Date: Friday 06 Jul 2012
Asian stocks were mostly lower on Friday, with sentiment still affected by the surprise decision by The People's Bank of China (PBoC) to cut its benchmark interest rate for the second time in two months in an effort to counter a slowdown in the world’s second-largest economy.
Effective today, China is reducing the one-year lending rate by 31 basis points (bps) to 6%. It is also dropping the one-year deposit rate by 25 bps to 3%.
An interest rate cut by the European Central Bank and more quantitative easing announced by the Bank of England underlined the point that all is not tickety-boo in the global economy.
Stocks with heavy European exposure, such as cameras and printers maker Canon, camera film maker Minolta, car maker Mazda and Hong Kong retailer Esprit all took the low road.
In Hong Kong, banking stocks were friendless on concerns that the PBoC's rate cut would put the squeeze on profits. Bank of Communications, China Construction Bank, Industrial & Commercial Bank of China and China Merchants Bank all retreated.
In contrast, the rate cut seemed to ginger-up the performance of property stocks such as China Resources Land and Evergrande Real Estate, as well as car maker Geely Automobile.
The ubiquitous electronics firm Samsung disappointed the market with a trading update which fell short of analyst expectations.
The firm, which is a world leader in mobile handsets, TVs and memory chips, gave a provisional sales estimate for the April to June quarter of around 47 trillion won, or £2.66bn. That’s against analysts expectations of 50 trillion won or £2.83bn.
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