Asia Pacific stock market declined on Tuesday, 25 March 2014, as risk
aversion selloff amid concerns about the threat to financial market
stability posed by Russian politics and Chinese monetary policy,
compounded with lingering concerns about the effects of reduced United
States stimulus.
Risk aversion selloff amid concerns about the threat to financial market stability posed by Russian politics and Chinese monetary policy, compounded with lingering concerns about the effects of reduced United States stimulus.
The shares in the regional market opened lower today, as weaker finish of US market overnight and dismal preliminary report on factory activity in China continued to weigh on sentiment. US Stocks fell on Monday as a selloff in the health-care sector persisted for a second straight session while investors also focused on negative economic data out of China and Europe. The Dow Jones Industrial Average was down 26.08 points (0.16%) at 16,276.69. The broad-based S&P 500 lost 9.08 (0.49%) at 1,857.44, while the tech-rich Nasdaq Composite fell 50.40 (1.2%) to 4,226.38.
The HSBC-Markit purchasing managers' index fell from 48.5 in February to 48.1 in March – an eight month low, further evidence of the prolonged slowdown that could lead to lower demand for resources in the world's No. 2 economy. A reading below 50 suggests a contraction in the manufacturing sector.
A Markit Economics Ltd. preliminary index of U.S. manufacturing fell to 55.5 in March from 57.1 a month earlier, the London-based group said yesterday.
Germany's Ifo institute business-climate index, based on a survey of executives, fell to 110.7 in March from 111.3 in February, the highest level since July 2011.
Risk sentiments deteriorated further on possibility of sanctions against oil and gas producer Russia. The U.S. and other Group of Seven countries vowed to launch coordinated sanctions on key parts of the economy, which could include the energy industry, if Russian President Vladimir Putin presses further into Ukraine.
The world's top industrial powers threatened further sanctions to deter Russian President Vladimir Putin from taking over other parts of Ukraine and suspended Russia from participating in the Group of Eight. The leaders of the G-7 industrialized nations on Monday, 24 March 2014, said they will not participate in the scheduled G-8 summit in Sochi due to Russia's "illegal attempt to annex Crimea." In a statement, the leaders warned that any escalation of the crisis would result in "coordinated sectoral sanctions" that will hurt the Russian economy. The G-7 urged the International Monetary Fund and the Ukrainian government to rapidly reach a deal on conditions for an aid package, which will unlock other international assistance. "We remain united in our commitment to provide strong financial banking to Ukraine," the statement said. The energy ministers of the seven nations will meet to discuss ways to strengthen "collective energy security," the statement said.
Also, risk sentiments dented on concerns about capital outflow from emerging market after rise in US short dated treasuries yield. Short-dated U.S. Treasuries prices wobbled, taking short-term U.S. bond yields to six-month highs as investors fretted over whether the Federal Reserve would raise interest rates sooner than expected, following comments last week from Janet Yellen, the bank's new chief.
San Francisco Federal Reserve President John Williams in an interview with Washington Post said there was no suggestion from the Federal Reserve last week that the central bank will pull the trigger to hike interest rates sooner than previously believed. "Market perceptions are what they are. But I really don't see anything of what we said as suggesting that we're going to tighten monetary policy sooner rather than previously," Williams said.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 29-30 April 2014. The Federal Reserve on 19 March 2014 said after the conclusion of a monetary policy review that it will trim its monthly bond purchases by $10 billion to $55 billion. The Federal Reserve will end its bond-buying program before the end of the year with an interest-rate increase likely to follow in "around six months," Chair Janet Yellen said on 19 March 2014. Quarterly Fed forecasts on 19 March 2014 showed more officials predicting that the benchmark interest rate, now close to zero, will rise to at least 1% by the end of 2015 and 2.25% a year later.
Among Asia pacific market, Japanese shares closed mostly down, on tracking negative lead from Wall Street overnight and on lingering concerns about tensions between the West and Russia over Ukraine. The benchmark Nikkei-225 index fell 0.36% to 14423.19, while the Topix index of all first-section shares climbed 0.05% to 1163.70.
