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Asia Pacific Market: Stocks fall a fourth day amid China, Fed stimulus concerns

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Capital Market
Last Updated : Jan 30 2014 | 12:00 AM IST
Asia Pacific shares were mostly lower for fourth consecutive session on Tuesday, 28 January 2014, on caution ahead of a Federal Reserve's highly anticipated policy meeting on scaling back stimulus. But, fall on the downside were marginal as some investors chased for bottom fishing after several days of steep losses. The MSCI Asia Pacific Index fell 0.3% to 134.33.

Turnover across the region were relatively thin as nervous investors largely awaiting for the outcome of two-day meeting of the U.S. Federal Reserve starting today in global day. The Fed on Wednesday wraps up a two-day meeting and investors will be looking to see if it announces any further cuts to its stimulus. There are fears that officials may announce to reduce the central bank's monthly bond buying by another $10 billion to $65 billion. The U.S. central bank last month said it would reduce its bond-buying by $10 billion-a-month from January to $75 billion, citing a pick-up in the world's biggest economy.

Investors worried about slowing growth in China, the world's second biggest economy, found some solace in reports that a high-profile trust company in China cut a last minute deal to avoid a default. Some 700 clients who bought into a 3 billion yuan ($500 million) product from China Credit Trust agreed on Monday to a restructuring so that they could get their investment back, avoiding the first of what was feared would be a cascade of defaults in the country's shadow banking sector.

Among Asian bourses, Japan's market continued descent for fourth session in row, weighing the benchmark Nikkei Stocks Average 0.17% lower at 14980.16, as risk off selling amidst concerns about global economic recovery strength, yen appreciation to seven-week high versus the greenback and on doubts about the prospects for growth in Japanese corporate earnings.

Export related stocks stumbled as the U.S. dollar continued hovering at mid-102 yen level. A stronger yen tends to make Japanese products sent abroad more expensive. Sony Corp. stocks declined 2.7% to 1665 yen after Moody's cut its rating on the company to junk status, citing concerns about Sony's TV and PC businesses. Elsewhere in the tech group, shares of Apple Inc suppliers Rohm Co. shed 0.39% and Murata Manufacturing Co. fell 0.33% after Apple issued a disappointing financial outlook Apple shares were punished during after-hours trading in the U.S.

In Australia, Australian stock market declined sharply today, on tracking sizeable losses for global equities the previous day. The mining and resource sector was the hardest hit after gold futures fell and copper traded at a seven-week low. The benchmark S&P/ASX 200 index declined 65.80 points to 5175.10, while the broader All Ordinaries dropped 66.30 points to 5188.

Australian share market commenced trading with weak note after returning from a three-day weekend break as jitters about emerging markets growth impacted investor confidence. Australian market closed yesterday for the Australia Day public holiday.

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Shares of Australian materials and resources companies extended losses today. Investor sentiment towards the miners has been dampened since the release last week of a disappointing HSBC flash reading of the China Purchasing Manufacturers Index that indicated the manufacturing sector contracted this month. Resources giant BHP Billiton lost 2% to A$36.31, while rival Rio Tinto fell 1.3% to A$64.31 with the spot price for iron ore, landed in China, unchanged at $124.30 a tonne.

Junior iron ore miner BC Iron lost 2.5% to A$4.99 despite reporting record half-year sales and maintaining its full year guidance. Junior goldminer Perseus Mining fell 7.2% to A$0.385 despite meeting its quarterly production and costs guidance.

JB Hi-Fi shared climbed up 4.9% to A$19.19 after electronics retailer maintained its full-year guidance for total sales growth of between 6% and 8%. JB Hi-Fi's net profit rose 10% to A$90.3 million in the six months ended December 31, compared with A$82.1 million in the year-earlier period.

Oil Search shares inclined 1.5% to A$8.26 after PNG focused oil and gas company lifting its production guidance for the year. It now expects to produce between 12-15 mmboe (million barrels of oil equivalent) in 2014, around 15% more than previous forecasts.

Building products firm, Boral (BLD) expects net profit to rise to approximately A$90 million in 1H14; helped by good weather. On a negative note, estimates for the second half are less optimistic. BLD was down 0.4% to A$4.70.

NAB's business-confidence index was unchanged at plus 6, while business conditions jumped in December (up 7 points to +4 index points), moving more into line with confidence. Most industries recorded improved conditions for December - especially transport, wholesale and the services industries more generally - but, manufacturing and construction were both notable exceptions.

