Japan released inflation figures that gave a mixed signal about the effectiveness of Prime Minister Shinzo Abe's economic revitalization strategy that aims to reverse two decades of stagnation and falling prices. The consumer price index rose for a fourth straight month in September but much of the increase was due to higher costs for imported food and energy as monetary easing has weakened the Japanese yen.
Japan's consumer price index (CPI), which measures a basket of everyday goods but excludes the volatile cost of fresh food, was up 0.7% from a year earlier, according to the internal affairs ministry. In September, electricity bills rose by 7.6% on year while automobile-related costs also went up 4.3% due to higher gasoline prices, the data showed. Excluding fresh food and energy prices, consumer prices were flat in September. Fossil energy imports soared in the wake of the Fukushima atomic disaster in 2011 that forced the shutdown of Japan's nuclear reactors, and the yen's rapid depreciation since late last year has boosted import costs.
On top of that, the Chinese central bank's refusal to inject funds into money markets this week to curb frothy credit growth has sparked fears of a liquidity crunch, with bank-to-bank lending rates inching higher. That has dimmed the optimism that stemmed from a rebound in China's third quarter economic growth and an improvement in manufacturing for September.
The seven-day repurchase rate, a gauge of funding availability in the Chinese banking system, traded at a weighted average of 5.80% by late afternoon, compared with yesterday's average of 4.820%. Traders consider a seven-day repo rate at 4% and below as indicative of comfortable liquidity levels in the market.
China's money rates jumped as the People's Bank of China refrained from conducting reverse repos for a third straight auction. The PBOC drained a net 58 billion yuan ($9.8 billion) from the financial system this week as reverse repos matured. PBOC withdrew 44.5 billion yuan last week.
Higher money rates in China's are raising concern policy makers may be tightening liquidity to curb credit growth. The pressure for monetary and credit expansion is still large as the trade surplus widens and capital flows in, the central bank said in an October 16 statement. There is ample liquidity in the banking system and the central bank will follow a prudent monetary policy, according to the statement.
Among Asia peers, Japanese shares dived sharply as investors sold a broad range of stocks to close out their positions before the weekend on account of stronger yen. Meanwhile, selling of Nikkei futures also prompted selling of cash stocks. The Nikkei Stock Average slid 398.22 points, or 2.8%, to end the day at 14,088.19, its lowest point since Oct. 9 and suffered its steepest decline since Aug. 7, when it fell 576 points.
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Canon Inc lost 1.6% to 3080 yen after it lowered its full-year net profit forecast to 240 billion yen from a previous estimate of 260 billion yen set in July. Mitsubishi Motors Corp rose 1.2% to 1036 yen after the car company increased its profit outlook.
In Australia, shares in Australian financial market eked out gains to hold at five-year high lifted by top lenders and commodity related stocks. The benchmark S&P/ASX 200 index added 13.4 points, or 0.25%, to 5386.3, near a five-year high of 5402.4 hit earlier in the week. The improvement on Friday has meant that over the last 5 days the index has gained about 1.2%, its third consecutive week of gains.
Shares of precious-metal miners were biggest winner in ASX after gold prices hit fresh five-month highs on Thursday. The Comex December futures price rose by US$16.30 an ounce or 1.2% to US$1,350.30 per ounce. Newcrest Mining rose by 0.7% to A$10.99, Perseus Mining 3.3% to A$0.62 and Kingsgate 2.9% to A$1.61.
Australian banking and financial stocks finished ahead of earnings reports, with Australia & New Zealand Banking Group rising 0.9% to A$32.66, Westpac Banking Corp 0.5% to A$34.36, Commonwealth Bank 0.9% to A$76.28 and National Australia Bank 1.4% to A$36.08.
AMP shares declined 2.8% to A$4.80 after the financial services company has warned its fourth-quarter earnings could take a hit of up A$65 million due to further troubles at its income protection business.
