Asia stocks down Japan sinks deeper into recession

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(Agencies)
Updated: 2009-02-16 14:30

HONG KONG – Most Asian stock markets fell Monday, as new figures showed Japan's economy contracted the most in 35 years and Group of Seven finance ministers warned the global slump will drag on through most of the year.

A trader watches a stock monitor on the floor of the New York Stock Exchange February 13, 2009. [Agencies]

The news out of Japan, worse than many forecasts, was a sobering reminder of the toll on Asia's export-driven countries as world demand collapses amid the worst economic downturn in decades. According to the government, the world's second-biggest economy shrank at an annual pace of 12.7 percent last quarter.

Investors also seemed disappointed after finance chiefs from the Group of Seven finance ministers finished their meeting with pledges to work together to boost growth and unemployment but without any concrete measures.

Increasingly, investors are unconvinced governments around the world are acting quick enough to solve the credit crisis, plummeting consumer demand and other problems at the heart of the economic slowdown.

"The global recession is deeper than anticipated. At the same time policy makers are failing to deliver measures to address the problems," Dariusz Kowalczyk, chief investment strategist for SJS Markets in Hong Kong. "It seems that what they're doing is too little too late."

Japan's Nikkei 225 stock average lost 41.84 points, or 0.5 percent, to 7,737.56, and Hong Kong's Hang Seng Index dropped 275.65 points, or 2 percent, to 13,279.02. South Korea's Kospi lost 0.8 percent to 1,182.39.

Markets in Singapore and Australia also declined, while benchmarks in Shanghai and Taiwan gained.

In Japan, exporters were down on data showing the economy sank deeper into recession.

The result represents the steepest drop for Japan since the oil shock of 1974 and outpaced declines of 3.8 percent in the US and 1.2 percent in the euro zone. A survey of economists by Kyodo news agency had projected an 11.6 percent contraction.

"It's clearly very shocking data," said Clive McDonnell, head of Asia strategy at BNP Paribas Securities in Hong Kong. "The drop is certainly beyond our own quite negative expectations. (Japan's) policy response has not been as effective."

Shares in Toyota Motor Corp. lost 1 percent, while electronics heavyweight Canon Inc. slid 1.8 percent.

Also weighing on markets were declines on Wall Street last week.

Friday, the Dow fell 82.35, or 1.04 percent, to 7,850.41, its lowest close since Nov. 20. Broader stock indicators also fell, with the Standard & Poor's 500 index down 8.35, or 1.00 percent, to 826.84. The S&P 500 ended the week off 4.8 percent.

US markets are closed Monday for Presidents Day.

In currencies, the dollar weakened to 91.62 yen, down from 91.87 yen late Friday. The euro fell to $1.2772 compared to $1.2860.

Oil prices were little changed after soaring 10 percent last week, trading 15 cents higher at $37.66 for a barrel of light, sweet crude for March delivery. The contract rose $3.53 to settle at $37.51 a barrel on the New York Mercantile Exchange on Friday.