Among top gainers in the Nikkei225 index, Nitto Boseki Co (3.6%), Dainippon Screen Manufacturing Co (3.5%), Sumitomo Electric Industries (3.4%), Kuraray Co (3.1%), and Toray Industries Inc (3%). Major losers in the Nikkei225 index were IHI Corp (3.8%), Mitsui Engineering & Shipbuilding Co (3.6%), Dainippon Sumitomo Pharma Co (3.5%), Nisshin Steel Holdings Co (3.3%), and SoftBank Corp (3.2%).
Bank of Japan released data on Flow of Funds Accounts of the 4th Quarter 2013 on Tuesday, showing that overseas investors increased their holdings of Japanese government debt in the final quarter of 2013 while financial assets at domestic households hit a record high, reflecting the modest economic recovery. The balance of Japanese government bonds held by non-residents totaled Y82 trillion at the end of December, or 8.3% of the Y985 trillion in outstanding JGBs, up from Y79 trillion (8.1%) at the end of September, the BOJ said. The data also showed that the balance of overseas investor holdings of JGBs fell 0.8% from a year earlier at the end of December, but the pace of decrease decelerated from -8.7% at the end of September. The balance of JGBs held by domestic financial institutions at the end of December dropped 3.8% on year to Y597 trillion. It was also down from Y603 trillion at end-September. Their share of outstanding JGBs was 60.6%, down from 61.7% in September. Meanwhile, the balance of financial assets held by Japanese households rose 6.0% on year to a record high of Y1,645 trillion at the end of December, with the bulk (53.1%) still saved in cash and deposits. The rise in financial assets held by the households was due to the increase in cash and deposits as well as stock holdings. The balance of JGBs held by domestic households was down 12.4% on year at Y21 trillion. Their JGB holdings accounted for 2.17% of the total JGBs outstanding at end-December, down from 2.24% three months earlier.
In Australia, Australian stock market finished lower, on uncertainty over Ukraine and the global economy. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index both fell by 0.2% to 5336.60 and 5351, respectively.
Gold miner stocks fell down sharply after the precious metal's spot price lost nearly 2% on Monday night in the international markets. NewCrest Mining lost 5% to A$0.45, Perseus Mining 6.3% to A$0.45 and Medua Mining 8.5% to A$2.04. Junior goldminer Beadell Resources was the worst-performing stock in the ASX 200, falling 11.8% to A$0.60.
Shares of Australian lenders finished mixed today. Commonwealth Bank of Australia dropped 0.1% to A$75.89, ANZ Banking Group 0.3% to A$32.31, and National Australia Bank 0.3% to A$34.76, while Westpac Banking Corp rose 0.7% to A$33.86. Investment bank Macquarie Group added another 0.2% to A$56.53 after jumping 2.9% the previous day following a 40% to 45% upgrade to full year profit guidance.
Solomon Lew's Premier Investments climbed up 11.2% to A$8.95 after the retail chain, which includes brands Peter Alexander and Smiggle, beat expectations to report a 12.1% rise in first-half net profit to A$52.1 million after sales rose 5.3% to A$468.4 million. Premier increased its interim dividend by 1 cent to A$0.20 a share, fully franked, payable May 16.
TPG Telecom shares surged 7.3% to A$6.18 after the telecommunications and IT company reported a 15% rise in first-half net profit to A$90.1 million and upgrading full year earnings guidance. TPG Telecom's better than expected result also fuelled speculation the company could launch a takeover of rival iiNet, which got a bounce of 5.3% to a record high of A$7.97.
In China, Mainland China stock market finished mixed in volatile trade, as lingering concerns over domestic economic growth after latest batch of weak Chinese economic data counterbalanced by hopes of stimulus measures from China. The benchmark Shanghai Composite Index climbed up 1.03 points, or 0.05% from prior day closure to finish at 2067.31, while Shenzhen Composite Index, which covers the smaller mainland exchange, dropped 2.17 point, or 0.2%, to finish at 1083.31.
Among SSE sectors, 6/10 sectors of the SSE index advanced, with utilities sector was best performer in the SSE sectoral peers, adding 1.1%, followed by industrial up 0.8%, information technology up 0.7%, consumer discretionary up 0.4%, telecommunication services up 0.3% and healthcare up 0.1%. On the downside, financial issue dropped 0.7%, materials down 0.2%, consumer staples down 0.2% and energy down 0.2%.
