By Agency reporter

Monday, 24 Jan 2011

Asian stocks fell this week, with the benchmark index erasing its gain for the year, amid concerns that China’s faster-than-expected economic growth will add pressure for it to step up measures to combat inflation.

Bloomberg News reported on Saturday, that BHP Billiton Limited, the world’s largest mining company, slid 2.5 per cent in Sydney as commodity prices retreated.

Mitsubishi Corporation, Japan’s No. 1 commodities trader, declined by 4.1 per cent in Tokyo. Cnooc Limited, China’s biggest offshore oil producer, dropped 2.1 per cent in Hong Kong. James Hardie Industries SE, the biggest seller of home siding in the United States, declined by 3.1 per cent in Sydney.

“The market is worried that growth in China has been too strong and that officials may need to tighten policy further to prevent the economy overheating,” Mr. James Holt, who helps manage about $40bn at BlackRock Investment Management Australia, said. “Since China is one of the few growth engines in the world right now, markets have sold off.”

The MSCI Asia Pacific Index retreated by 1.7 per cent to 136.48 this week, halting five straight weeks of advance.

Hong Kong’s Hang Seng Index dropped by 1.7 per cent. China’s Shanghai Composite Index slipped by 2.7 per cent.

Stocks in Indonesia and neighbouring Philippines also slid, driving their benchmark indexes more than 10 percent below recent highs, on concern inflation will lead to higher borrowing costs and pare corporate earnings.

Japan’s Nikkei 225 Stock Average fell by 2.1 per cent this week, while Australia’s S&P/ASX 200 Index slid one per cent.

BHP slid by 2.5 per cent to A$44.71 in Sydney. Rio Tinto Group, the world’s third-largest mining company, slipped 3.6 per cent to A$84.38. Mitsubishi declined 4.1 per cent to 2,273 yen. Cnooc dropped 2.1 per cent to HK$18.64.

Crude for March has fallen by three per cent last week. The February contract expired on January 20 after dropping by 2.2 per cent to $88.86, the lowest since January 7.

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum lost 2.1 per cent this week.

“Concerns remain about China’s tightening,” said Mr. Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Company, which oversees about $104bn. “People are worried that with continued tightening from emerging economies, especially China, demand for commodities will decline.”

 

Source: Punch