposure to the American consumer and home buyer. Westfield, which develops shopping centres in the US, lost 2.1 per cent to A$ 38.40. The S&P/ASX 200 closed down 0.1 per cent at 6,176.30.
Taiwan’s Taiex index finished 0.1 per cent lower at 8,727.55. Computer maker Acer fell by the maximum allowed on the exchange as investors worried Acer may be overpaying for its US$710m acquisition of Gateway. The shares closed down 6.9 per cent at NT$59.20.
Shares of Acer’s rival Lenovo fell in Hong Kong as the firm faces losing its number one spot as world’s biggest computer maker if the Gateway acquisition is successful. Lenovo lost as much as 7.5 per cent in the morning before ending the day down 6.7 per cent at HK$5.13. The Hang Seng index was 0.9 per cent lower at 23,363.76.