Shares of distilleries were down on concern over earnings outlook. Kweichow Moutai Co., the biggest maker of baijiu liquor, slumped 2.6% to 166.81 yuan after projecting slower sales growth this year. The company expects revenue to increase 3% in 2014, compares with 17% revenue growth last year, when net income rose 14%. Shanxi Xinghuacun Fen Wine Factory Co. tumbled 7.6% to 16.22 yuan after saying profit declined 27% last year.
Shares of companies linked to Shanghai's free trade zone gained after media reports indicated restrictions on foreign investors there could be relaxed. Shanghai International Port locked 10% upper circuit at 4.92 yuan on media reports that the company will seek private and international funds as strategic investors. Retailer Shanghai Friendship Group Inc. and Shanghai Lujiazui Finance & Trade Zone Development Co. both surged by the 10% daily limit to 10.85 yuan and 18.10 yuan, respectively. Shanghai Jinqiao Export Processing Zone Development Co advanced 10% to 11.42 yuan.
China's money markets rates went up today after People's Bank of China drained 46 billion yuan from the banking system during Tuesday's open market operation, despite growing concerns in the market about liquidity availability as the quarter-end approaches. The People's Bank of China drained a net 48 billion yuan from the market last week, slightly greater than the 40 billion yuan removal prior to last week.
The overnight repo, a benchmark measure of interbank funding availability, traded at a weighted average of 2.51%, up 1 bps from previous session's closure. The seven-day repo rate, a gauge of interbank liquidity conditions, was quoted at 3.70% late afternoon, up 12 bps from previous session's closure.
In Hong Kong, shares in HK market finished weaker today, on concerns about tensions between the West and Russia over Ukraine and uncertainty over Chinese economic growth.
The Hang Seng Index closed 0.52% down at 21732.32. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, dropped 0.04% to 9690.86.
Among the HK 50 blue chips, 22 rose and 25 fell, with two stocks remaining steady. Tencent (00700) dipped 4.9% to HK$558.5, contributing 99-point losses to the benchmark Index, and becoming the worst-performing blue chip, with a HK$53 billion of market cap wiping off. Wharf was put on 3.1% to HK$50.25, becoming the top blue chip winner, on tracking spike in its subsidiary i-Cable which surged 22% to HK$0.94.
Lumena (00067) plunged 7.4% to HK$1.25 before suspension. Short selling research house Glaucus initiated coverage of the stock with a "strong sell" call and HK$0 target price.
Yashili plunged 10% to HK$3.66 after reporting full-year profit of 437.6 million yuan ($71 million), compared with analyst projections for 520 million yuan.
Tingyi rose 2.2% to HK$20.80 after brokerage house UBS recommended the stock, citing company's high-end steamed noodles with improved ingredients will be a major breakthrough for the industry and the company.
In India, Indian markets settled on a flat note, with power and capital goods stocks witnessed a rise whereas oil & gas stocks registered a fall. At the provisional close, the 30-share benchmark index, BSE Sensex ended flat with a decline of 0.27 point at 22,055.21.
Reliance Industries (RIL) and ONGC edged lower in volatile trade after the Election Commission on Monday, 24 March 2014, directed the government to put on hold a proposed hike in natural gas prices which was to take effect from 1 April 2014.
Bharat Heavy Electricals (Bhel) extended Monday's gain triggered by the company securing a large contract worth Rs 3000 crore from NTPC. The stock was up 4.41%. Shares of fast moving electrical goods (FMEG) company Havells India gained 2.26% to Rs 914, also its record high.
Indian rupee edged higher against the dollar in the foreign exchange market after the provisional data released by the stock exchanges after trading hours on Monday, 24 March 2014, showed that foreign institutional investors (FIIs) made substantial purchases of Indian stocks on that day. The partially convertible rupee was hovering at 60.49, compared with its close of 60.77/78 on Monday, 24 March 2014.
Elsewhere in the Asia Pacific region, Taiwan's Taiex index added 0.98%. South Korea's KOSPI index was down 0.22%. Singapore's Straits Times index fell 0.25%. Indonesia's Jakarta Composite Index sank 0.37%. New Zealand's NZX50 rose 0.24%. Malaysia's KLSE Composite added 0.18%.
