China stocks get slapped; Sydney, Seoul rise
HONG KONG (MarketWatch) -- Mainland Chinese stocks tumbled on Monday after a few corporate profit warnings and some downbeat comments on the economy from Premier Wen Jiabao, sending the Shanghai Composite to its lowest finish in more than three years.
Australian and South Korean shares advanced in the wake of strong U.S. earnings reports.
The Shanghai Composite Index (000001) dropped 1.7% to 2,147.96, a closing level it hasn't seen March 13, 2009, when the benchmark ended at 2,128.85. The Shenzhen Composite Index, meanwhile, fell to 889.10, losing 3.6% for its worst percentage drop since a 4.1% plunge on March 28.
The drop came as Suning Appliance Co. (002024) and telecom-equipment firm
The drop in shares of Suning, one of the China's largest home-appliance retailers, came after a it reportedly warned that its profit may fall more than previously forecast. Shares of telecom-equipment firm ZTE Corp., likewise, fell after saying its first-half profit fell by between 60% and 80%.
"While we have been cautious on the [ZTE] stock given our concerns on the margin pressure for both of its network and terminal businesses, we still see this profit warning as a negative surprise, given the magnitude of the earnings decline," said analysts at Barclays Capital.
The drop came against the backdrop of macro-economic worries. Chinese Premier Wen Jiabao said Saturday that his nation's economic rebound wasn't yet stable and that hardship may continue for a period of time, according to a state-media report. Read more on Premier Wen Jiabao's remarks.
The comments followed government data released Friday morning showing China's second-quarter economic growth slowed to 7.6% from a year earlier, compared to 8.1% in the first quarter. Read more on China's economic growth data.
Several medium- and large-capitalization stocks lost heavily on the Chinese stock exchanges.
Sany Heavy Industry Co. (600688) lost 5.7% and Sinopec Shanghai Petrochemical Co. (600688) shed 5% in Shanghai; Yunnan Copper Co. (000878) fell 4.7% and Chongqing Changan Automobile Co. (000625) shed 4.3% in Shenzhen.
The performance on mainland exchanges weighed on some other markets in the region, with Hong Kong's Hang Seng Index (HSI) up 0.2% after a choppy session that saw the benchmark change direction a few times. Taiwan's Taiex ended 0.2% lower.
But South Korea's Kospi (SEU) rose 0.3% and Australia's S&P/ASX 200 index (XJO) climbed 0.6%, eking out gains on the back of a solid rally on Wall Street Friday, after better-than-expected quarterly results from J.P. Morgan Chase & Co. (JPM) and
Japanese share markets were closed for a holiday.
"Good earnings news from J.P. Morgan and Wells Fargo highlights the strength of U.S. banks, in sharp contrast to European banks. This helps underpin U.S. bank lending and provides added confidence that the U.S. economy is not about to plunge back into recession," said Shane Oliver, head of investment strategy for AMP Capital Investments.
However, Asian "shares are vulnerable in the short term," Oliver said.
"The September quarter is often difficult for share markets, and the European debt crisis, U.S. slowdown and lingering worries about China remain ongoing sources of weakness, with earnings expectations likely to be downgraded further," Oliver said.
Other major movers
Lending a bit of support to the Hong Kong market, heavyweight bank
South Korean names exposed to the global demand cycle also saw some gains, with
Friday's advance in the commodities space spurred resource-sector stocks. In Sydney, iron-ore producer
Also in Sydney,
In Hong Kong, shares of
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