Asian markets ended mostly higher Tuesday, as most regional indexes felt little negative impact from the devastating earthquake in China. But shares in Shanghai finished lower.
The Shanghai Composite Index, which tracks both Class A and Class B shares, ended down 1.8% at 3560.24. The massive earthquake in southwestern China caused a selloff in insurers and telecommunications firms, while the central bank's latest credit-tightening also hit banks, pushing shares in mainland China lower. China Pacific Insurance dropped 7.2% and China Life fell 4.7%. China United Telecommunications, the only telecom operator listed in mainland China, shed 4.9% on reports of substantial damage to local telecoms infrastructure in Sichuan. Banks also came under pressure after the People's Bank of China said late Monday it will raise lenders' reserve requirement ratio to 16.5% from May 20. Industrial & Commercial Bank of China fell 1.5% while Bank of China shed 1.4%.
There remains much uncertainty about the impact on Sichuan province from the 7.9-magnitude quake, which occurred Monday afternoon and has killed an estimated 10,000 people. Although Sichuan is far inland, past policies aimed at promoting industrialization far from coastal areas mean the region is a major manufacturing as well as agricultural area. (See related article.)
Mitigating the potential market impact, the Shanghai and Shenzhen stock exchanges suspended trading Tuesday in 66 listed companies based in Sichuan province and Chongqing municipality. A number of local and foreign-invested companies, including snack and drinks maker Want Want China Holdings and Japan's Toyota Motor, Honda Motor and Yamaha Motor said they had suspended production at some facilities for safety inspections in wake of the disaster. Among other major decliners, China Vanke fell 1.9% and market heavyweight PetroChina fell 2.6%.
Hong Kong's Hang Seng Index rose 2% to 25552.77 as Chinese banks rose sharply after the mainland's reserve-ratio increase. China Construction Bank /zigman2/quotes/208974133/delayed HK:939 +1.46% rose 4.9%, Industrial & Commercial Bank of China /zigman2/quotes/201401473/delayed HK:1398 +1.00% advanced 3.2%, Bank of China /zigman2/quotes/204682472/delayed HK:3988 +0.96% picked up 2.8% and Bank of Communications /zigman2/quotes/203442771/delayed HK:3328 +1.58% gained 2.1%.
Chalco /zigman2/quotes/202960704/delayed HK:2600 +0.85% rose 6.3% and Tencent /zigman2/quotes/204605823/delayed HK:700 -1.72% advanced 8.8% after Hong Kong stock index compiler Hang Seng Indexes said Friday the companies will become index constituents starting June 10. PCCW /zigman2/quotes/203638754/delayed HK:8 -0.86% slid 2% after the index compiler said it will be removed from the index from June 10, though Cheung Kong Infrastructure /zigman2/quotes/203835081/delayed HK:1038 +0.30% , which will also be removed, ended 0.3% higher.
In Tokyo, the benchmark Nikkei 225 index rose 1.5% to 13953.73. Despite China's quake, sentiment was upbeat, buoyed Wall Street's overnight gains. "The quake in China had no negative impact here because it did not seem to affect earnings of Japanese companies," said Tsuyoshi Segawa, an equity strategist at Shinko Securities.
Japan's top auto maker Toyota Motor /zigman2/quotes/203803129/delayed JP:7203 +0.01% rose 0.8% and Honda Motor /zigman2/quotes/200490352/delayed JP:7267 +1.27% gained 1.6%. Nissan Motor /zigman2/quotes/208298710/delayed JP:7201 -1.03% rose 3.2% after the company announced its net profit jumped rose 67% on healthy overseas sales. (See related article.)
Shares in bulldozer and other heavy-equipment makers advanced on expectations of higher demand due to the cleanup and rebuilding from the Chinese quake. Machinery company Komatsu /zigman2/quotes/204002437/delayed JP:6301 +1.47% rose 3.9% while Hitachi Construction Machinery /zigman2/quotes/205375504/delayed JP:6305 +3.17% jumped 5.2%.
In Seoul, the Korea Composite Stock Price Index rose 1.1% to end at 1842.80. The index had dipped in the morning session due to a potential rise in inflationary pressures. Positive earnings outlooks boosted local technology shares. Bellwether Samsung Electronics climbed 3.7%, LG Display rose 4.2% and LG Electronics gained 1.3%.
Steelmakers finished higher as well on revived hopes for further price increases, analysts said. Posco, the world's fourth-largest steelmaker by output, rose 3.0% while Hyundai Steel climbed 3.2%. Shares of builders stayed strong throughout the session after Hyundai Engineering & Construction said that it has received a $1.12 billion order to build offshore facilities for a refinery plant in Kuwait. Its shares finished 0.7% higher. GS Engineering & Construction -- which will build a $4 billion refinery in Kuwait together with Japan's JGC -- added 1.9%. Doosan Infracore was one of the day's top gainers, climbing 6.5% on news that it will set up a $192 million heavy equipment plant in China.
In currencies, the dollar traded at ¥103.72 in Tokyo, compared with ¥103.84 in New York late Monday. The euro stood at $1.5560, slightly up from $1.5544 late Monday in New York.
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