Asian Markets Mixed Amid Rising Oil Prices and Japan's Political Shakeup


Asian Markets were mixed Monday. In Hong Kong the Hang Seng Index dipped 0.4% to 23,313 and in Japan the Nikkei 225 Index tumbled 1.8% to 10,505. Meanwhile, China's Shanghai Composite Index surged 1.8% to end the day at 2,996.

Markets reacted to a surge in the price of oil, which crossed the $106-per-barrel line in Asian trading today. Fighting in Libya has curtailed the nation's oil output by at least three quarters, according to the Financial Times, and according to the International Energy Agency, January output was at 1.69 million barrels per day. Other countries, such as Saudi Arabia, are said to be picking up the slack, but the uncertainty is rattling markets.

In Hong Kong airline shares plunged in anticipation of higher fuel prices. Air China dived 3.9%, Cathay Pacific tumbled 3.5%, China Southern Airlines lost 2.1% and China Eastern Airlines fell 1.7%.

Hong Kong developers sank on worries that global economic recovery will falter as high oil prices add to the cost of everything from travel to manufacturing goods to transporting products around the world. Cheung Kong and Sun Hung Kai both slumped 1.3%, China Resource Land dipped 1.1%, Hang Lung fell 0.9% and New World Development lost 0.8%.

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Other big losers included hair care product maker BaWang, which announced on Friday that it expects a loss of CNY 130 million ($20 million) for 2010. The company has been on a slippery slope since a Hong Kong magazine reported that the company's tinctures contain traces of a cancer causing chemical, but the Wall Street Journal points out that the carcinogen is a common byproduct in cosmetics production and the products still meet E.U. and FDA safety standards. BaWang slid 5%, not good news for the firm's sword-wielding spokesman Jackie Chan.

Mining Companies Benefit From Rising Gold

Companies that climbed higher in today's trading included Zhaojin Mining, which jumped 5.6% on a massive surge in annual profits. Real Gold Mining leaped 3.8% and Zijin Mining rose 1.2%, both helped by an increase in the price of gold.

Political uncertainty in Japan undermined investors already jittery over the crisis in the Middle East. Foreign Minister Seiji Maehara tendered his resignation after admitting accepting a paltry $610 political donation from a South Korean national -- a practice distinctly banned by Japanese law, according to the BBC. The resignation is seen as a major blow to Prime Minister Naoto Kan's government, which has been working double-time to straighten out the country's finances, and especially since Maehara was widely viewed as Kan's successor.

Japanese building and engineering firms closed lower with Hazama Corp. nosediving 2.6%, Kajima losing 2.3%, Nishimatsu Construction down 1.8% and Taisei declining 1.1%.

Electronics exporters fell with Canon slumping 2.4%, Sony falling 1.8% and Casio Computer and Sharp both dipping 1.2%.

In China, it was quite another story, with the country's benchmark index climbing higher as the government issued statements saying domestic consumption is the key to positive economic growth. Appliance makers surged with TV maker Hisense Electric rallying 5.7%, Gree Electric Appliances shooting up 4.6% and Qingdao Haier, a refrigerator company, zipping up 4.4%.

Chinese energy companies capitalized on the expectation that the cost of power will continue to rise. China Shenhua, a coal-based energy company and China Coal Energy both hit the 10% daily maximum, while oil company PetroChina surged 2.6% and oil processor Sinopec Shanghai Petrochemical advanced 1.6%.