Asian Markets: Shares lower as JAL plunges again on fears of bankruptcy
byOct 16th 2009 7:00AM
In Asia today, Japan's Nikkei Index closed at 10, 258 – up 0.2 percent. Hong Kong's Hang Seng Index lost 0.3 percent, ending the day at 21,930, and China's Shanghai Composite Index fell 0.1 percent to 2,977.
Japan's worst-performing stock was Japan Airlines Corp. (JALSY), which plunged 11 percent for a second day in a row. Reports surfaced that the airline will abandon plans to raise cash by selling part of its JALways Co., and investors began toying with the idea of bankruptcy for the beleaguered airline. The company is begging creditors for 600 billion yen ($6.6 billion) in financial assistance, including debt relief of about 300 billion yen ($3.3 billion), according to a Reuters report. A government committee is overseeing the airline's efforts to right itself, but so far has rejected plans, including a proposal to cut operating costs by 30 percent by eliminating 6,800 jobs and 50 flying routes.
On a more positive note, Japan's Fast Retailing Co. (FRCOY) continued its climb, adding 5.5 percent. Its Uniqlo stores are gaining in popularity by the day as outlets in Europe gain an ever more chic clientele.
In China, banks performed badly as investors anticipate an increase in write-offs, as called for by banking regulators. Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. (CICHY) both slid 1.2 percent.
Airlines in China were also on the decline with Hainan Airlines Co. sinking 1.9 percent and China Southern Airlines Co. (ZNH) dropping 1.1 percent.
Chinese shares on the rise included building equipment maker XCMG Construction Machinery Co., which surged 8.3 percent, coal producer Pingdingshan Coal, which surged 4.5 percent, and property developer Beijing Huaye Realestate Co., which increased 5.1 percent.
In Hong Kong, banking shares mirrored their Chinese counterparts: Bank of China Ltd. (BACHY), slid 1.8 percent, Industrial & Commercial Bank of China Ltd., lost 1.6 percent and China Construction Bank Corp. (IDCBY) dropped 1.2 percent.
Retailer China Resources Enterprise Ltd. surged on the news that it may be bought out by partner Esprit Holdings Ltd. (ESHDY). China Resources rose 3.6 percent and Esprit, which has shops all over Hong Kong including a location in the upscale Pacific Place mall, ended the day up 1 percent. Perhaps Asia's obsession with fashion will be the key to it's financial recovery.