Asia Pacific share market closed down on Thursday, 16 June 2016, as investors fled equities for safe-haven assets like gold amid fresh worries about economic growth and market turmoil. The US and Japanese central banks both kept monetary policy unchanged and signalled caution amid uncertainty ahead of Britain's vote on EU membership next week.
The US Federal Reserve on Wednesday also kept interest rates unchanged and signalled a slower pace of future rate hikes, citing uncertainties in the global economy and concerns about a pending vote by Britons on EU membership next week. The Fed officials also lowered their projections for US growth in 2016 to 2% from 2.2%. The worrying drop in non-farm payrolls employment last month and concerns about the upcoming Brexit vote appear to have driven this dovish tone of the Fed.
The Bank of Japan left its policy unchanged at its meeting Thursday, adding to a host of concerns investors have grappled with in recent sessions, including a coming U.K. referendum on European Union membership, an unclear path for U.S. interest rates, and mixed data on the world economy. In its policy statement, the BOJ said risks to the economic outlook include uncertainties in emerging and commodity-exporting economies, particularly China, impact of monetary policy response from the US on global financial markets, prospects regarding Europe's debt problem and economic activity, as well as geopolitical risks. The BOJ decided a status quo at the June meeting to avoid criticism for a collusive relationship with the government facing the July Upper House election and to save its scarce ammunition before the U.K. referendum next week.
Among Asian bourses
Australia Market closed mixed
Australian share market finished mixed, as gains in bullion, retailers, and utilities stocks were offset by losses in energy, financial, and healthcare stocks. At close of trade, the benchmark S&P/ASX 200 index declined 1.10 points, or 0.02%, to 5146. The broader All Ordinaries rose 1.30 points, or 0.02%, to 5231.70. Rising stocks outnumbered declining ones on the Australia Stock Exchange by 532 to 477 and 345 ended unchanged. The S&P/ASX 200 VIX, which measures the implied volatility of S&P/ASX 200 options, was down 2.79% to 19.932.
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Energy shares lost ground on tracking drop in crude oil prices. Crude oil for delivery in July fell 0.96% or 0.46 to hit $47.55 a barrel, while the August Brent oil contract fell 0.86% or 0.42 to trade at $48.55 a barrel. Woodside Petroleum fell 0.5% to A$25.97 and Origin lost 0.9% to A$5.34.
The rally in the gold price pushed listed miners to a three-year high, driving the All Ordinaries Gold Index up as much as 3.5%. Shares of heavy-weight gold miners Newcrest Mining, Evolution Mining and Northern Star Resources all gained, with Newcrest up 2.9% to A$22.54, Evolution 4.7% to A$2.43, and Northern Star 5.1% to A$5.09.
Crown Resorts rocketed 13.2% to A$12.75 after James Packer announced audacious plans to split the underperforming company. Crown will split its international business into a new listed vehicle and explore a potential IPO of a property trust including the bulk of its Australian hotels after admitting its poorly performing Macau business had dragged down value for shareholders.
Nikkei tanks 3.05%
The Japan share market finished steep lower, dragged down by yen appreciation against basket of major currencies after the Bank of Japan (BOJ) kept monetary policy steady. Selloff pressure also intensified amid uncertainty around US and Chinese growth, Britain's future in the European Union. All 33 groups on the equity gauge declined, with real estate, nonferrous metals, rubber products, and machinery issues being major losers. The benchmark Nikkei 225 index tanked 3.05%, or 485.44 points, to 15,434.14. The Topix index of all first-section issues finished down 35.55 points, or 2.78%, at 1,241.55.
Exporters were the biggest drags on the Topix after yen soared to its highest level against the dollar in nearly two years after Japan's central bank left its policy unchanged. A strong yen makes life harder for Japanese exporters. Isuzu Motors Ltd. fell 4.6% and Nissan Motor Co. dropped 4.3%.
Nitto Denko Corp. fell 7.2%, after Mitsubishi UFJ Morgan Stanley Securities Co. cut its rating on the chemical maker, citing deterioration in the polarizing film market.
China Stocks fall 0.5%
Mainland China stock market closed down, as selloff resumed a day after MSCI's decision to keep mainland-listed shares out of its key emerging markets index. The downward pressure on the market witnessed due to the potential withdrawal of funds that had been buying A shares in the past few weeks betting on a positive decision by MSCI on A shares. The CSI300 index of the largest listed companies in Shanghai and Shenzhen dropped 0.7%, to 3094.67, while the Shanghai Composite Index fell 0.5%, to 2872.82 points.
