Headline bourses of the Asia Pacific market declined on Monday, July 29, 2013, as wave of risk aversion selloff on caution ahead of monetary policy reviews from the US to Europe this week. Meanwhile, risk sentiment was also weighed down on worries over China economic growth slowdown after official data released over the weekend showed profits at Chinese industrial firms slowed in June.
The Federal Open Market Committee convenes July 30-31. The Federal Open Markets Committee is likely to make an announcement on the timing of the tapering of its $85 billion-a-month bond-buying stimulus program a move that has kept long-term rates near record lows and supported economic recovery. The International Monetary Fund cautioned last week that the Fed exiting from its quantitative easing program could spur excessive interest-rate volatility and would have adverse global implications.
The European Central Bank and Bank of England also meet this week, after both signaled earlier in the month that they will keep interest rates low.
Market performance was also depressed by data from the National Bureau of Statistics on Saturday showing the combined profits of China's industrial companies rose 6.3% from a year earlier in June, slower than an annual gain of 15.5% in May and 9.5% in April. Industrial profits increased 11.1% in the first six months of the year, down from a 12.3% growth in the January to May period, the bureau said.
Among the regional bourses, Japanese share market declined for fourth straight day, weighed down by lukewarm corporate earnings and the yen's strength against major currencies. Meanwhile, the market extended its losses toward the close as investors were worried by talk of a delay to an anticipated increase in the country's consumption tax. The benchmark Nikkei Stock Average plunged 468.85 points, or 3.32%, to end the day at 13,661.13. It is the first time since July 1 for the benchmark index to close below 14,000. Among the sectors, almost all sectoral heavyweights declined with worst performer were chemicals, machinery, banking, services and trading companies.
Bank of Japan Gov. Haruhiko Kuroda said on Monday that the monetary stimulus that the central bank introduced April showing a positive effects on financial markets, the economy, and expectations for price rises, but cautioned that the BOJ is still some ways off from achieving its 2% inflation goal. Mr. Kuroda also stuck to his view that the index will likely reach its target of 2.0% in the latter half of the central bank's projection period through the end of March 2016.
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In Australia, Australian stock market closed tad higher in quiet and range bound trade, with gains in banking shares helped offset losses in gold, energy and mining stocks. The All Ordinaries Index rose 4.10 points up at 5027.90, while the ASX 200 Index finished 4.30 points up at 5046.30.
Gold producer Newcrest Mining lost 2.1% to A$12.15 after Moody's downgraded the company's debt from Baa2 to Baa3 with a negative outlook, while OZ Minerals shed 8 cents to A$4.05 after warning it would take a hit of up to A$240 million in its first half results, largely due to lower copper and gold prices. Shares of Evolution Mining dropped 1.2% to A$0.83 as the gold producer plans a write-down of assets by between A$350 million and A$400 million in the wake of a decline in gold prices.
In New Zealand, NZ shares fell, dragged down by Telecom Corp and general weakness among several other Top 10 stocks. The NZX 50 Index fell 3.515 points, or 0.77%, to 4,578.475.
In China, Chinese shares went lower for fourth day in row, with financials, industrials and resources stocks led retreat after industrial companies reported slower profit growth and China began a nationwide audit of government borrowings amid concern potential bad debts may weigh down the economy.
Risk aversion selloff flared in Shanghai after China's National Audit Office said on Sunday that it will launch a nationwide audit of government debt at the request of the State Council, fueling concern over rising debt levels that may pose risks to the growth of the world's second largest economy.
Shares of Banks and property developers declined heavily in Shanghai, with Industrial and Commercial Bank of China, the nation's largest lender, decreased 0.3% to 3.90 yuan. Industrial Bank Co lost 2.3% to 9.13 yuan. China Minsheng Banking Corp fell 1.8% to 8.25 yuan.
CSSC Jiangnan Heavy Industry Co, one of China State Shipbuilding Corp's affiliated shipyards, slumped 9.7% to 9.02 yuan after reporting a 60.31 million yuan net loss in the first half of the year.
In Hong Kong, shares of the HK bourses fell down amid lingering economic worries, with sentiment weighed by China's top auditor announcement a nationwide audit of government debt. Market sentiment was also hit by dismal data showing industrial profits in China rose at a slower pace in June. The Shanghai market index broke below 2,000 marks also weighed on sentiment. The benchmark Hang Seng Index declined 118.80 points to finish at 21,850.
Cement and related stocks were down in Hong Kong on concerns Infrastructure projects would be delay as China's central government is to conduct another nationwide audit on local government debt. Sinoma plunged 5.8% to HK$1.71. BBMG fell 3.6% to HK$4.83. CRCC retreated 3.9% to HK$7.74. CRG dipped 3.1% to HK$4.06.
Solar players were higher in Hong Kong on news that China and EU have reached deal in solar panel dispute. Solargiga added 2.5% to HK$0.415. GCL-Poly put on 1.5% to HK$1.99. But Comtec Solar slid 5.3% to HK$2.15.
In India, Indian stocks declined on profit taking, with FMCG, metals, realty and the oil & gas sector led retreat on caution ahead of the Reserve Bank of India's policy review meet on Tuesday. The 30-share index was down 154.91 points, or 0.78%, to 19593.28. It touched a high of 19,751.03 and a low of 19,570.87 in trade today.
UltraTech Cement dropped after reporting weak Q1 result. The company's net profit fell 13.49% to Rs 673 crore on 2.24% decline in net sales to Rs 4958 crore in Q1 June 2013 over Q1 June 2012. UltraTech Cement said that the quarter witnessed an increasing trend in logistics and raw material costs, linked to increase in railway freight and diesel prices. The benefit of softening in prices of imported coal was partly offset by rupee depreciation, the company said. The cement major said that the outlook continues to remain challenging. Growth in cement demand in the year ended 31 March 2014 (FY 2014) is expected to be around 6%, the company said. Over the long run, the demand for cement is likely to be at over 8%, with housing and infrastructure being the key demand drivers, the company said.
IT major Wipro surged after the company issued upbeat revenue guidance for Q2 September 2013 at the time of announcing Q1 June 2013 results. Wipro expects 1.99% to 3.88% growth in revenue from IT services business at between $1.62 billion to $1.65 billion in Q2 September 2013 over Q1 June 2013. The company's consolidated net profit rose 3% to Rs 1623.30 crore on 1% growth in revenue to Rs 9734.60 crore in Q1 June 2013 over Q4 March 2013.
Elsewhere, South Korea's KOSPI fell 0.57% and Taiwan's TAIEX lost 0.8%. Indonesia's JKSE declined 1.6% and Malaysia's KLSE Composite lost 0.5%, while Singapore's STI closed 0.87 point up.
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