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GLOBAL MARKETS-China stocks tumble; yen jumps after Japan vote

* Historic, landslide opposition win in Japan boosts yen

* Shanghai stocks fall to 3-mth low, hitting risk taking

* Valuations of Asia stocks losing lustre?

By Kevin Plumberg

HONG KONG, Aug 31 (Reuters) - Chinese stocks tumbled 5 percent to a three-month low on Monday, weighing on Asian stocks and sapping investor willingness to put money at risk, while the yen rose sharply after Japanese voters swept the opposition into power.

The election results, while widely anticipated, sparked some short-term buying of yen on hopes that new policies will support consumer spending in an economy trapped in deflation and haunted by a weak growth outlook, though domestic stocks slipped on exporter weakness. [ID:nT356076]

Outside of Japan, volatility in Shanghai, a market largely closed to foreigners, has curbed risk taking and has been weighing on the Australian dollar, which with its relatively high yields is a common target for investors searching for bigger returns.

Shanghai-listed shares dropped 5.4 percent .SSEC on the day, racking up losses of 21 percent in August and falling below the 125-day moving average, what is viewed by many domestic investors as the threshold between bear and bull markets.

Fears that banks will rein in their lending after a torrid first six months of the year and an abundance of supply of new shares have been pushing Chinese shares lower for the last month, often weighing on global investor sentiment about holding riskier assets.

U.S. stock futures were down 0.55 percent SPc1, indicating a soft open on Wall Street later in the day, while Treasury futures were up 0.2 percent TYc1.

Shares of Bank of China (601988.SS), the country's biggest foreign exchange lender, were down 3.1 percent and the top drag on the market. Hong Kong's Hang Seng .HSI dropped 2.2 percent to a one-month low in sympathy with Shanghai.

Tokyo's Nikkei share average .N225 slashed early gains that were led by buying of futures and fell 0.35 percent. Large exporters Canon Inc (7751.T) and Honda Motor Corp (7267.T) were among the biggest drags on the Nikkei, losing around 2 percent each on the stronger yen.

The MSCI index of Asia Pacific stocks traded outside Japan .MIAPJ0000PUS slid 1.4 percent. The selling was widespread, hitting the consumer discretionary, energy, telecommunications and materials sectors.

ASIA STOCK'S PREMIUM QUESTIONED

Asian stocks are trading at a price-to-book valuation of 1.1 times, above the 30-year average of 0.7 times and around the same level at the peak of the last bull market.

Investors since March had been justifying the premium based on the region's growth prospects and its expected speedy recovery from the global downturn.

However, the Asian stock rally sputtered in July and August for two reasons, according to Mark Matthews, Asia Pacific strategist with Fox-Pitt Kelton ini Hong Kong.

"The first is that the U.S. in particular and the developed world in general are experiencing economic recoveries that are more robust than previously expected. The second is that there is policy shift in China, and even the doves there are happy that asset prices are no longer rising quickly," he said in a note.

YEN FOR YEN

In the currency market, the yen got an early boost on the clear-as-day election result, which eliminated any uncertainty about Japan's political leadership. The sharp selloff in Shanghai equities also supported the yen as dealers sought a safe haven.

The U.S. dollar fell 0.9 percent to 92.60 yen JPY=, the lowest since July 13, and the euro dropped 1.1 percent to 132.24 yen EURJPY=.

"The DPJ (Democratic Party of Japan) may favour the consumer more, which ultimately could be favourable for the economy, but that's a long-run thing," said Stephen Roberts, an economist at Nomura in Sydney.

For a graphic on the Japanese election results, click on:

here

The Australian dollar was off 0.3 percent to US$0.8398 AUD=, though was largely unchanged in August.

The creeping rise of risk aversion in markets pushed down oil prices, with U.S. crude for October delivery down 0.5 percent to $72.41 a barrel CLc1. Brent was down 0.6 percent to $72.34 a barrel LCOc1. (Editing by Kim Coghill)

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31-Aug-2009 14:46

Straits Times Index / STI to cross 3000 boosted by long-term investors

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x 0

shanghai down 6%

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31-Aug-2009 13:29

Midas / Midas

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x 0

still in consolidation mode..

patience is a virtue..

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31-Aug-2009 13:28

Citic Envirotech / United Envirotech

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x 0

later "big brother" start to give us a call..

me n lawcheemeng kenna.. keke

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31-Aug-2009 13:16

Straits Times Index / STI to cross 3000 boosted by long-term investors

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x 0

There are warning signs around.. just whether u want 2 heed them or not

Chinese shares tumble

An investor looks at a stock price monitor at a private securities company Friday August 28, 2009 in Shanghai, China. -- PHOTO: AP

SHANGHAI - CHINESE shares tumbled 5.37 per cent by midday Monday as concerns over slowing lending growth and a new share supply glut weighed on sentiment, dealers said.

The Shanghai Composite Index, which covers both A and B shares, was down 153.73 points at 2,706.96.

Major refiner China Petroleum & Chemical Corp. dropped 8.7 per cent to 11.30 yuan while PetroChina, the Shanghai index's heaviest weighted share, fell 5.1 per cent to 13.02 yuan.

Analysts say investors sold on concerns that banks will cut back on the lavish lending that helped push shares higher earlier in the year.

In Tokyo, Japan's Nikkei average edged lower on Monday as a stronger yen sent shares of exporters lower, erasing earlier gains to an 11-month high after an election win by the opposition.

Sunday's landslide victory for the Democratic Party, led by Yukio Hatoyama, ends a half-century of almost unbroken rule by the Liberal Democratic Party and breaks a deadlock in parliament.

In active trade, the benchmark Nikkei dipped 0.4 per cent to 10,497.19, after gaining more than 2 per cent at one point to 10,767.00, its highest level since Oct 6. Market players said the gain had been led by buying of Nikkei futures, sparking short-covering.

'After a spatter of buying at the open, this may be it for today,' said Kenichi Hirano, operating officer at Tachibana Securities. Market players said there was little sign of foreign investors' presence in the market and some were selling on the fact that the election was over.

The broader Topix fell 0.3 per cent to 966.09. Nikkei September futures also fell 0.3 per cent to 10,500, reversing course after touching as high as 10,770. -- AFP, AP, REUTERS

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31-Aug-2009 13:11

Citic Envirotech / United Envirotech

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x 0

buyin coming back @ 18c..

no more panic @ the disco liaoz

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31-Aug-2009 12:03

Citic Envirotech / United Envirotech

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x 0

no more panic already.. so boring..

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31-Aug-2009 11:32

Straits Times Index / STI to cross 3000 boosted by long-term investors

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x 0

in a market there's buyers and sellers..

at the bottom the sellers are the retailers.. and the buyers the smart $$

at the top the sellers are the smart $$ .. the buyers the retailers..

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31-Aug-2009 11:04

Straits Times Index / STI to cross 3000 boosted by long-term investors

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x 0

HanSeng and China down big time..

STI hit a double top this morning @ 2660 close to the other day's high of 2670..

time to wait to pick up cheap..

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31-Aug-2009 10:44

Citic Envirotech / United Envirotech

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x 0

support @ 17.5 is massive..

gotta break that to fall to ur 15c

unlikely unless some Big player throws the whole chunk down

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31-Aug-2009 10:36

Ezra / Ezra

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1.68!..time for lift off!

ozone2002 ( Date: 26-Aug-2009 11:41) Posted:

look out for ezra to break its 1.66 high

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