Japan stocks rally; Shanghai, Taipei decline

Shares of regional airlines suffer broad losses on bird-flu fears

 

By V. Phani Kumar and Michael Kitchen, MarketWatch

HONG KONG (MarketWatch) — Japanese stocks soared Monday as the yen’s slide helped the market stand tall, even while some other Asian equities suffered from a cocktail of worries over the spread of bird flu in China, downbeat U.S. jobs data and North Korea’s aggression.

Japan’s Nikkei Stock Average JP:NIK +2.80%  jumped 2.8% to end at 13,192.59, while gains for some mining stocks helped Australia’s S&P/ASX 200 AU:XJO +0.29%  post a modest 0.3% advance from two-month lows.

China’s Shanghai Composite CN:000001 -2.54%  skidded 0.6% as the market reopened after a four-day weekend amid heightened worries over the spread of a new strain of bird-flu virus.

Taiwan’s Taiex XX:Y9999 -2.39% slumped 2.4%, Hong Kong’s Hang Seng Index HK:HSI -0.04%  ended marginally lower, and South Korea’s Kospi KR:SEU -0.44%  fell 0.4%.

Reuters

“The avian flu may have limited impact on economic growth, while it could cause future food-price inflation if more supply is cut. But this incident may hurt investment sentiment in the very near term,” Citigroup strategists Minggao Shen and Ben Wei wrote to clients in a report Monday.

They said that while the insurance sector “may face earnings pressure” amid worries over the spread of the H7N9 virus, airlines, consumer staples and retail sectors could also be potentially affected.

On the other hand, the health-care and auto sectors might benefit, they said.

Airline stocks in particular fell across most of the region, reflecting fears that tourist flows into and from China may be affected. In Shanghai, Air China Ltd. CN:601111 -3.38%   AIRYY -7.74%  skidded 3.4% and China Southern Airlines Co. CN:600029 -2.55%   ZNH -7.22%  shed 2.6%.

Elsewhere in the region, China Airlines Ltd. TW:2610 -5.98%  dropped 6% and Eva Airways Corp. TW:2618 -6.80%  slumped 6.8% in Taipei, Qantas Airways Ltd. AU:QAN -1.42% QUBSF -7.85%  fell 1.4% in Sydney, and Korean Air Lines Co. KR:003490 -1.97%  declined 2% in Seoul.

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But in Hong Kong, airlines saw some relief buying after taking a heavy hit Friday, with Air China HK:753 +4.46%  adding 4.5%, and Cathay Pacific Airways Ltd. HK:293 +4.07%   CPCAY -2.78%  advancing 4.1%.

At the same time, drug-maker shares advanced in China, with Harbin Pharmaceutical Group Co. CN:600664 +1.61%  adding 1.6%, and Kangmei Pharmaceutical Co. CN:600518 +1.42%  up 1.4%.

The broad decline for regional markets followed weak cues from the U.S., where stocks fell on Friday after nonfarm payrolls data for March disappointed.

Meanwhile, Moody’s Investors Service said Monday that North Korea’s recent belligerent actions were credit-negative for South Korea “because they have increased the chance of a serious military clash.”

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