In Thailand, shares in Thai market declined, with the SET Index down 0.8%. Thailand's manufacturing production decreased 6.2% in December from a year earlier, according to a report today, 28 January 2014. An anti-government protester was injured in a shooting incident in Bangkok, near the venue where Prime Minister Yingluck Shinawatra is meeting members of the Election Commission to discuss proposals to delay the 2 Feb general election, Bluesky TV reported.

In China, shares of Mainland China market finished higher, as investors chased for bottom fishing after the benchmark gauge dropped the most in three weeks yesterday. Meanwhile, bargain buying also aided by calming liquidity crunch woes after central bank injection of 15 billion yuan into the system The Shanghai benchmark provisionally ended 5.21 points higher at 2038.51, while CSI 300 Index grew 3.94 points to 2038.51.

The People's Bank of China added another 150 billion yuan to the interbank market on Tuesday's open market operation, pumping even more cash into the system to meet depositor demands ahead of the start of the Chinese New Year holiday on Friday. The injection, conducted via 14-day reverse repos, follows last week's 375 billion yuan addition, transactions which included a combined 300 billion yuan addition via 21-day repos on Tuesday and Thursday. China's markets will be shut from Jan. 31 to Feb. 6 for the Chinese New Year holidays.

The National Bureau of Statistics said on Tuesday that profit at China's industrial companies increased 6% in December from a year earlier, after rising 9.7% in the previous month.

In Hong Kong, shares in HK market finished lower for fourth consecutive session after seesawing between gains and losses in narrow range, amid lingering worries of an outflow of funds from emerging markets and a slowdown of China's economic growth. The benchmark Hang Seng Index provisionally finished 15.46 points lower at 21960.64.

Shares of China's Internet giant Tencent Holdings rose 2.78% to HK$503 after the company's news portal qq.com said Tencent is encouraging U.S. users to connect their Google accounts with WeChat accounts, a fast-growing smartphone messaging application developed by Tencent. Other tech stocks also advanced, as software developer Kingsoft Corp inclined 5.32% to HK$24.75, online game developer NetDragon Websoft rose 3.4% to HK$15.78 and Chinese PC maker Lenovo Group added 5.86% to HK$15.78.

In India, key benchmark indices closed marginal lower after the Reserve Bank of India (RBI) surprised markets by raising its main lending rate viz. the repo rate by 25 basis points to 8% after Third Quarter Review of Monetary Policy for 2013-14 and said that it is only by bringing down inflation to a low and stable level that monetary policy can contribute to reviving consumption and investment in a sustainable way.

As per provisional closing, the S&P BSE Sensex was down 23.94 points or 0.12% to 20,683.51. The Sensex had fallen as much as 153 points just after the monetary policy was announced but soon recovered as RBI eased concerns on growth.

Among the 30-share Sensex pack, 17 stocks declined and rest of them gained. The gainers included Tata Steel that rose 3.49% to Rs.366.10 a share and Tata Motor that added 2.43% to Rs.356.25. Among the losers, Hindustan Unilever shares declined 0.94% to Rs.570.15 each, while Sun Pharmaceutical Industries dropped 2.44% to Rs.582.90 a unit.

Maruti Suzuki India (MSIL) tumbled in volatile trade after the company said at the time of announcing Q3 December 2013 result during market hours that the company's board has approved implementing the expansion project in Gujarat through a 100% subsidiary of Suzuki Motor Corporation, Japan. The stock lost 9.28% at Rs 1,543.40. The stock hit a high of Rs 1750.10 and low of Rs 1541.25.

Idea Cellular lost 4.61% after net profit declined 0.07% to Rs 398.10 crore on 4.64% growth in total revenue to Rs 6610.50 crore in Q3 December 2013 over Q2 September 2013. The Q3 result was announced after market hours on Monday, 27 January 2014.

Elsewhere in the Asia Pacific region, New Zealand's NZX50 index decreased 0.11%. South Korea's KOSPI rose 0.34%. Indonesia's Jakarta Composite index added 0.44%. Malaysia's KLSE Composite added 0.13%. Singapore's Straits Times index rose 0.66%. Taiwan's market closed for holiday.

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First Published: Jan 28 2014 | 4:54 PM IST

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