The risk aversion tightened its grip on the Asia Pacific share market on last trading session of the week, Friday, 21 August 2015, as investors' nerves took another hit after a gauge of Chinese manufacturing plunged to the lowest since 2009.The China-led risk aversion was bolstered by fresh risk-off events on Thursday - Greek PM resignation, geopolitical risk (North Korea), and fresh signs of currency wars. Stoking selloff, the US stock markets suffered massive losses as well overnight, with S&P 500 dropping below one of its most closely watched indicators, a 200-day moving average.
The preliminary Caixin China Manufacturing Purchasing Managers' Index, a gauge of nationwide manufacturing activity, dropped to a 77-month low of 47.1 in August, compared with a final reading of 47.8 in July. The reading was the worst since March 2009, in the depths of the global financial crisis, and the sixth straight one below the 50-point level, which separates growth in activity from contraction on a monthly basis. The flash PMI, the earliest economic measure to be released about China each month, is closely followed by global investors for clues on the health of the economy.
Geopolitical tension revives after North Korean leader Kim Jong-un has ordered his frontline troops to be on a war footing, after an exchange of fire with the South across their heavily fortified border.
China's move last week to devalue the yuan has drawn much bad press, sparking talk of competitive devaluation, or currency wars. Slower growth in China means falling demand for and hence import of raw materials and energy from commodity-exporting countries like Canada, Australia, Brazil, Indonesia and many other developing economies. This further depresses the currencies of these countries, already suffering from an outflow of capital to the higher-growth, soon-to-be-higher- interest-rate US.
In Greece, Prime Minister Alexis Tsipras resigned on Thursday and called snap elections in September, a move aimed at strengthening his grip on power. After fighting the last election on an anti-austerity platform, and spending much of his first six months in office attempting to reverse some of the changes made in Greece under its international bailout, he was eventually forced to back down in negotiations with the country's creditors in July.
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Among Asian bourses
Australia market tumbles to 8-month low
The Australian share market plummeted to eight month low as risk aversion selloff after weaker-than-expected China manufacturing data heightened concern the economic slowdown in Australia's biggest trading partner is deepening. All ASX sectors closed lower, with financials were the hardest hit. Meanwhile, selloff pressure was evident in realty, property trusts, healthcare and retailers. The benchmark S&P/ASX 200 Index stumbled 74 points, or 1.4%, to 5214.60 points, while the broader All Ordinaries Index tanked 70.70 points, or 1.34%, to 5224.80 points.
Financial sector declined the most in ASX sectors group, with top four lenders leading losses. Westpac Bank fell 2.6% to A$31.37, National Australia Bank 2.8% to A$31.16, Australia & New Zealand Banking Group 2.7% to A$28.34, and Commonwealth Bank 0.7% to A$75.59. Insurance Australia Group shed 5.2% to A$5.52 after reporting that a blowout in disaster-related claims dragged down its profit by more than a third.
Medibank Private jumped 12.2% to A$2.25 after announcing its full-year statutory profit jumped to A$285.3 million, up from A$130.8 million the year before.
Santos closed merely 0.2% down at A$5.60 after erasing early gain inspired by reports of the resignation of its chief executive, David Knox. The company slashed its dividend by 25% and flagged asset sales after first-half earnings plunged 88%.
Nikkei tanks 3%
Japanese share market finished the session steep lower as drop in the Wall Street overnight, stronger yen, weaker-than-expected China manufacturing data, and the prospect of higher US interest rates has spurred a wave of selling across sectors. All of the gauge's 33 industry groups declined, with shares of insurance, real estate, banks, utilities, brokerage houses, shippers and resources being key losers. The Nikkei Stock Average tumbled 597.69 points, or 2.98%, to end at 19435.83 points. The broader Topix index ended 50.87 points, or 3.13%, lower at 1573.01 points. For the week, the Nikkei index lost 5.3%.
The greenback extended slide, hitting nearly a six-week low against the Japanese yen. The dollar slid to 122.83 yen versus 123.44 yen seen in late North American trade on Thursday.
Shares of banks and exporters were the biggest drags on the Topix industry groups. Toyota Motor Corp slumped 2.3%, Mitsubishi UFJ Financial Group Inc lost 4.1% and Sumitomo Mitsui Financial Group Inc dropped 4.8%. Tire maker Bridgestone Corp. lost 3.2% and electronic device maker Alps Electric Co. shed 7%.
