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Asia Pacific Market: Stocks gain ahead of ECB

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Capital Market
Last Updated : Sep 03 2014 | 5:30 PM IST

Headline shares of the Asia Pacific market closed mostly higher on Tuesday, 02 September 2014, amid the promise of increased monetary policy support in Europe lifted investors' spirits. Meanwhile, gain was also aided by rumour about fresh monetary stimulus from the Bank of Japan to counter the impact of the sales tax hike and speculation that Beijing will increase support for strategic industries to bolster economic growth after manufacturing expanded at a slower pace last month.

A monthly meeting of the European Central Bank (ECB) is scheduled for 4 September, and there are expectations that the ECB will announce quantitative easing in the coming months to strengthen growth in the euro zone, which may boost market sentiment.

Some strategists have predicted the ECB will announce 1.4 trillion euro worth of stimulus on Thursday, which will more than make up for the expected end of extraordinary stimulus in the United States next month

The two separate surveys released on Monday indicated that China's manufacturing growth decelerated in August due to weaker global demand and a slowdown in domestic investment. HSBC Corp.'s purchasing managers index fell to 50.2 from July's 18-month high of 51.7 on a 100-point scale on which numbers above 50 show an expansion. An official industry group, the China Federation of Logistics and Purchasing said its separate PMI declined to 51.1 from 51.7.

China's manufacturing PMI reports followed weaker-than-expected credit, production and investment data for July, suggesting the economy is losing momentum and adding to pressure on the Chinese government to step up efforts to meet its expansion target this year.

Among Asia bourses

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All Ordinaries rises to fresh six-year high

Australian share market advanced highest close since mid-2008, after another decision from the Reserve Bank to keep interest rates steady and stronger than expected building approvals data lifted investors' spirits. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each rose by 0.5% to 5658.5 points and 5656.8 points, respectively.

The Sydney market gained momentum as confirmation of continuing low interest rates domestically. The Reserve Bank of Australia elected to hold the official cash rate in the September policy meeting at its record low 2.5%, for the 13th meeting in a row.

Also, investor risk sentiment spirited after Australian Bureau of Statistics said on Tuesday, 02 September 2014, that the seasonally adjusted estimate for total dwellings approved rose 2.5% in July following a fall of 3.8% in the previous month. Meanwhile, a separate report from the ABS showed the current account hit a deficit of A$13.7 billion in the second quarter, slightly better than expectations for a A$14 billion deficit.

Shares of energy companies were standout in Australia, as a joint venture between Origin Energy and AWE announced a significant gas discovery in Western Australia. The news came a day after Morgan Stanley analysts upgraded Origin to overweight while endorsing the company's strategy to focus on gas. Shares in Origin Energy added 3.1% to A$16.12, while AWE jumped 3.5% to A$1.78.

Materials and resources stocks ended mostly up after the Senate on Tuesday agreed to repeal the former Labor government's mining tax. Resources giant BHP Billiton rose 0.5% to A$36.90, while main rival Rio Tinto gained 0.4% at A$63.03. Junior iron ore miner Fortescue Metals gained 0.2% to A$4.10.

Shares of utilities players were worst-performer today. AGL Energy led fall, with loss of 3.7% to A$13.73 as the country's biggest retail electricity and gas supplier traded ex-dividend. AGL Energy was trading without the rights to 33 cents per share final dividend.

Nikkei rises to highest level since January

Japanese share market closed at highest level in over seven months today, as yen depreciation against basket of major currencies and speculation over pro-pension reform minister spirited risk appetite buying in stocks. The benchmark Nikkei 225 index added 1.24%, or 192 points, to finish at 15668.60, its best finish since 22 January 2014, while the Topix index of all first-section shares climbed 1.1%, or 13.94 points, to 1297.

The gain in Tokyo market came amid speculation a politician in favour of pension reform will be appointed health minister, with duties including overseeing retirement savings. Kyodo News reported that a ruling Liberal Democratic Party lawmaker who is an advocate of making the country's Y127 trillion public pension reserve fund a more aggressive investor was a possible candidate for the position of health minister in a cabinet reshuffle expected Wednesday. The Government Pension Investment Fund falls under the jurisdiction of the health ministry.

Exporter shares continued upward journey, thanks to yen weakening against the dollar. The yen slid 0.5% to 104.84 per dollar. A weaker yen is better for exporters, as it inflating the value of their earnings abroad in yen terms and enabling them to price their goods more competitively overseas.

SoftBank Corp., a mobile carrier that gets about 40% of its revenue in the U.S., added 1.3% to 7,541 yen. Nikon Corp., the world's No. 2 camera maker, rose 0.1% to 1514 yen. Tokyo Electron jumped 0.9% to 7289 yen, TDK Corp gained 7.5% to 5620 yen and Advantest Corp rose 0.9% to 1244 yen. Toyota Motor Corp added 1.8% to 6060 yen. Sony Corp jumped 0.2% to 2019 yen.

