Asia Pacific share market mostly higher in cautious trade on Thursday, 12 November 2015, as market participants avoided aggressive trading ahead of speeches by senior Federal Reserve officials later today.
Market participants were cautious ahead of several speeches from senior Fed officials, including Chairwoman Janet Yellen, scheduled later in the day. Traders expect more action later on Thursday with no less than five US Federal Reserve officials due to speak. A speech by New York Fed President Dudley on the US economic outlook to the Economic Club of New York may provide more insight.
They are paying close attention to whether officials indicate the U.S. central bank is in fact getting closer to a liftoff and if so how fast rates would rise in coming months. Surprisingly strong U.S. jobs data on last Friday has increased speculation that the U.S. central bank will start raising rates in December 2015.
Among Asian bourses
Australia market ends marginally higher
The Australian share market ended marginally higher, as investors risk sentiments buoyed by better-than expected domestic unemployment rate print and hopes of further fiscal stimulus in top resource consumer China after the release of more weak economic data in the country. But gains were marginal as many market participants avoided aggressive trading ahead of speeches by senior Federal Reserve officials, including Chairwoman Janet Yellen. The benchmark S&P/ASX 200 index ended 3.10 points, or 0.06%, up at 5125.70 points, while the broader All Ordinaries index rose 1.10 points, or 0.02%, to 5182.20 points.
Data from the Australian Bureau of Statistics showed that seasonally adjusted unemployment rate for October 2015 was 5.9% (down 0.3%age points) and the labour force participation rate was 65.0% (up 0.1%age points). The ABS reported the number of people employed increased by 58,600 to 11,838,200 in October 2015 (seasonally adjusted).
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Financial stocks gained ground as buyers returned to the major banks. Commonwealth Bank was up 1.8% to A$77.40, Westpac 1.6% to A$30.61, National Australia Bank 0.7% to $28.56, and ANZ Bank 0.7% to A$28.56.
Shares of energy players slumped after crude oil prices retreated overnight on fears of a seventh straight weekly increase in US crude inventories. Oil explorer Woodside Petroleum declined 1.1% to A$29.01 and Origin Energy lost 1.4% to A$5.10. Oil and gas firm Santos tanked 27.24% to A$4.30 as a trading halt was lifted after completing an institutional capital raising.
Materials and resources stocks were also down, with iron ore miner BHP Billiton falling 1.6% to A$20.61, a 10-year low, as the fallout from its collapsed Brazilian tailings dam continues to plague the company. Fortescue Metal followed decline, falling 0.8% to A$2.35. Rio Tinto rose 0.2% to A$49.50.
Japan stocks little changed ahead of Fed speeches
The Japanese share market closed virtually flat, as upbeat machinery orders data was offset by perceptions of overheating in the market. Meanwhile, many market participants avoided aggressive trading ahead of speeches by senior Federal Reserve officials later today and Japanese GDP figures next week. The day's notable gainers comprised utilities, pulp & paper, realty, tyre, and machinery makers, while banks, mining, civil aviation, and textile & apparels issues were among major decliners. The Nikkei Stock Average was 6.38 points, or 0.03%, to end at 19697.77 points. The broader Topix index has lost 0.11%, or 1.75 points, to 1593.57 at the close.
Government data out before the opening bell showed Japan's machinery orders, excluding those for ships and from utilities due to their volatility, grew a seasonally adjusted 7.5% in September from the month prior, beating most market expectations.
Market participants were cautious ahead of first read on Japanese gross domestic product, or GDP, figures for the July-September quarter on Monday and a two-day Bank of Japan policy meeting later next week.
The plunge in crude oil prices overnight took a bite out of energy explorers, with petroleum explorer Inpex losing 1.4% to 1200 yen. Inpex had advanced more than 4% on Wednesday after it cut its full year operating profit forecast by less than analysts had estimated.
Bank issues lost ground, dragged down by Resona Holdings, which fell 6.1% to 626 yen after announcing year-on-year profit declines Wednesday for the six months through September and slightly downgrading its pretax profit forecast for the year ending next March. Resona Holdings said its net profits fell 35% on year to Y86 billion ($698 million) for the first half through September. The company cited a deterioration of performance as well as the need for more reserves for possible bad debt and the negative effects from a rebalancing of exchange traded fund holdings.
Dentsu Inc. fell 5.4% to 6600 yen after the advertising firm lackluster earnings led to profit-taking on recent stocks gains. The company said sales grew 14% to 374 billion yen for the six-month period through to September, and its net profit increased 24% to 26 billion yen.
