Asia Pacific share market advanced on Monday, 11 July 2016, as risk appetite buying bolstered by election results in Japan and Australia and last week's strong monthly U.S. jobs report which eased concerns over the health of the world's largest economy
Abe's Liberal Democratic Party won 56 of the 121 seats in contention, public broadcaster NHK said, while its junior coalition partner Komeito had 14. Alongside others who support Abe's view on constitutional revision, plus uncontested seats, the prime minister is set for a super majority. By strengthening Abe's hand, the election increases the likelihood that the government will introduce fiscal stimulus while expanding its program of asset purchases to keep interest rates low. The Nikkei newspaper reported that Abe would on Tuesday order the compilation of a stimulus package, which one of his advisers has said should be 20 trillion yen ($196 billion) in the current fiscal year.
Prime Minister Malcolm Turnbull declared victory in Australia's election, though it remains unclear if his Liberal-National coalition has enough seats to form a majority government more than a week after voting day.
The US employment report on Friday, which showed the economy added 287,000 jobs last month, was more than forecast and acted as an immediate impetus for investors starting the week with a greater appetite for risk.
Among Asian bourses
Australia Market surges 2%
Australian share market finished the session higher sharply higher on the back of bargain buying across the board, with material and resources and financial blue chip shares leading gains. At close of trade, the benchmark S&P/ASX 200 index advanced 106.60 points, or 2.04%, to 5337.10. The broader All Ordinaries climbed up 101.90 points, or 1.92%, to 5471.50. Rising stocks outnumbered declining ones on the Australia Stock Exchange by 751 to 350 and 310 ended unchanged. The S&P/ASX 200 VIX, which measures the implied volatility of S&P/ASX 200 options, was down 3.70% to 17.402.
Shares of materials and resources enjoyed support as risk appetite returned to the sector following Friday night's solid jobs data, which boosted hopes the global recovery remained on track. BHP Billiton inclined 2.9% to A$19.60, meanwhile main rival Rio Tinto was up 2.5% to A$49.52 and iron ore miner Fortescue Metals Group grew 5.4% to A$4.07.
Banks and financial stocks advanced on bargain hunting after a disappointing run last week. Commonwealth Bank of Australia added 2.3% to A$74.10, Westpac Banking Corp 3.3% to A$29.19, ANZ Banking Group 3.5% to A$23.92, and National Australia Bank 2.3% to A$24.99.
Shares in Primary Health Care were down 2.6% to A$3.72 after the company warned that it will miss its annual profit guidance, blaming a string of writedowns within the medical centres business. The company expects to book underlying profit after tax of A$104 million for the year ended June 30. Previously, Primary had expected to meet the bottom end of its forecast range of A$110 million to A$115 million. Of the write-offs, A$66 million will be booked in fiscal 2016 and A$32 million in prior periods.
Japan Market surges as election point to further Abenomics
The Japan share market inclined, after Prime Minister Shinzo Abe ordered a new round of fiscal stimulus spending. Abe's Liberal Democratic Party scored a big win in Upper House elections held over the weekend. The election was said to be a referendum on Abe's economic stimulus plan dubbed "Abenomics," which uses the "three arrows" of fiscal stimulus, monetary easing and structural reforms. Many observers are emphasizing that the weekend election in Japan has given a super-majority to those parties that want to change the constitution, relaxing the restraints on the military. All 33 TSE sectors advanced, with Iron & Steel, Securities & Commodities Futures, Glass & Ceramics Products, Insurance, and Nonferrous Metals issues being major gainer. The 225-issue Nikkei Stock Average spurted 601.84 points, or 3.98%, to 15708.82. The broader Topix index of all First Section issues on the Tokyo Stock Exchange surged 45.91 points, or 3.79%, to 1255.79. Rising stocks outnumbered declining ones on the Tokyo Stock Exchange by 1968 to 62 and 19 ended unchanged. The Nikkei Volatility, which measures the implied volatility of Nikkei 225 options, was down 3.88% to 29.50.
Construction and real-estate stocks closed sharp higher on hopes government likely expand the size of its fiscal stimulus. Construction firm Taisei Corp. rose 6.4% to 863 yen. Real-estate developer Mitsui Fudosan Co. gained 6% to 2,161 yen.
Nintendo Co. surged 25%, after its new mobile-game app, Pokemon Go, climbed to the top of the free-to-use charts for Apple Inc. in the U.S. and Australia.
