Bernanke remarks prompt slide

Currencies, bourses also react to China data

Asian markets fell yesterday as investors took profits after weak Chinese data and signs that the US Federal Reserve could start tapering off its massive stimulus measures.

The Stock Exchange of Thailand plunged 23.81 points, down 1.4 per cent from the previous day, to close at 1,607.46 on heavy selling by foreign and local investors, as investors worried about the end of quantitative easing. Trade value was Bt78.13 billion.

The stock slump came after Federal Reserve chairman Ben Bernanke hinted that the US central bank might cut bond buys, at the same time as disappointing Chinese manufacturing data.

The SET Index plunged 26.15 points when it opened yesterday morning to 1,605.12 points, with net sales of Bt34.12 billion.

An analyst at Krungsri Securities noted that the market volatility was in line with the stock markets in region after Bernanke's remarks, with investors losing confidence in the market, causing an exodus.

The SET Index in the afternoon shrank by more than 40 points to miss the 1,600 mark after a report from HSBC Holdings said manufacturing in China had unexpectedly contracted for the first time in seven months.

The flash HSBC Purchasing Managers' Index (PMI) for May fell to 49.6, below the 50-point level, demarcating expansion from contraction for the first time since October and sending Asian financial markets sharply lower. The HSBC PMI stood at 50.4 in April.

The sub-50-point level is lower than targeted and bad for Asian stock-market sentiment, according to the analyst.

Rush for profits

Meanwhile, Tokyo dropped on record volumes in the afternoon as investors panicked in the rush to take profits, with the Topix Index suffering its biggest daily fall since the March 2011 earthquake-tsunami and the ensuing nuclear crisis.

Tokyo closed down 7.32 per cent, or 1,143.28 points, at 14,483.98.

Sydney slumped 1.99 per cent, or 106.9 points, to close at 5,062.40. South Korean shares slid 1.24 per cent, or 24.64 points, to finish at 1,969.19.

Shanghai ended down 1.16 per cent, or 26.73 points, at 2,275.67, and Hong Kong dropped 2.54 per cent, or 591.4 points to finish at 22,669.68.

"The negative Chinese indicator triggered today's selling," said Hirokazu Fujikiki, strategist with Okasan Securities in Japan. "It was no wonder sizeable selling would emerge, as Japanese shares rose quite fast recently."

Earlier in the day, the Nikkei 225 index at the Tokyo Stock Exchange, which closed at its best level in more than five years on Wednesday, had risen 0.23 per cent.

Manila closed down 0.96 per cent, or 70.69 points, at 7,314.38, Taipei shed 1.92 per cent, or 161.01 points, and Wellington fell 0.47 per cent, or 21.59 points, to 4,588.59.

Other markets had opened down, taking their lead from Wall Street, where the Dow Jones Industrial Average dropped 0.52 per cent to 15,307.17 after Bernanke's comments.

Europe's main stock markets also slumped at the start of trading, with Frankfurt and Paris down more than 2 per cent and London slumping 1.42 per cent.

Selling in Japan picked up pace when the yen jumped against the dollar in Asia afternoon trade, as investors adjusted positions after the recent sharp decline in the value of the Japanese currency.

The dollar plunged to 101.63 yen in Tokyo afternoon trade from 103.31 yen in New York late on Wednesday.

Oil extended losses in Asian trade, with New York's main contract, light sweet crude for delivery in July, dropping 63 cents to $93.65 a barrel in the afternoon. Brent North Sea crude for July delivery shed 60 cents to $102.00.

Gold was at $1,378.14 at 8.25am GMT from $1,384.40 late on Wednesday.

The baht fell the most in almost two weeks as speculation that the US Federal Reserve will scale back its bond-buying dampened demand for emerging-market assets.

The baht dropped 0.4 per cent, the most since May 10, to 29.92 per dollar as of 9.14am in Bangkok, according to data compiled by Bloomberg. It declined 0.2 per cent this week, paring its gain this year to 2.2 per cent, the best performance in Asia. Onshore markets will be shut tomorrow for a public holiday.

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Article source: http://www.thethailandlinks.com/2013/05/24/bernanke-remarks-prompt-slide/