Risk aversion selloff amid concerns about the threat to financial market stability posed by Russian politics and Chinese monetary policy, compounded with lingering concerns about the effects of reduced United States stimulus.
The shares in the regional market opened lower today, as weaker finish of US market overnight and dismal preliminary report on factory activity in China continued to weigh on sentiment. US Stocks fell on Monday as a selloff in the health-care sector persisted for a second straight session while investors also focused on negative economic data out of China and Europe. The Dow Jones Industrial Average was down 26.08 points (0.16%) at 16,276.69. The broad-based S&P 500 lost 9.08 (0.49%) at 1,857.44, while the tech-rich Nasdaq Composite fell 50.40 (1.2%) to 4,226.38.
The HSBC-Markit purchasing managers' index fell from 48.5 in February to 48.1 in March – an eight month low, further evidence of the prolonged slowdown that could lead to lower demand for resources in the world's No. 2 economy. A reading below 50 suggests a contraction in the manufacturing sector.
A Markit Economics Ltd. preliminary index of U.S. manufacturing fell to 55.5 in March from 57.1 a month earlier, the London-based group said yesterday.
Germany's Ifo institute business-climate index, based on a survey of executives, fell to 110.7 in March from 111.3 in February, the highest level since July 2011.
Risk sentiments deteriorated further on possibility of sanctions against oil and gas producer Russia. The U.S. and other Group of Seven countries vowed to launch coordinated sanctions on key parts of the economy, which could include the energy industry, if Russian President Vladimir Putin presses further into Ukraine.
The world's top industrial powers threatened further sanctions to deter Russian President Vladimir Putin from taking over other parts of Ukraine and suspended Russia from participating in the Group of Eight. The leaders of the G-7 industrialized nations on Monday, 24 March 2014, said they will not participate in the scheduled G-8 summit in Sochi due to Russia's "illegal attempt to annex Crimea." In a statement, the leaders warned that any escalation of the crisis would result in "coordinated sectoral sanctions" that will hurt the Russian economy. The G-7 urged the International Monetary Fund and the Ukrainian government to rapidly reach a deal on conditions for an aid package, which will unlock other international assistance. "We remain united in our commitment to provide strong financial banking to Ukraine," the statement said. The energy ministers of the seven nations will meet to discuss ways to strengthen "collective energy security," the statement said.
Also, risk sentiments dented on concerns about capital outflow from emerging market after rise in US short dated treasuries yield. Short-dated U.S. Treasuries prices wobbled, taking short-term U.S. bond yields to six-month highs as investors fretted over whether the Federal Reserve would raise interest rates sooner than expected, following comments last week from Janet Yellen, the bank's new chief.
San Francisco Federal Reserve President John Williams in an interview with Washington Post said there was no suggestion from the Federal Reserve last week that the central bank will pull the trigger to hike interest rates sooner than previously believed. "Market perceptions are what they are. But I really don't see anything of what we said as suggesting that we're going to tighten monetary policy sooner rather than previously," Williams said.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 29-30 April 2014. The Federal Reserve on 19 March 2014 said after the conclusion of a monetary policy review that it will trim its monthly bond purchases by $10 billion to $55 billion. The Federal Reserve will end its bond-buying program before the end of the year with an interest-rate increase likely to follow in "around six months," Chair Janet Yellen said on 19 March 2014. Quarterly Fed forecasts on 19 March 2014 showed more officials predicting that the benchmark interest rate, now close to zero, will rise to at least 1% by the end of 2015 and 2.25% a year later.
Among Asia pacific market, Japanese shares closed mostly down, on tracking negative lead from Wall Street overnight and on lingering concerns about tensions between the West and Russia over Ukraine. The benchmark Nikkei-225 index fell 0.36% to 14423.19, while the Topix index of all first-section shares climbed 0.05% to 1163.70.