Kyushu Electric Power Co. lost 7.5% after the election victory of a new governor in Kagoshima who campaigned on temporarily halting the running of nuclear reactors for security checks. Kyushu Electric's Sendai nuclear power plant is located in Kagoshima.
China Stocks rise on stimulus optimism
Mainland China stock market closed stronger, as muted inflation data released over the weekend reinforcing expectations the government will announce further stimulus in the second half of 2016. Consumer prices in June grew .9% from a year earlier, down from the pace in May, while producer prices extended their decline (down 2.6%), reinforcing economists' views more support was needed to help the economy. Gains were broad based with manufacturing and mining shares all rising, but finance shares lagged on news that the banking regulator was investigating risks in the bill-financing business of some commercial banks. The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 0.35%, to 3203.33, while the Shanghai Composite Index grew 0.23%, to 2994.92 points.
Shares of banks and financials declined on news of a rise in non-performing loans at the country's banks. Outstanding non-performing loans (NPLs) in China's vast banking sector exceeded the two trillion yuan ($299.21 billion) mark at the end of May, a senior banking regulator official said on Thursday.
Hong Kong Stocks climbs 1.6%
The Hong Kong stock market closed up, coinciding with an upbeat session on mainland equity markets after key US indexes surged to records last week. The benchmark Hang Seng Index advanced 427.65 points, or 1.61%, to 26933.30 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, grew 168.21 points, or 1.97%, to 8703. Turnover increased to HK$60.3 billion from HK$47.2 billion on Friday.
Dairy product producers were chased on hopes of upcoming launch of the Shenzhen-Hong Kong Connect program. Mengniu Dairy (02319) advanced 2% to HK$13.36. Biostime (01112) surged 9% to HK$27.7.
Property counters also attracted buying orders. SHKP (00016) rose 2% to HK$100.1. Henderson Land (00012) also gained 1% to HK$43.55. MTRC (00066) rose 2% to HK$40.4. Tencent (00700) added 2% to HK$180 as both Citi Research and Daiwa Research are bullish for its outlook.
China Comm Con (01800) jumped 4% to HK$8.37. CRRC (01766) gained 1% to HK$7.02. China Railway (00390) rose 1% to HK$5.71.
Aviation counters were higher on report that international passenger traffic increased 11% in the first half of 2016. Air China (00753) jumped 4% to HK$5.7. Cathay Pacific (00293) gained 2% to HK$11.5.
Sensex, Nifty hit almost 11-month closing high
Banking, auto sector stocks and index heavyweights HDFC, ITC and Infosys led rally for the two key benchmark indices triggered by firm global stocks. The Sensex jumped 499.79 points or 1.84% to settle at 27,626.69. The Nifty gained 144.70 points or 1.74% to settle at 8,467.90. All the nineteen sectoral indices on BSE registered gains.
IndusInd Bank slipped in volatile trade after announcing Q1 June 2016 results. The stock fell 0.11% to Rs 1,125.50. IndusInd Bank's gross non-performing assets (NPA) stood at Rs 860.64 crore as on 30 June 2016 compared with Rs 776.82 crore as on 31 March 2016 and Rs 570.12 crore as on 30 June 2015. The ratio of gross NPA to gross advances stood at 0.91% as on 30 June 2016 compared with 0.87% as on 31 March 2016 and 0.79% as on 30 June 2015. The ratio of net NPA to net advances stood at 0.38% as on 30 June 2016 as against 0.36% as on 31 March 2016 and 0.31% as on 30 June 2015. The bank's provisions and contingencies rose 86.87% to Rs 230.47 crore in Q1 June 2016 over Q1 June 2015.
Punjab National Bank jumped 9.27% after the Reserve Bank of India (RBI) after trading hours on Friday, 8 July 2016, notified that the aggregate foreign shareholding in the state-run bank has gone below the prescribed threshold caution limit stipulated under the extant foreign direct investment (FDI) policy. Hence, the restrictions placed on the purchase of shares of PNB are withdrawn with immediate effect.
State-run coal-mining giant Coal India rose 2.84% ahead of the board meeting today, 11 July 2016 to consider the proposal for buyback of equity shares.
Elsewhere in the Asia Pacific region: New Zealand's NZX50 added 0.9% to 7062.45. South Korea's KOSPI index gained 1.3% to 1988.54. Taiwan's Taiex index climbed 1.7% to 8786.47. Malaysia's KLCI grew 0.6% to 1653.87. Indonesia's Jakarta Composite index gained 2% to 5069. Singapore's Straits Times index added 1% to 2876.14.
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