Asia Pacific share market declined on Friday, 24 July 2015, after a survey of Chinese manufacturing activity was weaker than expected, while US jobs data bolstered bets that the US Federal Reserve is on track to hike interest rates later this year.
China's factory sector contracted by the most in 15 months in July as shrinking orders depressed output, a preliminary private survey showed today, 24 July 2015. The flash Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) dropped to 48.2, the lowest reading since April last year. It was the fifth straight month below 50, the level which separates contraction from expansion. June's final reading was 49.4. China's Caixin Media Co is publishing the PMI for the first time this month after replacing HSBC as the sponsor of the survey.
Investors avoided holding strong positions ahead of big events including the Federal Open Market Committee meeting and U.S. gross domestic product data next week. Market pundits are predicting a possible Fed rate hike at September meeting, on the back of upbeat weekly jobless claims report. The weekly US employment data released on Thursday, 23 July 2015, showed that initial jobless claims declined 26,000 to a seasonally-adjusted 255,000, the lowest since November 1973.
In Europe, Greece yesterday, 23 July 2015 reportedly moved another step closer to receiving its third bailout package, after the country's parliament approved a second set of economic overhauls required by lenders. The legislative approval is a precondition by the Greece's international creditors for starting official negotiations on the 86-billion-euro ($94.51 billion) aid program, aimed at helping the country stave off a debt default and get back on an economic-growth track. Meanwhile, officials from the lender institutions the European Commission, the European Central Bank and the International Monetary Fund (formerly known as the Troika) will be in Athens today, 24 July 2015 to open detailed discussions with the Greek government.
The flash survey data from Markit Economics showed that Eurozone economic growth slowed slightly in July but the pace of expansion remained one of the strongest seen over the last four years. The composite Purchasing Managers' Index fell to 53.7 in July from June's four-year high of 54.2. The expected score was 54.
Asia Pacific Market
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Nikkei falls on stronger yen
Japanese share market ended lower amid profit booking after yen appreciation against the greenback, disappointing China manufacturing data, and on caution ahead of big events including the Federal Open Market Committee meeting and U.S. gross domestic product data next week. Japanese investor sentiment was also weighed down by IMF's warning that Japan's debt would probably triple the size of the economy by 2030 if the government fails to act now. Market participants brushed aside Nikkei Flash Japan Manufacturing PMI data showing an improvement of 1.3 points to 51.4 in July. The Nikkei Stock Average dropped 139.42 points, or 0.67%, to end at 20544.53 points. The broader Topix index lost 0.54%, or 9.02 points, to close at 1655.86 points. For the week, the Nikkei index slipped 0.5%. For the year so far, it remains higher by 17.7%.
Exporter shares declined as the yen bounces into the 123 territory against the U.S. dollar. Honda Motor and Panasonic Corp sagged 0.7 and 0.5%, respectively, while construction equipment maker Komatsu closed down 1.6%, hurt by the lackluster results of Caterpillar and disappointing China manufacturing index
Shin-Etsu Chemical surged 4.2% after semiconductor wafer maker reported operating profit of Y51.4 billion for quarter ended June 2015 and lifted its dividend by 10% to Y110 per share. The company also surprised the street by disclosing full-year operating profit guidance for the first time. Its Y197.0 billion target came in above many expectations.
Chugai Pharmaceutical slipped 1.3% despite booking a strong first-half operating profit rise equivalent to 54% of full-year guidance. But analysts said that despite the rosy figures, near-term buy catalysts were exhausted.
Broadcaster TV Tokyo added 3.7% on news that the Nikkei Inc. has agreed to buy the Financial Times Group from U.K. education company Pearson for about 844 million pounds ($1.3 billion).
Australia market falls on China data
The Australian share market declined for third straight day, as risk sentiments deteriorated after Chinese manufacturing output data unexpectedly hit a 15-month low. Any weakness from China has a detrimental effect on the Australian market and in economy. Most of the ASX sectors declined, with shares of retailers, consumer goods, resources and financial blue-chip companies being major losers. The benchmark S&P/ASX 200 Index dropped 24.20 points, or 0.43%, to 5566.10 points, while the broader All Ordinaries Index lost 24.50 points, or 0.44%, to 5556.80 points. Over the week, the S&P/ASX200 benchmark slipped 1.8% and the All Ordinaries lost was down by 1.7%. The loss comes on the heels of a 3.2% gain last week.
Shares of material and resources companies extended rout after Chinese manufacturing data fell unexpectedly. Rising supply in the face of moderating demand also weighed sentiment in the sector. Iron ore prices continue to run into headwinds in the face of strong production from leading global names. This dynamic remained in focus following the latest production report from Brazil's Vale. The miner said it had produced 85.3Mt of iron ore in the June quarter, beating consensus expectations of 82.5Mt. While the mining giant plans to cut 25Mt of lower quality iron ore production from the company's south and southeast mines in Brazil and from third-party purchases, Vale intends to expand full year production to a record 340Mt by boosting output of higher margin product. BHP Billiton fell 0.9% to A$25.27. Australia's biggest gold miner Newcrest Mining slipped 4.8% to A$11.27 while Perseus Mining lost 4.5% to A$0.32.
