By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) -- Many major Asia stock markets fell
sharply Tuesday, paring strong year-to-date gains as Europe's
political troubles forced their way back onto the agenda.
Japan's Nikkei Stock Average dropped 1.5%, with the move cutting
year-to-date gains to 6.7%, while South Korea's Kospi fell 0.7%,
and Australia's S&P/ASX 200 lost 0.5%.
In China, Hong Kong's Hang Seng Index plunged 1.7%, slicing
gains made since the start of the year to 2.8%, while the Shanghai
Composite Index lost 0.4%, though with its 2013 advance still at a
robust 6.6%.
"The market isn't looking at the fundamentals but is back to the
binary risk-on/off syndrome as fears over Europe resurface, focused
on Spain and Italy," Kim Eng Securities head of sales trading
Andrew Sullivan said in Hong Kong.
"Another issue for Hong Kong is that we are in the runup to
Chinese New Year, and retail investors may take this opportunity to
lock-in recent gains and take cash to put in their lai-see
packets," he said, referring to the customary red envelopes
containing cash gifts exchanged during the holiday.
Euro-fears revive
U.S. stocks took some heavy losses Monday, as uncertainty over
Europe rattled investors and triggered a steep pullback from
five-year highs.
"The current flare-up in worries has to do with rising political
risk in Spain and Italy," said Barclays Capital strategist Aroop
Chatterjee.
"Markets have been increasingly comfortable with European risks
over the past few months and are largely not positioned for this
increase in political problems. The outcomes in Spain and Italy are
far from certain and may represent stumbling blocks for further
expansion in risk appetite," Chatterjee said.
The Hong Kong market suffered particularly heavy selling, with
heavyweight HSBC Holdings PLC (HBC) -- which has a major presence
in Europe -- down 2.1% amid the concerns over Italy and Spain.
European markets sold down overnight, with opinion polls in
Italy showing weakening support for the current austerity reforms,
and a political corruption scandal plaguing Spain.
Among other Hong Kong movers, shares of Sinopec -- formally
known as China Petroleum & Chemical Corp. (SNP) -- skidded 7%
on fears of equity dilution after announcing a $3.1 billion private
share placement.
Recent gainers in the consumer, property and financial sectors
also suffered losses, with Bank of China Ltd. (BACHY) lower by
2.5%, and Henderson Land Development Co. (HLDVF) down 2.8%.
In mainland China trading, banks also fell sharply, giving back
recent gains, with Agricultural Bank of China Ltd. (ACGBY) falling
2.2% to cut its 2013 advance to 12.9%. China Citic Bank Corp.
(CHCJY) fell 2.9%, paring year-to-date gains to 17.5%.
Japanese exporters were also weaker after a recent advance, with
Mazda Motor Corp. (7261.TO) down 2.5% after rising 11.4% in
February alone. Likewise, Sharp Corp. (SHCAF) fell 3.5%, while Fuji
Heavy Industries Ltd. (FUJHY) lost 3%.
Heavyweight retailer Fast Retailing Co. (FRCOY) retreated 3.4%
after reporting a 5.5% drop in same-store sales at its Uniqlo
casual-clothing store chain.
Fujitsu Ltd. (FJTSY) retreated 3.5% after a Nikkei report that
the firm will report a fiscal-year net loss of almost Yen100
billion ($1.1 billion), hurt by costs relating to revamping its
semiconductor business.
Hitachi Ltd. (HIT) fell 6.4% as investors reacted to a lower
fiscal-year outlook from the conglomerate and a 38% drop in
quarterly net profit, which missed analysts' expectations.
In Australian trading, hearing-aid company Cochlear Ltd. (CHEOY)
tumbled 7.2%, retracing recent gains, after the firm said that it
returned to a profit in its fiscal first half but at a lower level
than analysts had expected.
An as-expected interest rate decision from the Reserve Bank of
Australia did little to ruffle markets, with the benchmark
S&P/ASX 200 virtually unchanged as the central bank kept its
policy interest rate at 3%.
The South Korean market saw sizeable losses for tech firms, with
heavyweight Samsung Electronics Co. (SSNLF) falling 0.4%, and chip
maker SK Hynix Inc. (HXSCL) down 2.3%.
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