Asia Pacific share market surged on Friday, 23 October 2015, as investors risk appetite whetted after the European Central Bank (ECB) chief Mario Draghi's hinted at further economic stimulus measures out of Europe in December 2015.
Investors around the world cheered ECB chief Mario Draghi's hints of more QE out of Europe. ECB President Mario Draghi has set the stage for a possible stimulus expansion in December as policymakers are increasingly concerned over the deteriorating growth and inflation outlook for the euro area.
The ECB left its key interest rates unchanged at a record low on Thursday for a tenth policy session in a row. The ECB has left the main refinancing rate unchanged at 0.05% at its meeting on Thursday as widely expected. The marginal lending rate also stayed unchanged at 0.3% and the deposit rate at -0.2%. At the press conference, President Mario Draghi acknowledged that the QE program has been "proceeding smoothly" and would "continue to have a favorable impact". Yet, he indicated that the decline in commodity prices and concerns about slowdown in emerging markets would prolong deflation. As such, the central bank would re-examine its bond buying program in December. This is interpreted as a dovish message and market is quickly pricing in further easing in coming months.
Eyes are now on a Bank of Japan (BoJ) meeting next week amid speculation it will further loosen monetary policy to counter a downturn in the world's third largest economy. Investors are also looking for signs on the timeline for a long-anticipated Federal Reserve interest rate hike. The Fed will meet on Tuesday and Wednesday next week, after its policymakers opted to hold interest rates steady last month, amid concerns that a slowing global economy, particularly in China, could pose risks to the U.S. economic outlook.
Among Asian bourses
Australia market joins global rally
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The Australian share market closed sharp higher, taking heart from the improved risk sentiment after the European Central Bank signaled its readiness to inject more stimulus. All 10 ASX sectors advanced, with consumer staple, consumer discretionary, financial, realty, material, energy and industrial issues being major gainers. The benchmark S&P/ASX 200 index rose 87.80 points, or 1.67%, to 5351.60 points, while the broader All Ordinaries index added 88.50 points, or 1.67%, to 5388.10 points.
The banks and financial stocks ended stronger, on the prospect of more global monetary easing, despite announcements by two of the big banks that they would lift lending rates. National Australia Bank led lenders rally, up 1.9% to A$32.44, after announcing that it is raising its variable mortgage rate by 17 basis points from November 12, tracking similar move by its rivals. ANZ Banking Group rose 1.1% to A$28.90 after announcing mid-day that it is raising home loan rates by 18 basis points. Westpac Banking Corp added 1.7% to A$31.56 and Commonwealth Bank of Australia jumped 1.3% to A$77.35.
Oil explorer stocks were also higher, as crude oil prices rallied after the European Central Bank indicated its readiness to step up its stimulus program. Brent added 0.8% to $48.44 a barrel, while U.S. crude added 0.5% to $45.60. Woodside Petroleum advanced 0.5% to A$31.10, Santos 2.2% to A$6.46, and Origin Energy 1.7% to A$6.02. Beach Energy and Drillsearch Energy shares rose 3% to A$0.69 and 26% to A$0.83, respectively, following a merger agreement.
Nikkei surges 1.91%
The Japanese share market soared amid improved risk appetite, after the European Central Bank hinted at further economic stimulus measures in December. All 33 TSE first-section sector sub-indexes ended up, with Foods, Real Estate, Securities & Commodities Futures, Insurance, Rubber Products, Marine Transportation, and Machinery issues being major gainers. The Nikkei Stock Average added 75347.13 points, or 1.91%, to end at 18554.28 points, its highest level since August 31, meanwhile the broader Topix index added 1.95%, or 29.62 points, to 1547.84 at the close.
Shares of major exporters advanced after yen weakened to upper 120-level against the greenback. A weaker yen is positive for Japanese exporters as it makes products cheaper overseas and improves their profits when repatriated. Blue-chip exporters such as Toyota Motor Corp. rose 1.3% to 7522 yen, Sony Corp. added 0.6% to 3420 yen and Honda Motor Co. gained 4% to 4063 yen.
Shares of financial and realty companies were also higher, with Mitsubishi Estate Co., the country's biggest developer, adding 3.3% to 2638 yen. Mitsubishi UFJ Financial Group jumped 2.3% to 786 yen and Sumitomo Mitsui Financial Group advanced 2% to 4842 yen. Brokerages also jumped, with Nomura Holdings Inc gaining 3.7% to 782 yen., while Daiwa Securities Group Inc. climbed 2.3% to 857 yen.
Shares of rail car and parts makers advanced, led by Central Japan Railway Co, up 3.6% to 21635 yen, after announcing upgrades to its bullet trains worth 100 billion yen. The announcement buoyed appetite for rail car and parts makers; Nippon Sharyo Co rose 4.1% to 332 yen and NTN Corp climbed 2.8% to 580 yen.
