Profit taking dent Asia Pacific markets

Risk appetite retreats ahead of EU Summit in Brussels

Asia Pacific stock markets ended first day of new trading week in deep red, with the MSCI Asia Pacific Index retreated 0.9%, as investors succumbed to profit taking amidst uninspired gross domestic product figures from the United States and lingering debt concerns from Europe. Meanwhile steep fall in Chinese market after returning from weeklong Lunar New Year holidays and lower opening of European bourses intensified profit booking across the regional bourses.

Investors dumped riskier positions across the regional markets on growing uncertainty about the European debt after Fitch Ratings downgraded the sovereign credit ratings for Belgium, Cyprus, Italy, Slovenia and Spain and potential disorderly Greece default as Greek government and its private creditors failed to come up with an agreement on debt swap talks before the start of a European summit which is going to begin later today.



Concerns about the growth momentum in the world largest economy revived after the U.S. government said Friday the country's inflation-adjusted gross domestic product for 2011 as a whole grew by 1.7%, down from 3% in 2010. US witnessed 2.8% GDP growth in the fourth-quarter ended December 2011, short of market expectation, but highest since the second quarter of 2010.

Back to countries, the Australian benchmark All Ordinaries Index closed down 0.3%, as investors opted for booking recent gain following weak offshore cues. Local stock market had started today's trade slight lower from previous closing, and then gained for the next hour of trade, and have now dipped into the red once again. Most sectors were weaker however the utilities and consumer discretionary stocks were recording some modest gains. Shares from consumer staples, technology, financials, and mining issues were major drag on benchmark index.

In Japan, the Nikkei Stock Average dropped 0.54%, registering third day of straight fall, as risk aversion mood spur by yen strength against greenback (yen appreciation to the 76-level against the dollar) and growing cautions about domestic corporate earnings for the April-December period after many companies that released their earnings by the end of last week reported weaker-than-expected figures or substantial profit declines.

Japanese exporters ended lower today's, with shares from automakers led retreat on plunge in global production. Toyota Motor fell 1.7% to 2,789 yen, Hino Motors 2.3% to 500 yen, Isuzu Motors 1.8% to 386 yen, Mazda Motor 3.1% to 127 yen, and Suzuki Motor 0.8% to 1,721 yen. Sony Corp slid 1.8% to 1,388 yen, Canon Inc 1% to 3,435 yen, Fujifilm Holdings 2.6% to 1,941 yen, and Fujitsu 3.4% to 404 yen.

Mitsubishi Electric plunged 15% to 650 yen after the firm admitted Friday that it overstated costs in government defense and space-related contracts. The Defense Ministry, the Cabinet Satellite Intelligence Center, and the space agency subsequently barred the firm from participating in open bidding. Tohoku Electric Power Co plummeted 10% to 750 yen after the firm forecasted last Friday that group might post group net loss of 250 billion yen for the fiscal year ending in March.

In china, the Mainland China stocks closed first session on new trading week largely in red terrain, weighing the benchmark Shanghai Composite index down by 1.5%, as investors offloaded risky assets across the board after returning from the weeklong Dragon Year celebrations on disappointment following lack of announcement about reserve-ratio cut during the holiday.

Chinese banks declined on worries about risk exposure caused by the dropping house prices and the deteriorating European debt crisis. Industrial and Commercial Bank of China shed 2.1% to 4.27 yuan, Agricultural Bank of China 1.5% to 2.68 yuan, Shanghai Pudong Development Bank 2.1% to 9.22 yuan, and China Construction Bank 2.9% to 4.74 yuan. Property developers went lower after Centaline Property Agency, China's biggest real-estate brokerage, said today's that home transactions in China's four biggest cities Beijing, Shanghai, Guangzhou and Shenzhen recorded 109 units during the week-long Chinese New Year, down by 66% from the same holiday period last year. Among property developers, China Vanke tumbled 4.4% to 7.55 yuan, Poly Real Estate Group Co 4.7% to 10.43 yuan, and Gemdale Corp. 3.3% to 5.28 yuan.

In Hong Kong, the HK stocks closed sharply lower in tandem with the slide of mainland A-share markets. The Hang Seng Index ended down 1.7% to 20,160.41, snapping a 6-day rally, registering first fall in seven straight sessions, as investors indulged in profit taking activities after the index had accumulated cumulative gain of 7.8% in prior six straight sessions. Selloff pressure triggered across the board, exception being utilities, with shares from financials, properties, materials, and energy led retreat.

In India, the BSE benchmark Sensex provisionally closed 2.15% down at 16,863.30, as investors opted for profit taking following strong recent rally. Profit taking pressure triggered after cues from offshore as well as regional bourses and mounting concerns about Europe debt crisis. Meanwhile profit booking intensified during late afternoon after weaker opening of European market today. All sectoral indices dived in red, with shares from capital goods, power, realty, bankex, metal, and oil & gas issues logged major losses.

Among other Asian bourses, the Indonesia Jakarta Composite index declined 1.8% to 3,915.16. Singapore Strait Times index lost 1% to 2,889.29. South Korea KOSPI was down 1.24% to 1,940.55. Taiwan TAIEX index escalated 2.4% at 7,407.41.