The Japan Thread

HONG KONG (AFX) - Share prices across the Asia-Pacific region finished the year on a lower note with Tokyo hit by renewed concerns over the outlook for the US economy following the release of weak home sales data overnight, dealers said.
At the end of an abbreviated session, the Nikkei (news) 225 Stock Average was down 232.77 points or 1.4 pct at 16,111.43, after yesterday settling at its highest level since September 2000.
But the index was up 40.2 pct for all of 2005, as foreign and Japanese investors bet that the world's second-largest economy will finally beat deflation next year.
The broader TOPIX index of all First Section shares fell 13.99 points or 0.8 pct to 1,649.76. The index rose 43.5 pct during the year.
The US National Association of Realtors reported that sales of existing homes dropped 1.7 pct in November to a seasonally adjusted annual rate of 6.97 mln, the lowest since March, while inventories of unsold homes increased 1.2 pct to 2.90 mln, the most since April 1986.
'The existing home sales data revived fears over the prospect of the US economy, especially about the future outlook for US consumer spending,' Societe Generale Asset Management senior economist Akio Yoshino said.
Akihiro Shiroeda, market analyst at Nozomi Securities said that the weak US data prompted profit-taking on winners this year, such as banks, securities houses, as well as selected technology shares.
'Because the US will announce key indicators such as the US ISM index while Japan is on a new year break, local players wanted to carry over any positions,' Shiroeda said.
'But today's downturn does not signal any change in the uptrend, which will continue into the new year, thanks to growing expectations that the Japanese economy will defeat deflation,' he added.
Financial markets in Japan are closed next Monday and Tuesday. Trading will resume on Wednesday.
Share prices in Australia drifted lower in quiet end of year trading with investors content to sit on the sidelines or lock in profits after a healthy rally which took the key indices to fresh record highs this week, dealers said.
They said selling was broad but on low volumes although the energy sector made gains following a rise in oil prices.
Dealers said volumes were low because of a shortened trading session which ended at 2.15 pm Sydney ahead of the New Year holiday weekend.
The S&P/ASX 200 closed down 9.1 points or 0.19 pct at 4,763.4, retreating from Thursday's record close of 4,772.5 and ending a rally that began before Christmas.
The key indicator closed off an intra-day high of 4,775.8 while its low for the day was 4,749.2.
For the year, the S&P/ASX 200 rose just over 17 pct, marking the second year of double digit growth after a 23 pct rise in 2004.
CommSec chief equities economist Craig James said he expects the Australian share market to continue its ascent over the coming year, with both the All Ordinaries and S&P/ASX 200 indices rising to around 5,100 by December 2006.
The market will reopen on Tuesday.
In Hong Kong, share prices were trading considerably lower in the afternoon, with the benchmark index slipping below the key 15,000 points level, as sentiment was weighed down by falls on Wall Street and in the Japanese market, dealers said.
They said investors were also cautious ahead of the long weekend. The market will be closed on Monday.
At 3:23 pm, the Hang Seng Index was down 181.21 or 1.20 pct at 14,864.38.
In mainland China, A-shares in Shanghai and Shenzhen closed lower on profit-taking after recent significant gains, with telecom firms and power generators losing ground, dealers said.
The Shanghai A-share Index slid 9.42 points to 1,220.93 on turnover of 10.13 bln yuan and the Shenzhen A-share Index lost 3.30 points to 290.06 on turnover of 5.63 bln yuan.
The benchmark Shanghai Composite Index was down 8.33 pct for the full year.
There was no trading in Seoul today because of the New Year holiday.