By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Japanese stocks dropped Monday, hit
by a strengthening yen and slower-than-expected economic growth in
the April-June quarter, but Chinese shares gained after data
showing banks issued more credit than estimated in July.
Japan's Nikkei Stock Average dropped 0.7% after the government
said the economy grew at an annualized rate of 2.6%. The expansion
marked a third straight quarter of growth but fell a full
percentage point short of the 3.6% improvement estimated in
separate Dow Jones Newswires and Reuters surveys.
"The economic conditions have turned out less favorable or more
tricky for the scheduled consumption-tax hikes," said Crédit
Agricole economist Kazuhiko Ogata.
Ogata cited uncertainty about the plan's implementation
following Japan's Prime Minister Shinzo Abe earlier instructions to
ministers to evaluate the impact from the planned consumption tax
hikes before making a final decision on the increase.
Japan's parliament has already approved an increase in the
consumption tax to 8% by April 2014 and to 10% by October 2015,
from 5% at present. The tax increase, aimed at boosting the revenue
of the highly-indebted government in Tokyo, is expected to weigh on
the nation's economic recovery.
Financial shares declined in Tokyo, with Daiwa Securities Group
Inc. (DSEEY) losing 4.4%, Nomura Holdings Inc. (NMR) sliding 4.1%,
and Mitsubishi UFJ Financial Group Inc. (MTU) shedding 0.8%.
Bridgestone Corp. (BRDCY) gained 3.6% after the tire maker
raised its profit forecast for the fiscal year ending next March,
while Citizen Holdings Co. surged 16.2%, boosted by strong results
and an increase in its profit outlook.
But many other exporters retreated after the U.S. dollar
(USDJPY) briefly slid under the Yen96-level, with Fast Retailing
Co. (FRCOY) falling 1.1%, and Nikon Corp. (NINOY) declining 3%.
Elsewhere in Asia, the Shanghai Composite added 0.9%, and Hong
Kong's Hang Seng Index advanced 1.2% after a weak start.
Australia's S&P/ASX 200 rose 0.4%, but South Korea's Kospi
slid 0.1% in choppy trading.
Banks rose in Shanghai after data released following the stock
market's close Friday showed Chinese banks made 699.9 billion yuan
($114.3 billion) (USDCNY) worth of local-currency loans in July,
beating expectations.
Shares of China Minsheng Banking Corp. (CMAKY) added 2%, and
China Merchants Bank Co. (CIHKY) gained 1.1%.
In Hong Kong, China Resources Land Ltd. (CRBJF) climbed 3.2%,
refining giant China Petroleum & Chemical Corp. (SNP) rose
4.3%, and coal major China Shenhua Energy Co. (CSUAY) soared 5.8%
amid expectations for an improvement in the Chinese economy.
"With uncertainty over [U.S.] Federal Reserve stimulus measures
lurking in the background, markets are struggling to find
direction," said Rivkin Securities global analyst Tim Radford.
"Given it's a relatively quiet economic week ahead, we could expect
to see equities track sideways."
Australian miners posted solid gains following an increase in
metals prices Friday. BHP Billiton Ltd. (BHP) added 2.6%, and Rio
Tinto Ltd. (RIO) climbed 3.3%.
Newcrest Mining Ltd. (NCMGF) jumped 4.7% despite posting a
record annual loss and scrapping its dividend payment, as its
profit after stripping off one-time impairment charges came ahead
of expectations.
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