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-- Asian markets fall; Japan automakers weak amid China-Japan
tensions
-- Nikkei down 1.8%, Hang Seng Index falls 0.9%, S&P ASX
200 0.3% lower.
-- Island dispute most evident in car industry.
(Adds information, quotes, updates/adds market levels)
Asian markets fell on Wednesday as stocks in Japan and Hong
Kong dropped with the ongoing territorial dispute with China continuing to weigh
on sentiment, while official comments Tuesday overnight cast doubt on the power
of central banks to stimulate global growth.
"In the foreground there
seems to be geopolitical risk between Tokyo and Beijing," said Matthew Sherwood,
head of investment market research at Perpetual Investments in Sydney, which has
around $25 billion worth of assets under management, adding that "people are
still quite worried about Japan's export-based economy."
Japan's Nikkei
Stock Average fell 1.8% as tensions between China and Japan continued to weigh
on sentiment. Persistent strength in the yen, at Y77.76 to the dollar, was
another negative, as was selling pressure due to many local companies going
ex-dividend.
Hong Kong's Hang Seng Index was off 0.9%, while the
Shanghai Composite was down 0.6%.
The ongoing island dispute was most
apparent in the automobile sector, as large Japanese car companies decided to
reduce their production in China as anti-Japan sentiment affects local sales of
their products.
Toyota Motor fell 1.7% after it decided to close its
main plant in Guangdong province, southern China, for an extra four days, ahead
of a scheduled eight day closure for national holidays next week. Nissan lost
2.1% after it said it will extend its holiday closure by three days.
The
effect was felt in Hong Kong as well, as Dongfeng Motor Group, which has joint
ventures with Nissan and Honda, fell 2.9%. Guangzhou Automobile Group, which
gets much of its earnings from a joint venture with Toyota and Honda, was down
4.2%. China ZhengTong Auto Services Holdings, a Chinese car dealership with a
high exposure of Japanese cars, dropped 3.5%.
In South Korea, where the
Kospi was down 0.6%, Hyundai Motors added 1.8%.
Australia's S&P/ASX
200 fell 0.3%, as mining stocks remained weak: BHP Billiton dropped 1.7% and Rio
Tinto was 2.6% lower.
Regional markets followed Wall Street lower after
Federal Reserve Bank of Philadelphia President Charles Plosser said that the
Fed's recently unveiled bond buying program will probably fail to help economic
growth, which in turn might damage the central bank's reputation.
Concerns over Europe's debt crisis were stoked when a European Central
Bank member told German newspaper Die Welt that the central bank will not take
part in a potential restructuring of Greek debt, leaving the task to euro-zone
members.
The euro stabilized at $1.2900 after slipping 0.2% overnight.
In deal news, Singapore Telecommuncations dropped 3.9% after sovereign
wealth fund Temasek Holding sold 400 million shares, representing 2.5% of the
company.
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