Asia Pacific share market closed higher on Monday, 20 October 2014, as investors chased for value buying after solid US data and earnings calmed tumult in global financial markets and reassured investors worried about the health of the world economy. The MSCI Asia Pacific Index soared 2.2% to 136.67.
Regional shares started the session with firm note, on tracking recovery on Wall Street on Friday where robust US economic data lifted investor spirits. The Thomson Reuters/University of Michigan index of consumer sentiment rose to its highest in more than seven years in early October, beating expectations. New housing starts were also surprisingly strong last month, suggesting US economic growth remained solid.
Meanwhile, buying pressure spirited an optimistic report about Japanese pension investment in domestic stocks. Japan's $1.2 trillion Government Pension Investment Fund will increase its allocation target for local shares to about 25% from 12%, the Nikkei newspaper reported without attribution. GPIF will also boost its holdings of foreign bonds and stocks to about a combined 30% from 23%, while reducing domestic debt to the 40% level from 60%, the Nikkei said Oct. 18.
The stock market also got some support from encouraging US earnings reports. Out of the 81 S&P 500 component companies that have reported third-quarter results, 64.2% have beaten expectations, a rate slightly below the average over the past four quarters but better than the past 20 years.
Among Asian bourses
Nikkei soars 4%
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Japanese share market closed the session sharply higher, as investors chased for bargain buying across the board, on media reports suggested that Japan's $1.2 trillion government retirement fund will increase its allocation target for shares to 25% from 12%. The benchmark Nikkei 225 index at the Tokyo Stock Exchange rose 3.98%, or 578.72 points, to finish at 15111.23. The broader Topix index of all first-section shares jumped 4%, or 47.12 points, to 1224.34.
Shares of Exporters and other currency-sensitive companies advanced the most in Tokyo market. Toyota gained 5.2% to 6,028 yen. Honda Motor Co added 3.5% to 3,367.5 yen. Sony Corp added 3.9% to 1,875 yen. Resona Holdings jumped 6.2% to 589.9 yen. Sumitomo Mitsui Financial Group Inc. jumped 3.3% to 3,963 yen, the most since May. Shinsei Bank climbed 2.8% to 217 yen.
Aussie market rises 0.9%
Australian share market closed higher, extending last week winning streak, on the back of value buying following the recent sharp dive in stocks, with financial, retailer and mining blue-chips being major winners. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each grew 0.9% to 5319.40 and 5307.30, respectively.
Transfield shares shot up 26.7% to A$1.90 after the board of contractor of the company advised its shareholders to ignore a cash takeover bid from Spanish infrastructure group Ferrovial Servicios, which offered A$1.95 per share, valuing the company at A$1 billion.
Downer EDI shares went up 3.5% to A$4.19 after the company purchased contractor Tenix for A$300 million.
TEN NETWORK HOLDINGS shares closed 7.3% higher at A$0.22 after the reports that Gina Rinehart, who owns 10% of the struggling broadcaster, is planning to leave the board of directors.
Shanghai Composite rises 0.66%
Mainland China share market closed higher, amid speculation the central government is accelerating measures to support economic growth. The benchmark Shanghai Composite index rose 15.54 points, or 0.66%, to finish at 2356.73.
The People's Bank of China is said to plan the injection of about 200 billion yuan ($32.7 billion) into some national and regional lenders. Bank of America Corp. said the move is equal to a 20 basis-point cut in reserve-requirement ratios. The liquidity injection came before today's start of a Communist Party meeting and tomorrow's gross domestic product data.
Hang Seng rises 0.2%
Hong Kong equity market ended higher, on tracking positive performance of Wall Street on Friday and stronger mainland A-shares and other regional bourses. The Hang Seng Index gained 0.2% to 23070.26.
Shares of Chinese banks were higher after reports indicated that the PBoC planned to inject Rmb200 billion. Bank of China (03988) and ABC (01288) put on 0.28% and 0.58% to HK$3.52 and HK$3.46. CCB (00939) and ICBC (01398) nudged up 0.36% and 0.41% to HK$5.53 and HK$4.94. CITIC Bank (00998) and Minsheng Bank (01988) gained 1.25% and 1.64% to HK$4.86 and HK$7.45.
HKEx (00388) slid 0.81% to HK$172.3 after the CSRC did not announce the launch date of the Shanghai-Hong Kong Stock Connect last Friday as expected.
Sensex hits 1-1/2-week closing high as Govt deregulates diesel price
The government's announcement at the weekend of deregulation of diesel prices and increase in gas prices sent key benchmark indices surging. Investors also cheered a strong showing of the Bharatiya Janata Party (BJP) in assembly election in Maharashtra and Haryana as the barometer index, the S&P BSE Sensex, attained 1-1/2-week closing high. The 50-unit CNX Nifty attained one-week closing high. The Sensex jumped 321.32 points or 1.23% to 26,429.854. The market breadth indicating overall health of the market was positive. The BSE Mid-Cap index rose 1.12%. The deregulation of diesel prices will reduce the government's fuel subsidy burden. Meanwhile, as a result of the gas price hike, the government will get additional revenue of approximately Rs 3800 crore per annum on account of higher royalty, higher profit petroleum and higher taxes.
Meanwhile, the sharp cut in diesel price announced by oil marketing companies on Saturday, 18 October 2014, is expected to bring down freight rates. This could reduce consumer price inflation and provide room for the Reserve Bank of India (RBI) to cut interest rates. Diesel is the main fuel for transporters and directly affects the retail price of items ranging from foodstuffs to white goods that are transported across cities.
Shares of oil and gas firms rose after the government deregulated diesel and raised gas prices on Saturday, 18 October 2014. Bank stocks rose across the board as a sharp cut in diesel price is expected to bring down freight rates which in turn could reduce consumer price inflation. Jindal Steel & Power tumbled after the Central Bureau of Investigations (CBI) registered a fresh case against the company for alleged irregularities in coal block allocation. Auto stocks gained as removal of price controls on diesel is seen helping demand for cars. Capital goods stocks edged higher. Bharat Heavy Electricals advanced after the company issued clarification with regard to a media news item. Shree Cement gained after the company clarified on media reports that stated that Jaiprakash Associates may sell Bhilai unit to the company. UltraTech Cement surged after strong Q2 results.
Elsewhere in the Asia Pacific region-- South Korea KOSPI advanced 1.55% to 1930.06. Taiwan's Taiex index rose 1.77% to 8663.14. Indonesia's Jakarta Composite index added 0.23% to 5040.53. Malaysia's KLCI gained 0.83% to 1803.14. New Zealand's NZX50 grew 1% to 5197.89. Singapore's Straits Times index added 0.4% at 3181.05.
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