Murata Manufacturing jumped 5.4% to 10,675 yen after its price target was raised to 12,000 yen from 11,500 yen at Credit Suisse, which maintained its outperform rating.

Miura gained 2.6% to 3,695 yen after saying it plans a three-for-one stock split effective Oct. 1.

TDK Corp. surged 7.5% to 5,620 yen after the rating of the maker of electronics components was lifted to overweight at Morgan Stanley MUFG Securities Co.

Shanghai Composite climbs to 15-month high on stimulus hopes

Mainland China share market advanced to a 15-month high, amid growing speculation the government will increase support for strategic industries to bolster economic growth after two surveys showed that China's manufacturing growth decelerated in August. The benchmark Shanghai Composite advanced 30.54 points, or 1.37%, to 2266.05, the highest level since 5 June 2013. Turnover increased to 170.93 billion yuan from Monday's 117.21 billion yuan.

Shares of military linked stocks continued northward move amid optimism over the industry's reform. Shanghai Securities News reported on Monday that China will announce detailed rules for restructuring military research institutes in October, with about 16 listed companies are expected to be injected with military research institutes' assets.

China Spacesat Co shares locked 10% upper circuit at 21.93 yuan. Aerospace Communications Holdings rose by 10% daily limit to 15.74 yuan. Beijing Aerospace Changfeng Co jumped 10% daily limit to 21.79 yuan, while China Avic Electronics Co climbed 5.6% to 26.75 yuan.

Hang Seng ends edge down

Hong Kong share market closed down, amid profit-taking, with shares of mainland Chinese banks being major losers. The Hang Seng Index ended down 3.07 points to 24749.02. The benchmark index was down by 175 points in the morning, but it rebounded 65 points at one stage in afternoon. Market turnover rose to HK$70.56 billion from HK$61.88 billion on Monday.

Shares of telecommunication companies closed higher. China Mobile put on 2% to HK$98 after reportedly started taking iPhone 6 pre-orders from their customers. China Unicom jumped 4.1% to HK$14.14. China Telecom Corp. advanced 3.3% to HK$4.95.

Mainland lenders shares declined after state-owned investment bank CICC said August lending data may miss expectations, with bad loans on the rise and credit demand slowing. Industrial and Commercial Bank of China, the biggest lender, fell 0.8% to HK$5.05. HSBC Holdings shares fell 0.5% to HK$83.2 after UK fund manager Neil Woodford said he has sold his fund's stake in the global banking group.

Brokerage shares jumped after China domestic media reported that a month-long Shanghai-HK connect testing will end at 5 September, with the second phase of testing starting from 13 September. First Shanghai (00227) soared 7% to HK$1.61. Shenyin Wanguo (00218) gained 6% to HK$4.62.

Sensex, Nifty attain record closing high

A decline in crude oil prices and positive cues from European stocks helped key benchmark indices in India strike yet another record high, with the barometer index, the S&P BSE Sensex, moving past the psychological 27,000 level. Lower crude oil prices will help India in containing its fiscal deficit, current account deficit and fuel price inflation. The market sentiment was boosted by provisional data showing that foreign funds were net buyers of Indian stocks during the previous trading session. The Sensex rose 151.84 points or 0.57% to settle at 27,019.39, a record closing high. The CNX Nifty advanced 55.35 points or 0.69% to settle at 8,083.05, a record closing high.

The latest macroeconomic data showed the current account deficit (CAD) in India narrowed on year-on-year basis but rose on sequential basis in Q1 June 2014. Growth in the core sector eased in July 2014. Meanwhile, Japan has promised 3.5 trillion yen of public and private investment and financing, including Overseas Development Assistance (ODA) over five years for India's development.

The sentiment on the Indian bourses was boosted by provisional data showing that foreign funds were net buyers of Indian stocks during the previous trading session. Foreign portfolio investors (FPIs) bought shares worth a net Rs 554.14 crore yesterday, 1 September 2014, as per provisional data from the stock exchanges.

A decline in crude oil prices added to positive sentiment on the Indian bourses. India imports about 80% of its crude oil requirement. Brent crude prices fell on concerns of slowing oil demand growth due to weak economic recoveries in China and Europe. Brent crude for October delivery was off 70 cents at $102.09 a barrel. Lower crude oil prices will help India in containing its fiscal deficit, current account deficit and fuel price inflation.

Elsewhere in the Asia Pacific region-- South Korea's KOSPI index fell 0.8% to 2051.58. Taiwan's Taiex index sank 1.2% to 9399.72. New Zealand's NZX50 rose 0.12% to 5221.77. Singapore's Straits Times index declined 0.34% to 3330.22. Indonesia's Jakarta Composite index rose 0.7946 to 5201.59. Malaysia's KLCI rose 0.1% to 1867.69.

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First Published: Sep 02 2014 | 5:55 PM IST

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