China's devaluation of the yuan for second straight day dragged the Asia Pacific share market further south on Wednesday, 12 August 2015. Meanwhile, sharp plunge in the Wall Street and drop in commodity prices overnight also weighed down sentiments. The MSCI Asia Pacific Index slumped 1.6% to 137.85.
China's central bank continued devaluing the national currency, the yuan, for second straight day on Wednesday, 12 August 2015, after reforming the exchange rate formation system to better reflect the market. The central parity rate of renminbi, or yuan, weakened 1.6% to 6.3306 against the US dollar, narrowing from Tuesday's 1.9% depreciation, according to the China Foreign Exchange Trading System. China is devaluing its currency after a slew of data showing decelerating growth for the world's second-biggest economy.
China is allowing market forces to have a bigger role in determining the value of the yuan at an opportune time for the country, with market sentiment pushing for a weaker yuan, which will support a sluggish economy. The International Monetary Fund (IMF) described the central bank's move as "a welcome step" that allows market forces to have a greater role in determining the exchange rate.
A weaker yuan is expected to pressure other central banks in Asia to devalue their currencies to keep their economies competitive against China's.
Among Asian bourses
Australia stocks slump
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The Australian share market slipped further today, in the wake of China's move to devalue its currency for second straight day. All ten ASX sectors fell into the sea of red, with shares of technology issue was worst hit, followed by materials, energy, consumer discretionary and consumer staples, utilities and financial stocks. The benchmark S&P/ASX 200 Index lost 91.10 points, or 1.66%, to end at 5382.10 points, while the broader All Ordinaries Index declined 89.60 points, or 1.64%, to 5383.50 points.
Information technology was worst performing sector in the ASX200 sectoral group, down a whopping 7.2% on the Computershare sell-off. Computershare was down 9.3% to A$10.60 after global share registry reported a 0.7% drop in underlying profit. Echo Entertainment Group share price fell 2.3% after prediction that its capital investment works would hit its 2016 revenue. The company has reported a forecast-beating 52% rise in net profit to A$219 million.
Shares of mining and energy companies hit hardly, as firmer USD has pushed commodity prices lower. BHP Billiton fell 4.3% to A$25.20 while Rio Tinto sank 5.4% to A$51.65, being held back by it trading ex-dividend today. RIO will be paying out a A$1.44/share interim dividend to eligible shareholders on 10 September. Fortescue Metal dropped 8% to A$1.79. Among oil explorers, Woodside Petroleum sank 3.8% to A$33.44 and Oil Search lost 3.1% to A$6.80.
REA Group shares fell 3.8% to A$41.20 after Real Estate company reported weaker than expected jump in underlying net profit by 24%.to A$185.4 million for fiscal year ended June 2015.
Primary Healthcare shares rose 4.2% to A$4.64 after it reported a net profit up 19.1% to A$136.5 million for fiscal year ended June 2015.
Nikkei extends losses on China woes
Japanese share market ended sharply lower, as China's decision to devalue the yuan for a second day heightening concerns about the strength of China's economy damping the outlook for Japanese exporters. Total of 31 out of 33 TSE sectors declined, with shares of Iron & Steel, Mining, Nonferrous Metals, Chemicals, and Electric Appliances sectors being major losers. The Nikkei Stock Average declined 327.98 points, or 1.58%, to end at 20392.77 points. The broader Topix index ended 21.85 points, or 1.29%, lower at 1665.75 points.
Shares of exporters ended lower, with companies having significant business exposure to China suffered the most damages. Koito Manufacturing Co., which relies on China for about a quarter of its car headlight sales, dropped 3.6%. Murata Manufacturing Co., which sells 58% of its electronic components in China and Taiwan, slid 3.6%.
Retailers that have recently benefited from growing Chinese tourism were also hit badly on concerns a weaker yuan would reduce spending by Chinese tourists. J Front Retailing Co. lost 4.1%. Electronics retailer Bic Camera Inc. tumbled 5.1%. Department store-operator Isetan Mitsukoshi Holdings dropped 5% and cosmetics maker Shiseido Co. shed 5.3%.
Shares of miners and energy companies hammered, as firmer USD after China's devaluation has pushed commodity prices lower, including oil and copper, which declined to a six-year low. Inpex Corp. lost 3.2%, while lead and copper alloy producer Mitsui Mining & Smelting Co. sank 2.8%
Temp Holdings Co. advanced 9% after the staffing services firm reported better than expected 21% jump in net profit to 4.2 billion yen for quarter ended June 2015, thanks to increased demand for its services driven by Japan's economic recovery
China stocks depress by yuan fall, soft economic data
Mainland China's stock market ended lower in volatile trade on the back of weaker than expected industrial output data and as the central bank's continued devaluing the national currency for second straight day. All 10 SSE sectors fell below neutral line, with shares of technology, healthcare, financial, resources and retailers being major losers. The benchmark Shanghai Composite Index tumbled 1.06%, or 41.59 points, to end at 3886.32 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, lost 1.54%, or 35.09 points, to 2249.18 points. Total volume of A shares traded in Shanghai was 44.26 billion shares, while Shenzhen volume was 28.51 billion shares.