AMP said a review of its life insurance book will prompt it to tip A$15 million into its income protection book. A change in payout assumptions will also result in a capitalised loss in the range of A$40 million to A$50 million in the fourth quarter. This is expected to reduce AMP's operating profit by the same amount, the company said. ''In total, these two adjustments are expected to result in A$55 million to A$65 million reduction in AMP's operating result for the (fourth quarter) of 2013,'' AMP said. It also said it would have to wait until the fourth quarter to assess what impact the moves could have on dividends. AMP substantially bulked up its income protection business following it's A$4.1 billion purchase of AXA Asia Pacific's Australian operations. Income protection products, which guarantee a portion of a policyholder's salary for a period of time if they are unable to work, have been causing headaches for life insurers as claims rise in line with job losses among white-collar workers.
Rail and stevedore operator Asciano slumped 5% to A$5.90 after it warned earnings growth would be weaker in the 2013-14 financial year.
Warrnambool Cheese and Butter shares jumped 3.3% to a record closing high of A$8.42, after Canada's Saputo raised its takeover offer for the company.
In China, headline shares in the Chinese financial market declined for fourth consecutive day, as mounting liquidity concerns triggered risk aversion selloff. The Shanghai Composite Index declined 1.45% to 2132.96, while Shenzhen Composite Index, which covers the smaller mainland exchange, dropped 1.78% to 1039.94.
Shares of distilleries companies tumbled in Shanghai bourse after China's high-end liquor prices fell about 20% from a year earlier despite the nation enters the peak season for alcohol purchases. Kweichow Moutai fell 4.9% to 136.73 yuan, the biggest decline since Sept. 17. Wuliangye Yibin Co, China's second-biggest liquor maker, lost 2.1% to 17.47 yuan.
Shares of Shanghai related companies continued falling streak on profit taking following strong recent run. Companies containing the name Shanghai jumped since August when the Commerce Ministry said the government approved the free-trade zone in the city. Shanghai Port plunged 7% to 4.76 yuan, trimming its gain this year to 81%. Shanghai Waigaoqiao tumbled by the 10% daily limit to 41.58 yuan after surging 333% this year.
Great Wall Motor, the maker of China's best-selling sport utility vehicles, locked 10% lower circuit at 43.56 yuan amid disappoint with a quarter-on-quarter drop in Great Wall's margins given an increase in revenue. The company on Thursday posted net income of 2.08 billion yuan in the third quarter.
Sinovel Wind Group Co. sank 5.5% to 4.66 yuan after the country's biggest maker of wind turbines posted a loss of 699 million yuan for the first nine months.
In Hong Kong, HK shares dived as sentiments hammered by doubts about the durability of recoveries in the region's two biggest economies. The benchmark Hang Seng Index declined 0.6% to 22698.34, while the Hang Seng China Enterprises Index dropped 1.4% to 10177.82.
Among the 50 HK blue chips, 41 declined and 5 rose, while remaining 4 shares steady. CITIC Pacific dipped 3.5% to HK$10.38, while China Merchants Holdings (International) Co added 1.5% to HK$27.45, making themselves the top blue-chip loser and winner. Great Wall Motor shares sank 7.02% to HK$45.05 after Chinese auto maker reported weaker profit margins in the third quarter.
In India, Indian benchmark indices moved into positive zone from negative zone in mid-afternoon trade. At 14:20 IST, the barometer index, the S&P BSE Sensex, was up 25.36 points or 0.12%, off 31.37 points from the day's high and up 128.24 points from the day's low.
Shree Cement fell 1.24% on weak Q1 results. Net profit fell 24.5% to Rs 172.22 crore on 0.58% fall in total income to Rs 1321.49 crore in Q1 September 2013 over Q1 September 2012
Adani Ports and Special Economic Zone fell 1.49%. On a consolidated basis, the company reported 24% growth in profit after tax to Rs 342 crore on 81% surge in total income to Rs 1407 crore in Q2 September 2013 over Q2 September 2012.
Adani Power lost 3.53%. On a consolidated basis, the company reported net loss of Rs 1071.91 crore in Q2 September 2013, higher than net loss of Rs 260.91 crore in Q2 September 2012. Total income jumped 100.36% to Rs 3108.30 crore in Q2 September 2013 over Q2 September 2012.
Elsewhere in the region, New Zealand's NZX 50 index rose 0.59%. Indonesia's Jakarta Composite index fell 0.3%. South Korea's KOSPI slid 0.6%. Taiwan's Taiex index fell 0.6%. Malaysia's KLSE Composite lost 0.07%. Singapore's Straits Times index dropped 0.39%.
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