Among top gainers in the Nikkei225 index, Nitto Boseki Co (3.6%), Dainippon Screen Manufacturing Co (3.5%), Sumitomo Electric Industries (3.4%), Kuraray Co (3.1%), and Toray Industries Inc (3%). Major losers in the Nikkei225 index were IHI Corp (3.8%), Mitsui Engineering & Shipbuilding Co (3.6%), Dainippon Sumitomo Pharma Co (3.5%), Nisshin Steel Holdings Co (3.3%), and SoftBank Corp (3.2%).
Bank of Japan released data on Flow of Funds Accounts of the 4th Quarter 2013 on Tuesday, showing that overseas investors increased their holdings of Japanese government debt in the final quarter of 2013 while financial assets at domestic households hit a record high, reflecting the modest economic recovery. The balance of Japanese government bonds held by non-residents totaled Y82 trillion at the end of December, or 8.3% of the Y985 trillion in outstanding JGBs, up from Y79 trillion (8.1%) at the end of September, the BOJ said. The data also showed that the balance of overseas investor holdings of JGBs fell 0.8% from a year earlier at the end of December, but the pace of decrease decelerated from -8.7% at the end of September. The balance of JGBs held by domestic financial institutions at the end of December dropped 3.8% on year to Y597 trillion. It was also down from Y603 trillion at end-September. Their share of outstanding JGBs was 60.6%, down from 61.7% in September. Meanwhile, the balance of financial assets held by Japanese households rose 6.0% on year to a record high of Y1,645 trillion at the end of December, with the bulk (53.1%) still saved in cash and deposits. The rise in financial assets held by the households was due to the increase in cash and deposits as well as stock holdings. The balance of JGBs held by domestic households was down 12.4% on year at Y21 trillion. Their JGB holdings accounted for 2.17% of the total JGBs outstanding at end-December, down from 2.24% three months earlier.
In Australia, Australian stock market finished lower, on uncertainty over Ukraine and the global economy. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index both fell by 0.2% to 5336.60 and 5351, respectively.
Gold miner stocks fell down sharply after the precious metal's spot price lost nearly 2% on Monday night in the international markets. NewCrest Mining lost 5% to A$0.45, Perseus Mining 6.3% to A$0.45 and Medua Mining 8.5% to A$2.04. Junior goldminer Beadell Resources was the worst-performing stock in the ASX 200, falling 11.8% to A$0.60.
Shares of Australian lenders finished mixed today. Commonwealth Bank of Australia dropped 0.1% to A$75.89, ANZ Banking Group 0.3% to A$32.31, and National Australia Bank 0.3% to A$34.76, while Westpac Banking Corp rose 0.7% to A$33.86. Investment bank Macquarie Group added another 0.2% to A$56.53 after jumping 2.9% the previous day following a 40% to 45% upgrade to full year profit guidance.
Solomon Lew's Premier Investments climbed up 11.2% to A$8.95 after the retail chain, which includes brands Peter Alexander and Smiggle, beat expectations to report a 12.1% rise in first-half net profit to A$52.1 million after sales rose 5.3% to A$468.4 million. Premier increased its interim dividend by 1 cent to A$0.20 a share, fully franked, payable May 16.
TPG Telecom shares surged 7.3% to A$6.18 after the telecommunications and IT company reported a 15% rise in first-half net profit to A$90.1 million and upgrading full year earnings guidance. TPG Telecom's better than expected result also fuelled speculation the company could launch a takeover of rival iiNet, which got a bounce of 5.3% to a record high of A$7.97.
In China, Mainland China stock market finished mixed in volatile trade, as lingering concerns over domestic economic growth after latest batch of weak Chinese economic data counterbalanced by hopes of stimulus measures from China. The benchmark Shanghai Composite Index climbed up 1.03 points, or 0.05% from prior day closure to finish at 2067.31, while Shenzhen Composite Index, which covers the smaller mainland exchange, dropped 2.17 point, or 0.2%, to finish at 1083.31.
Among SSE sectors, 6/10 sectors of the SSE index advanced, with utilities sector was best performer in the SSE sectoral peers, adding 1.1%, followed by industrial up 0.8%, information technology up 0.7%, consumer discretionary up 0.4%, telecommunication services up 0.3% and healthcare up 0.1%. On the downside, financial issue dropped 0.7%, materials down 0.2%, consumer staples down 0.2% and energy down 0.2%.