Costa Group slipped 3.3% in their first day of trade on the ASX. Australia's biggest horticulture company was founded by the family of former Geelong Football Club president Frank Costa more than 120 years ago, listed on the ASX after raising A$550 million through an initial public offering.
China market slumps after factory PMI hits 15-month low
Mainland China's stock market ended lower, as investors opted for withdrawing some gains off the table after strong rally in last six sessions, helped by government unprecedented intervention measures. Risk sentiments were also lessened by disappointing flash manufacturing PMI data. The benchmark Shanghai Composite Index dropped 53.01 points, or 1.29%, to finish at 4070.91 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, declined 1.27%, or 29.94 points, to 2322.71 points. The Shanghai Composite Index gained 2.9% for the week.
Barring energy (up 0.5%), all SSE sectors declined, with shares of healthcare (down 2.6%), technology (down 2.2%), financial (down 1.9%), material (down 1.8%) players were hardest hit.
Insurers, brokerages and lenders led the retreat among financial, with China Life Insurance settle 3.2% lower, while Haitong Securities and Citic Securities plunged 3 and 2.6%, respectively. In the banking space, Bank of China, China Construction Bank and Agricultural Bank of China all ended more than 1% lower.
CRRC Corp declined 2.6% to 17.80 yuan. Train maker said on Thursday that it has won a 4.84 billion yuan order from Hong Kong transportation company MTR Corp, the Shanghai-listed firm's biggest-ever domestic metropolitan train contract. The Company stocks were 179% up year-to date.
Hong Kong market slumps
The Hong Kong stock market closed down, following the softer close of overseas markets and drop in Mainland China A-share bourses after news of sharply weaker-than-expected Chinese manufacturing data for July. The benchmark opened 118 points lower, which marked the intra-day high. It plunged to an intra-day low of 25073 after the preliminary Caixin China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, for July registered a 15-month low of 48.2. The Hang Seng Index ended down 270.34 points, or 1.06%, to finish at 25128.51 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, decreased 155.45 points, or 1.31%, to 11679.02 points. Turnover reduced to HK$78.36 billion from HK$79.8 billion on Thursday.
Brokerages were mostly lower. Guotai Jnuan (01788) slid 5.9% to HK$3.04. China EB (00165) dipped 4.5% to HK$21.35. CGS (06881) fell 3% to HK$7.76. Haitong Int'l (00665) added 1% to HK$5.06 after issuing positive profit alert.
Casino stocks advanced, with Sands China continued to leading the rally, up 1.8% on the top of 7% rally on Thursday, after announcing better-than-expected quarterly revenue. Barclays Research expects the company to raise its dividend payout. Galaxy Ent (00027) edged up 0.3% to HK$34.9. Both Melco Int'l Dev (00200) and MGM China (02282) rose 1% to HK$14.06 and HK$16.98.
Shares of AIA Group widened declines to 1.6% despite reporting a 21% rise in the value of new business for the first half of the year, driven by strong sales in Hong Kong and China.
Sensex, Nifty settles at 1-1/2 week low
Indian benchmark indices dropped sharply on last trading day of the week. After trading with small losses in first half of the day's trade, key benchmark indices extended fall and hit fresh intraday low in late trade. The barometer index, the S&P BSE Sensex and the 50-unit CNX Nifty, both, settled at their lowest level in 1-1/2 weeks. The Sensex lost 258.53 points or 0.91% to settle at 28,112.31.
The market breadth indicating the overall health of the market was negative, as political tussle between the National Democratic Alliance (NDA) government and the Congress party triggered concerns about the passage of key reform bills.
Bank stocks were mixed. Axis Bank slipped in volatile trade after declaring Q1 result. Capital goods stocks dropped. Metal and mining stocks declined. IT major Wipro dropped after the company reported a muted growth in IT services revenue in dollar terms on sequential basis in Q1 June 2015.
Foreign portfolio investors (FPIs) bought Indian shares worth a net Rs 294.62 crore from the secondary equity market yesterday, 23 July 2015, as per data from National Securities Depository (NSDL). Domestic institutional investors (DIIs) sold shares worth a net Rs 276.69 crore yesterday, 23 July 2015, as per provisional data.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index fell 0.3% to 8767.86. South Korea's KOSPI declined 0.9% to 2046. New Zealand's NZX50 fell 0.1% to 5894.18. Singapore's Straits Times index declined 0.1% at 3352.65. Indonesia's Jakarta Composite index lost 0.9% to 4856.60. Malaysia's KLCI fell 0.1% to 1720.76.
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