Kose Corp shares gained 4.3% to 11840 yen after reporting better than expected preliminary profit. The Cosmetics company posted a preliminary net income of 10.9 billion yen for the six months ended September 2015, better than its forecast for 7.7 billion yen.
China market ends stronger
The Mainland China stocks ended higher in volatile trade, as investors welcomed ECB chief Mario Draghi's hints of more QE out of Europe. Meanwhile, risk appetite whetted further after President Xi Jinping comment that the economy will not suffer a hard landing, and as home price data suggested a mild recovery in the Chinese property market. The Shanghai Composite Index surged 1.3%, or 43.69 points, to close at 3412.43 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, grew 2.94%, or 57.55 points, to 2016.74. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, jumped 3.26%, or 80.25 points, to close at 2538.38.
Shares of realty developers soared up after latest data indicated a recovery in the all-important housing market. Of 70 large and medium-sized cities surveyed in September, new home prices climbed month on month in 39, up from 35 in the previous month, the National Bureau of Statistics (NBS) said on Friday. Meanwhile, 21 large and medium-sized cities reported month-on-month price declines, down from 26 in August, according to NBS data. Real estate giant China Vanke advanced 2.9% to 13.74 yuan and Poly Real Estate advanced 5.8% to 9.09 yuan. Shanghai Shimao Co rallied 3.2% to 11.21 yuan.
China's health stocks were also up, driven by expectations the government will issue more policies to support the industry as part of Beijing's new "five-year plan" likely to be unveiled next week.
Airline carrier Air China dropped 0.6% to 9.40 yuan and China Southern Airlines Co lost 1% to 8.88 yuan after they dismissed a media report of a possible merger of the two.
Hong Kong market gains 1.34%
Hong Kong stock market advanced amid investors risk appetite was whetted after dovish comments from the European Central Bank (ECB) and upbeat US corporate earnings. The benchmark Hang Seng Index advanced 306.57 points, or 1.34%, to 23151.94 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, jumped 141.52 points, or 1.34%, to 10742.04 points. Turnover increased to HK$72.5 billion from HK$69 billion on Thursday.
Mengniu Dairy (02319) was ended up 3.3% to HK$15.22 after Citi Research said Mengniu's earnings before interest and taxes (EBIT) were lower than that of Yili, hence, the research house sees ample room for Mengniu to expand its EBIT.
China Unicom (00762) dipped 1.2% to HK$9.84 after the telecom carrier reported its 3Q net fell 23%, which triggered a slew of investment houses' target price cuts. China Telecom (00728) edged up 0.3% to HK$4.09 ahead of its earnings report on next Wednesday. China Mobile (00941) also nudged up 0.7% to HK$93.35.
Air China (00753) stocks retreated 2.2% to HK$7.19 and China Southern Airlines (01055) lost 4.3% to HK$6.44 after said announcing they have not received any merger notice. China Eastern Airlines (00670) also inched down 0.2% to HK$5.03.
Belle (01880) slipped 1.8% to HK$7.1 ahead of earnings results. The shoe retailer will announce its results on Monday.
Sensex hovers in positive zone
Gains for private sector banks, oil exploration and production (E&P) firms and index heavyweights HDFC and ITC aided upmove for key benchmark indices. At 14:15 IST, the barometer index, the S&P BSE Sensex, was up 218.68 points or 0.8% at 27,506.34. The Nifty was currently up 59.50 points or 0.72% at 8,311.20. Indian markets were shut on Thursday for a local holiday.
Meanwhile, foreign portfolio investors (FPIs) sold shares worth a net Rs 48.33 crore on Wednesday, 21 October 2015, as per provisional data released by the stock exchanges.
Further, Reserve bank of India (RBI) said on Thursday it will allow lenders to count short-term bullion deposits under the gold monetisation scheme as part of their cash reserve ratio or statutory liquidity ratios, increasing the appeal of the plan for the sector.
Aurobindo Pharma was up after the company announced that it has received final approval from the US Food & Drug Administration (USFDA) to manufacture and market Tramadol Hydrochloride Extended release tablets USP, 100 mg, 200 mg and 300 mg.
Ideal Cellular shares declined after the company's July-September quarter (Q2) consolidated revenues slid 1.2% quarter-on-quarter (QoQ) to Rs 8,690 crore led by a fall in voice pricing and voice minutes of use due to an increasing rural subscriber base and seasonal effects.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index was up 0.8% to 8673.81. South Korea's KOPSI rose 0.9% to 2040.40. New Zealand's NZX50 climbed up 0.8% to 5970.67. Singapore's Straits Times index rose 1% at 3069.44. Indonesia's Jakarta Composite index grew 1.3% to 4645.43. Malaysia's KLCI gained 0.4% to 1711.78.
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