Shares of distilleries were down on concern over earnings outlook. Kweichow Moutai Co., the biggest maker of baijiu liquor, slumped 2.6% to 166.81 yuan after projecting slower sales growth this year. The company expects revenue to increase 3% in 2014, compares with 17% revenue growth last year, when net income rose 14%. Shanxi Xinghuacun Fen Wine Factory Co. tumbled 7.6% to 16.22 yuan after saying profit declined 27% last year.
Shares of companies linked to Shanghai's free trade zone gained after media reports indicated restrictions on foreign investors there could be relaxed. Shanghai International Port locked 10% upper circuit at 4.92 yuan on media reports that the company will seek private and international funds as strategic investors. Retailer Shanghai Friendship Group Inc. and Shanghai Lujiazui Finance & Trade Zone Development Co. both surged by the 10% daily limit to 10.85 yuan and 18.10 yuan, respectively. Shanghai Jinqiao Export Processing Zone Development Co advanced 10% to 11.42 yuan.
China's money markets rates went up today after People's Bank of China drained 46 billion yuan from the banking system during Tuesday's open market operation, despite growing concerns in the market about liquidity availability as the quarter-end approaches. The People's Bank of China drained a net 48 billion yuan from the market last week, slightly greater than the 40 billion yuan removal prior to last week.
The overnight repo, a benchmark measure of interbank funding availability, traded at a weighted average of 2.51%, up 1 bps from previous session's closure. The seven-day repo rate, a gauge of interbank liquidity conditions, was quoted at 3.70% late afternoon, up 12 bps from previous session's closure.
In Hong Kong, shares in HK market finished weaker today, on concerns about tensions between the West and Russia over Ukraine and uncertainty over Chinese economic growth.
The Hang Seng Index closed 0.52% down at 21732.32. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, dropped 0.04% to 9690.86.
Among the HK 50 blue chips, 22 rose and 25 fell, with two stocks remaining steady. Tencent (00700) dipped 4.9% to HK$558.5, contributing 99-point losses to the benchmark Index, and becoming the worst-performing blue chip, with a HK$53 billion of market cap wiping off. Wharf was put on 3.1% to HK$50.25, becoming the top blue chip winner, on tracking spike in its subsidiary i-Cable which surged 22% to HK$0.94.
Lumena (00067) plunged 7.4% to HK$1.25 before suspension. Short selling research house Glaucus initiated coverage of the stock with a "strong sell" call and HK$0 target price.
Yashili plunged 10% to HK$3.66 after reporting full-year profit of 437.6 million yuan ($71 million), compared with analyst projections for 520 million yuan.
Tingyi rose 2.2% to HK$20.80 after brokerage house UBS recommended the stock, citing company's high-end steamed noodles with improved ingredients will be a major breakthrough for the industry and the company.
In India, Indian markets settled on a flat note, with power and capital goods stocks witnessed a rise whereas oil & gas stocks registered a fall. At the provisional close, the 30-share benchmark index, BSE Sensex ended flat with a decline of 0.27 point at 22,055.21.
Reliance Industries (RIL) and ONGC edged lower in volatile trade after the Election Commission on Monday, 24 March 2014, directed the government to put on hold a proposed hike in natural gas prices which was to take effect from 1 April 2014.
Bharat Heavy Electricals (Bhel) extended Monday's gain triggered by the company securing a large contract worth Rs 3000 crore from NTPC. The stock was up 4.41%. Shares of fast moving electrical goods (FMEG) company Havells India gained 2.26% to Rs 914, also its record high.
Indian rupee edged higher against the dollar in the foreign exchange market after the provisional data released by the stock exchanges after trading hours on Monday, 24 March 2014, showed that foreign institutional investors (FIIs) made substantial purchases of Indian stocks on that day. The partially convertible rupee was hovering at 60.49, compared with its close of 60.77/78 on Monday, 24 March 2014.
Elsewhere in the Asia Pacific region, Taiwan's Taiex index added 0.98%. South Korea's KOSPI index was down 0.22%. Singapore's Straits Times index fell 0.25%. Indonesia's Jakarta Composite Index sank 0.37%. New Zealand's NZX50 rose 0.24%. Malaysia's KLSE Composite added 0.18%.