Global index provider MSCI Inc yesterday said it would delay including A shares into one of its flagship indexes as concerns about market accessibility and capital mobility linger. MSCI highlighted the 20% monthly repatriation limits as a significant hurdle for investors, while anti-competitive clauses adopted by Chinese exchanges that restrict the launching of financial products linked to A shares in overseas markets also impeded the integration of A shares. The delay marks the third failure to add A shares in MSCI's widely followed emerging market index, which is tracked by money managers who manage US$1.7 trillion in assets. In 2015, MSCI rejected A shares due to concern about the quota allocation process, curbs on capital mobility and beneficial ownership of investments. MSCI said it would retain the A shares inclusion proposal for the 2017 Market Classification Review and it did not rule out a potential off-cycle announcement should further significant positive developments occur before June 2017.
Most of SSE sectoral indices declined, with infrastructure and financials stocks being major losers. Oil stocks tanked after crude futures settled lower overnight in New York for a fifth straight session. Refining giant Sinopec fell 1.3% to 4.68 yuan, while PetroChina was down 0.7%.
Bucking the trend, resources shares rose on news that China will strictly control newly added production capacity, and accelerate a reduction of overcapacity in the non-ferrous metals sector. Gold miners were higher, as August gold climbed to US$1,311.9 an ounce today, up 1.5% from Wednesday's close of regular trading in New York. Gold futures for August delivery settled at US$1,288.3 an ounce overnight, marking its sixth straight advance. Gold miner Zijin Mining Group was limit-up 10% to close at 3.48 yuan in Shanghai. Rival Shandong Gold Mining leapt 8% to 38.7 yuan and Zhongjin Gold jumped 5.6% to 11.31 yuan.
Hong Kong Market tanks 2.1%
The Hong Kong stock market finished deeply in red, as investors fled equities for safe-haven assets like gold amid fresh worries about US economic growth after the Federal Reserve lowered its economic growth forecasts for this year and on caution ahead of the Britain's June 23 national referendum on whether to leave the European Union. The benchmark Hang Seng Index tumbled 429.10 points, or 2.1%, to 20038.42 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, retreated 199.78 points, or 2.32%, to 8409.81. Turnover increased to HK$62.8 billion from HK$58.5 billion on Wednesday.
Developers were generally lower. CK Property (01113) and Sino Land (00083) fell 2% to HK$46.35 and HK$11.84. Wheelock (00020) declined 3% to HK$34.
Banking stocks were also lower as they may follow the US to keep rate steady. Standard Chartered (02888) dropped 3% to HK$54.95. HSBC (00005) sank 2% to HK$46.4. Bank of East Asia (00023) slipped 2% to HK$27.75 after Goldman Sachs tipped smaller family-controlled banks in HK may become target of acquisition. The research house also raised its target price for BEA.
Tencent (00700) dipped 2% to HK$168.8 even though a newswire cited insiders reporting that the internet giant is close to reach a deal to buy mobile game developer Supercell.
Shanghai Disney theme park opened today, but relevant stocks have yet to benefit from the euphoria. Jinjiang Hotels (02006) plunged 5% to HK$2.77. Air China (00753) fell 3% to HK$5.07. China East Air (00670) slid 5% to HK$3.99 after it reported May passenger traffic growth of 5.6% and cargo volume decline of 4.9%.
Indian market drops on weak offshore lead
Weak global cues triggered a fresh selling on the domestic bourses today, 16 June 2016. However, key indices managed to settle off their intraday lows as European stocks trimmed intraday losses. The barometer index, the S&P BSE Sensex lost 200.88 points or 0.75% to settle at 26,525.46. The Nifty 50 index lost 65.85 points or 0.8% to settle at 8,140.75.
Shares of Bharti Infratel fell 4.71% on reports that a foreign brokerage has downgraded the stock to underperform from buy and also slashed its 12-month target price to Rs 232 from Rs 440 earlier. According to reports, the foreign brokerage has downgraded the Bharti Infratel stock as it expects slower than expected telecom data growth. The brokerage firm sees risk of rental renewals that may lead to telecom firms being offered discounts. The brokerage has reportedly slashed its projected earnings per share (EPS) for Bharti Infratel by 5-9% for a period of three years from FY 2017 to FY 2019 factoring in higher-than-expected inflation in rental costs.
India's merchandise exports fell 0.79% at $22.17 billion in May 2016 over May 2015. Imports fell 13.16% at $28.44 billion in May 2016 over May 2015. The trade deficit fell to $6.27 billion in May 2016 from $10.41 billion in May 2015. Non-petroleum exports rose 1.01% at $20.19 billion in May 2016 over May 2015. Oil imports fell 30.45% at $5.93 billion. Non-oil imports fell 7.06% at $22.50 billion. The commerce ministry released the trade data on provisional basis for May 2016 after trading hours yesterday, 15 June 2016.
Elsewhere in the Asia Pacific region: New Zealand's NZX50 added 0.28% to 6888.57. South Korea's KOSPI index fell 0.9% to 1951.99. Taiwan's Taiex index slipped 1.3% to 8494.14. Malaysia's KLCI sank 0.8% to 1614.90. Indonesia's Jakarta Composite index dropped 0.01% to 4814.39. Singapore's Straits Times index slipped 0.82% to 2751.56.
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