Shares of Chinese civil aviation companies extended losses amid heightening concerns about the cost of servicing dollar-based debt and fuel bill after devaluation of currency. Air China sank 5%, China Southern Airline Co lost 6.2%, and China Eastern Airlines Corp fell 5.9%.
Shares of exporters, however, were up on hopes the yuan's drop will give much of a boost to global demand for Chinese goods. Trading house Shanghai Materials Trading Co jumped 5.8% and Garment makers Luthai Textile Co surged by their 10% daily limit.
Chinese industrial production rose 6% in July from a year earlier, slowing from a 6.8% year-over-year increase in June, as per data from the National Bureau of Statistics released on Wednesday. Industrial production increased 0.32% in July from June. In June, it rose 0.64% from the month before.
Separately, NBS data showed that fixed-asset investment in non-rural areas of China rose 11.2% in the January-to-July period from a year earlier. The rise was slower than the 11.4% increase recorded in the January-to-June period. Retail sales in China increased 10.5% in July from a year earlier, slowing from a 10.6% year-over-year increase in June. In the first seven months, retail sales grew 10.4%.
Hong Kong market plunge 2.4%
China's devaluation of the yuan for second straight day dragged the Hong Kong stock market to a near five-week low. The China's central bank set its daily reference rate 1.6% down against the U.S. dollar today after setting the rate 1.9% lower the previous day, a move it billed as a free-market reform but that some suspect could be the beginning of a longer slide in the exchange rate. The Hang Seng Index ended 582.19 points, or 2.38%, lower at 23916.02 points. Chinese airlines stocks dropped the most amid heightening concerns about the cost of servicing dollar-based debt, followed by financial and property shares. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, dropped 221.85 points, or 1.97%, to 11042.79 points. Turnover increased to HK$103 billion from HK$96 billion on Tuesday.
Bourse operator Hong Kong Exchanges and Clearing (HKEx) slid 4.2% to HK$207 even though its interim earnings grew 73% to HK$4 billion.
Real estate shares tumbled after Credit Suisse cautioned investors against the risks of capital outflows, and called the property sector the biggest loser in the process. COLI (00688) dived 8.3% to HK$23.15. CR Land (01109) dumped 8% to HK$19.78.
Chinese aviation counters continued their nosedive, while developers were also pressured on worries of rising foreign debts due to the devaluation of CNY. China South Air (01055) plunged 7% to HK$6.29. China East Air (00670) slipped 3.7% to HK$5.26.
But some exporters benefit from lower CNY on hopes it give much of a boost to global demand for Chinese goods. Li & Fung (00494) gained 2.8% to HK$5.89. Man Wah (01999) put on 2% to HK$7.82. But Techtronic Ind (00669) fell 1.4% to HK$28.6.
Sensex sees a broad based decline
Metal, mining and oil stocks led losses as key equity benchmark indices tumbled amid a sharp slide in global stocks. The market sentiment was also hit adversely after opposition parties once again stalled a discussion on the goods and services tax (GST) bill in the Rajya Sabha. The Sensex was provisionally off 348.48 points or 1.25% at 27,517.61. The broad market depicted weakness. There were more than three losers against every gainer on BSE. The BSE Mid-Cap index lost 2.49%. The BSE Small-Cap index was down 2.13%.
Shares of steel makers fell for the second straight day after Chinese central bank's decision to devalue its tightly controlled currency. NMDC dropped after reporting weak Q1 results. Tata Steel edged higher after the company announced first quarter results after trading hour yesterday, 11 August 2015. Vedanta and Hindalco Industries tumbled to 52-week low.
Foreign portfolio investors (FPIs) sold Indian shares worth a net Rs 736.81 crore yesterday, 11 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 130.74 crore yesterday, 11 August 2015, as per provisional data.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index lost 1.3% to 8283.38. South Korea's KOSPI dropped 0.6% to 1975.47. New Zealand's NZX50 declined 1.1% to 5757.22. Singapore's Straits Times index lost 2.6% at 3069.81. Indonesia's Jakarta Composite index fell 2.7% to 4498.67. Malaysia's KLCI sank 1.8% to 1607.19.
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