Nippon Kayaku Co. briefly rose during the day but ended down 1.2% following a report that Toyota Motor Corp. asked the second-tier supplier last month to increase production so it can buy more than 13 million inflators.
Kuroda Electric Co. slumped 8.3% after activist investor Yoshiaki Murakami lost a bid to get seats on the electronic-component maker's board.
Takeda Pharmaceutical Co dropped 3.1%, after U.S. District Judge Gregory Sleet concluded on Thursday that its patent on cancer drug Velcade that expires in 2022 is invalid. The ruling means that a generic version of the medicine could enter the market when another patent expires in May 2017.
China market tanks 4.3%
The risk aversion tightened its grip on the Mainland China's stock market, as investors nerves took another hit by a private gauge of Chinese manufacturing unexpectedly falling to its lowest level in more than six years. All sectors weakened, with shares of technology and consumer goods players were the biggest decliners. The benchmark Shanghai Composite Index closed down by 4.27%, or 156.55 points, to 3507.74 points. The Shenzhen Composite Index, which tracks stocks on China's second exchange, de-grew 5.4%, or 116.10 points, to 2039.40 points. Total volume of A shares traded in Shanghai was 37 billion shares, while Shenzhen volume was 26.01 billion shares.
The gloomy PMI figure followed other official data last week that showed growth in China's factory output, investment and retail sales were all weaker than expected in July, dashing hopes that the economy was finally stabilising after a flurry of support measures over the last year, including four interest rate cuts and a massive stock market rescue.
Shares of technology and consumer goods players were the biggest decliners on the Mainland China market. Shanghai Wangsu Science & Technology Co. plunged 9.1%. BYD Co. tumbled 4.1%, while Dongfeng Motor Group Co. slumped 5.6%.
Hong Kong market enters in bear terrain
Hong Kong stock market declined for sixth straight session, as concern a slowing China economy and weaker yuan will spur capital outflows. Meanwhile, the weakest Chinese manufacturing data since the global financial crisis accelerated losses in riskier assets. The Hang Seng Index ended down 347.888 points, or 1.53%, at 22409.62 points, taking declines since an April 28 high beyond 20% level that signifies the start of a bear market. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, lost 207.67 points, or 2%, to 10195.05 points. Turnover increased to HK$118.3 billion from HK$105 billion on Thursday.
A total of 16 blue chips hit a new 52-week low today. Galaxy Ent (00027) was the top loser, sinking 4% to HK$28.05. CK Property (01113) also slipped 4% to HK$53.3. Kunlun Energy (00135) and Hang Lung Properties (00101) declined 3% to HK$5.78 and HK$18.3.
Henderson Land (00012) jumped 6% to HK$47.7. It was the top blue-chip winner after Citi Research made a reorganisation case for the developer.
Chinese telecom carriers were higher on renewed speculation of restructuring. China Telecom (00728) soared 7% to HK$4.65. China Mobile (00941) put on 2% to HK$100.3. China Unicom (00762) gained 3% to HK$10.82.
Sensex falls on tracking global selloff
Indian share market ended lower as fears of a China-led deceleration in global growth and escalating tension between South Korea and North Korea gripped markets. Sensex and Nifty provisionally closed 241.75 points and 72.80 points lower at 27,366 and 8,299.95, respectively.
Almost all sectors languished in the red, with financial and auto and auto-ancillary stocks suffering the biggest cuts. Bajaj Auto, Vedanta, GAIL, Tata Motors, Hero MotoCorp were top losers in the Sensex. Among the gainers were Hindalco, HUL, Cipla, Infosys and Wipro.
Tata Motors fell 3.3%, extending losses into a second session, after the company said some Jaguar Land Rover vehicles may have been damaged in the Tianjin explosions on Aug. 12.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 1007.26 crore yesterday, 20 August 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 567.87 crore yesterday, 20 August 2015, as per provisional data.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index fell 3% to 7786.92. South Korea's KOPSI declined 2% to 1876.07. New Zealand's NZX50 rose 0.2% to 5751.19. Singapore's Straits Times index shed 1.3% at 2971.01. Indonesia's Jakarta Composite index sank 2.4% to 4335.95. Malaysia's KLCI fell 0.2% to 1574.67.
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