Nissin Foods Holdings rose 2.5% to 5740 yen after the company raised its net profit forecast for the year ending next March during the morning, reflecting the completion of its deal with Ajinomoto to make their Brazilian joint venture a wholly owned subsidiary.
Haseko Corp rose 1.9% to 1,312 yen after the condominium builder posted firm April-September earnings Wednesday, also upgrading its net profit forecast for the year ending next March and raising its planned annual dividend payout.
China stocks closed mixed
The Mainland China stock market ended mixed, after reports that four biggest banks may have to raise up to US$400 billion to meet new global capital rules and on caution ahead of an IMF decision on whether to include the Chinese currency in the Special Drawing Rights (SDR) basket. The Shanghai Composite Index declined 0.48%, or 17.35 points, to close at 3632.90 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 0.28%, or 6.27 points, to close at 2259.49. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, was down 0.76%, or 21.38 points, to close at 2783.30.
The IMF is expected to make its decision on whether to include the yuan in the SDR this month. JP Morgan economist Zhu Haibin said the chances of inclusion are high.
CHINA'S four biggest banks may have to raise up to US$400 billion to meet new global capital rules, an onerous task that could pressure them to slow down lending at a time when the government wants them to help prop up economic growth. The Financial Stability Board (FSB) this week finalized rules for ensuring banks do not become too big to fail, a pledge made by the Group of 20 major economies after governments spent more than US$1.5 trillion rescuing financial firms in the 2008 financial crisis. The reforms require the world's 30 systemically important banks, known as GSIBs, to hold a buffer of capital that can be written down to protect taxpayers if the bank goes bust. This layer of Total Loss Absorbing Capacity, or TLAC, comprises a large chunk of debt and comes on top of banks' core Basel capital requirements. China has four GSIBs: Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China and China Construction Bank, which was added to the GSIB list only last week.
Shares of Chinese technology companies declined heavily today on concern recent gains were overdone. Leshi Internet Information & Technology (Beijing) Co., the largest mainland-listed Internet video provider, slid at least 2%. East Money Information Co slumped 4%. Wangsu Science & Technology Co. lost 3.9% after rallying threefold over the past year.
ZTE, China's second-biggest phone-equipment maker, fell 2.1% after cancelled a share buyback plan. The company terminated a plan to buy back as much as 1 billion yuan ($157 million) of A shares because the stock market has become stable, according to a company statement.
Hong Kong market surges 2.4%
Hong Kong stock market ended sharply higher, with financial and realty stocks leading rally on reports Shenzhen Stock Exchange will include small-cap ChiNext shares in its planned link with the Hong Kong stock exchange. The benchmark Hang Seng Index surged 536.75 points, or 2.4%, to 22888.92 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, has gained 163.40 points, or 1.6%, to 10408.93 points. Turnover rose to HK$79.3 billion from HK$72.6 billion on Wednesday.
Shares of Lenovo (00992) soared 6% to HK$7.7 despite its interim loss of US$609 million. It was the top blue-chip winner. Li & Fung (00494) bucked the uptrend, falling 2% to HK$5.68. It was the biggest blue-chip loser. The stock has fallen for nearly 10% in this month.
Link REIT (00823) jumped 5% to HK$47.35 after JP Morgan raised its target price to HK$56.4.
Morgan Stanley upgraded MSCI Hong Kong to "overweight" from "equal-weight" ahead of a potential Fed rate hike. Amongst the major industry groups of MSCI Hong Kong, insurance, mainly AIA (01299), which will benefit from rising US interest rates. AIA shot up 4% to 48.45. CKH Holdings (00001), Hang Seng Bank (00011), SHKP (00016) and HKEx (00388) were all the top picks. They rose between 1% and 3%.
Auto makers were also higher after China's passenger vehicle sales posted strong growth of 13.3% year-on-year in October. BAIC Motor (01958) rose 3% to HK$7.75. Dongfeng Motor (00489) also gained 3% to HK$11.34. But BYD (01211) dipped 1% to HK$46.2.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index rose 0.2% to 8428. South Korea's KOPSI dropped 0.2% to 1993.40. Malaysia's KLCI lost 0.1% to 1663.20. Singapore's Straits Times index lost 0.8% at 2959. Indonesia's Jakarta Composite index gained 0.2% to 4462.23. New Zealand's NZX50 rose 0.2% to 6024. Indian stock market closed for Diwali holiday.
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