Headline equities of the Asia Pacific market ended mostly down in volatile trade on Tuesday, amid deepening worries about slowdown in the world's second-largest economy after the Chinese government surprise decision cut the yuan reference rate by a record.
Regional shares opened higher, following overnight rallies in European and U.S. markets. But, after the initial buying ran its course, stocks came under profit-taking pressure after news of China's devaluation of the yuan, which fuelled concerns over a slowdown in the Chinese economy.
China's central bank has devalued the national currency, the yuan, to its lowest rate against the US dollar in almost three years. PBOC lowered the one-off yuan's daily reference rate by 1.9% in a move to make the exchange rate more market-oriented, amid a slew of recent economic data showing a deepening slowdown. The move comes after the PBOC said earlier Tuesday that a strong yuan puts pressure on exports. At the weekend, China reported a sharp fall in exports and a slide in producer prices to a near six-year low in July. Exports fell by 8.3% in July, far worse than expected and the producer price index was down 5.4% from a year earlier. The yuan has appreciated 13% over the past three years against the dollar
Among Asian bourses
Australia stocks drop on earnings disappointment
The Australian share market ended weaker in volatile trade today, washing out Monday's improvements and falling back to near four-week lows, as several corporate earnings results failed to impress and the banks new regulatory requirements continued to weigh on investors' minds. Eight out of ten ASX sectors fell into the sea of red, with shares of healthcare, industrials, financials, utilities and technology stocks being major looser, while only mining and energy stocks bucking the trend . The benchmark S&P/ASX 200 Index lost 36 points, or 0.65%, to end at 5473.20 points, while the broader All Ordinaries Index declined 31.80 points, or 0.58%, to 5473.10 points. Volume was above average, with 2.1 billion shares traded worth $6 billion. 465 stocks rose, 517 fell and 344 ended unchanged.
The healthcare sector was the biggest loser in Australia today after Cochlear's outlook disappointed investors. Cochlear slumped 7.2% to A$83.56 after its full-year net profit missed expectations. The hearing-implant maker reported an annual net profit of A$145.8 million, up 56% from a year earlier but below analysts' forecasts. CSL was also down 1.9% to A$95.11 ahead of earnings report tomorrow.
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Financials were also lower, with top lenders were leading losses amid lingering concerns about the need to increase capital to meet regulatory requirements and a turn in the bad debt cycle, with currently low provision levels possibly set to rise. National Australia Bank declined 2.6% to A$32.46, Australia and New Zealand Banking Group fell 1.7% to A$30.07, and Westpac Bank sank 1.9% to A$32.05. Commonwealth Bank ended 0.02% lower at A$82.12.
Shares of mining and energy companies were top gainers in Australia today as copper prices rallied from a six-year low and as a rally in global oil prices ended a three-day losing streak. BHP Billiton rose 1.3% to A$26.34 and Rio Tinto added 1.6% to A$54.60 while Woodside Petroleum climbed up 1.8% to A$34.75 and Oil Search gained 1.3% to A$7.02.
The ANZ-Roy Morgan weekly consumer confidence survey showed a 0.4% drop, while NAB's monthly business survey showed a large decline amid concerns about China's economy, with business confidence falling back below the long-run average.
Japan stocks fall on China economy woes
Japanese share market declined for the first time in five consecutive sessions, as investors opted for withdrawing some profit off the table, amid deepening fears about China's economic troubles after Chinese government move to devalue its currency. The Nikkei Stock Average declined 87.94 points, or 0.42%, to end at 20720.75 points. The broader Topix index ended 3.69 points, or 0.22%, higher at 1687.60 points.
Stocks of companies sensitive to regional growth rose after economists predicted that devaluation of Chinese yuan may have less than one percentage point impact on overall profits of Japanese exporters. JFE Holdings Inc gained 3%. Nippon Steel & Sumitomo Metal Corp. added 2.4%.
Dai-ichi Life Insurance Co. rose 1.2% after the company reported stronger than expected net profits of 115 billion yen in the April-June quarter, up by 68% from a year earlier quarter.
China market ends mixed
Mainland China's stock market ended mixed in volatile trade, after the central bank's surprise decision to cut the yuan reference rate by a record amid signs the economic slowdown is deepening. Total of six out of 10 SSE sectors climbed up, with shares of material and energy sectors being top gainers, while financial and industrial issues were top losers. The benchmark Shanghai Composite Index fell 0.01%, or 0.51 point, to end at 3927.91 points, halting a two-day, 7.3% rally. The Shenzhen Composite Index, which tracks stocks on China's second exchange, gained 0.41%, or 9.43 points, to 2284.27 points. Total volume of A shares traded in Shanghai was 71.23 billion shares, while Shenzhen volume was 35.18 billion shares.
Shares of airlines were hit by the central bank's surprise decision to allow its currency to fall on concerns that a weaker yuan would increase their borrowing costs and push up their fuel bills. China Eastern, China Southern and Air China all dropped by more than 5%.
Imports also suffered, with a weaker yuan likely to push up the price of imports, while shares in exporters were boosted on hopes the yuan's drop will give much of a boost to global demand for Chinese goods. Trading house Shanghai Materials Trading Co and Garment makers Luthai Textile Co surged by their 10% daily limit.
Shares of financial and drug companies declined, with Jiangsu Hengrui Medicine Co. losing 2.9% and China Life Insurance co. retreating 1.7%.
Suning Commerce Group jumped 10% after Alibaba Group Holding said it will spend 28.3 billion yuan for a 19.9% stake in the electronics retailer.
Hong Kong stocks drop
The Hong Kong stock market ended lower after erasing early gain inspired by tracking overnight rally on the Wall Street and Beijing decision to 1.9% weaken the Chinese yuan against the U.S. dollar. The The Hang Seng Index ended 22.91 points, or 0.09%, lower at 24498.21 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, dropped 27.02 points, or 0.24%, to 11264.64 points. Turnover increased to HK$96 billion from HK$80.3 billion on Monday.
Both Tencent (00700) and HKEx (00388) fell 1% to HK$140.8 and HK$216 ahead of their interim earnings reports tomorrow. But Chinese property counters were chased. COLI (00688) jumped 4% to HK$25.25. CR Land (01109) gained 1% to HK$21.5.
CNY devaluation bodes well for handset exports. FIH (02038) shot up 3% to HK$4. Man Wah (01999) also surged 10% to HK$7.98. Techtronic Ind (00669) and Lenovo (00992) ascended 6% and 3% to HK$29 and HK$8.36. Li & Fung (00404) climbed 5% to HK$5.73.
Chinese aviation carriers bore the brunt of rising oil prices and devaluation of CNY. China South Air (01055) nosedived 18% to HK$6.76. Air China (00753) crashed 13% to HK$7.42. China East Air (00670) dumped 16% to HK$5.46. Cathay Pacific (00293) dipped 2% toHK$18.3.
Sensex, Nifty hit lowest closing level in almost two weeks
Mining, metal and banking stocks led losses for key benchmark indices, with the barometer index, the S&P BSE Sensex, falling below the psychological 28,000 mark. The Sensex and the 50-unit CNX Nifty, both, settled at their lowest level in almost two weeks. The market sentiment was hit adversely after the opposition Congress party stalled a discussion on the goods and services tax (GST) bill in the Rajya Sabha, citing procedural issues. The market sentiment was also hit adversely by China's central bank devaluing the nation's currency by nearly 2%. The Sensex fell 235.63 points or 0.84% to settle at 27,866.09. The Nifty fell 63.25 points or 0.74% to settle at 8,462.35.
Banks stocks declined. State Bank of India (SBI) dropped in volatile trade after the bank's ratio of net non-performing assets to net advances increased to 2.24% as on 30 June 2015 from 2.12% as on 31 March 2015. Auto components major Bosch rose in volatile trade after declaring good Q1 result. Shares of steel makers fell after China's central bank moved to devalue its tightly controlled currency, stoking fears of Chinese exports becoming cheaper. Telecom stocks declined. Realty stocks fell. Auto major Tata Motors extended yesterday's losses triggered by the company announcing weak Q1 results. IT stocks rose on a weak rupee.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 67.03 crore from the secondary equity market yesterday, 10 August 2015, as per data from National Securities Depository (NSDL). Domestic institutional investors (DIIs) sold shares worth a net Rs 50.05 crore yesterday, 10 August 2015, as per provisional data released by the stock exchanges.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index lost 0.9% to 8394.14. South Korea's KOSPI dropped 0.8% to 1986.65. New Zealand's NZX50 declined 0.7% to 5822.35. Singapore's Straits Times index lost 1.4% at 3153.06. Indonesia's Jakarta Composite index fell 2.7% to 4622.59. Malaysia's KLCI sank 1.1% to 1636.71.
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