The MSCI Asia Pacific Index fell 0.1% to 138.28. The MSCI Asia Pacific Index gained 6.9% this year as central-bank stimulus shored up global economic growth.
Investors' concerns about liquidity crunch in China reignited after increase in the money-market rates, which pushed the cost of borrowing to its highest level since an unprecedented cash crunch in the summer. The central bank announced via micro-blogging service Weibo on Thursday that it had conducted short-term liquidity operations to offer an appropriate amount of funds into the money market. The central bank's injection of funds to selected lenders failed to ease concern that liquidity will tighten before the resumption of share offerings next month.
Investors digested the Fed's decision on Wednesday to start cutting its stimulus measures in January. The start of this process, which has become known as tapering, was long anticipated.
The turnover across the Asian markets was relatively light as investors stayed on the sidelines to reassess the Federal Reserve's policy outlook after its decision this week to start tapering stimulus. The Federal Reserve announced a plan on Wednesday to trim its monthly bond purchases by $10 billion to $75 billion, beginning in January. The statement was accompanied by a dovish indication of rock-bottom interest rates for the foreseeable future, a combination that gave the Dow and the S&P 500 their largest daily gains in two months.
Among Asian bourses- Japanese financial market finished the session slight higher after recouping lost ground, as optimism about the health of the US economy after the US Federal Reserve decided to begin cutting its stimulus offset losses in blue chip shares amid profit-taking following strong gains earlier this week.
Tokyo shares commenced trading with weak note as market players were quick to sell before Japan's holiday-extended weekend after the Nikkei gained sharply over the prior three days. But, the market managed to finish above the boundary line after recouping losses thanks to the dollar's momentum against the yen that continued to build from the prior session's run-up.
As of the Tokyo Stock Exchange close, the greenback was changing hands at Y104.57, much higher than a day ago when it was at Y104.11; it has gained almost Y2 just since Tuesday after the US Fed announcement it would begin the tapering of its $US85 billion per month bond-buying program by reducing purchases by $10 billion. The Fed's decision to tapering indicates confidence by US authorities the world's largest economy is strong enough to cope with the gradual withdrawal of stimulus. A stronger dollar is a boon for exporters who can sell their goods more cheaply overseas and then repatriate the funds back into yen.
The export-oriented Japanese stocks were mostly lower on profit taking following strong recent run. Toshiba Corp fell 0.9% to 426 yen, TDK Corp. 0.51% to 4875 yen and Kyocera Corp 1.31% to 5280 yen and Nissan Motor Co 2.58% to 869 yen. On the upside, shares of Panasonic Corp rose 1.7% to 1215 yen after a Nikkei news report it planned to close two chip plants in Japan. Panasonic's chip-making partner, Fujitsu climbed 4.13% to 530 yen on report that the firm is seeking partners for a separate chip factory.
In Tokyo economic news- The Bank of Japan kept its asset-purchase levels and overall monetary policy unchanged, a widely expected move that did little to move currencies. The central bank's statement also retained previous language on the economic outlook, saying the nation's economy has been recovering moderately, while inflation expectations appear to be rising on the whole.
Australia- Headline shares on the Australian financial market extended gains for second straight day, sending the benchmark S&P/ASX 200 index higher by 63 points to finish at 5265.20, buoyed by optimism about the health of the US economy after the US Federal Reserve decided to begin cutting its stimulus. For the week, the benchmark S&P/ASX200 shot up 166.77 points, or 3.3% snapping a four-week losing streak. Nearly every sector moved higher with energy, mining and financial players were leading the way.
Australian top four banking shares ended with strong gains. Commonwealth Bank added 1.4% to A$75.93, Westpac Bank 0.6% to A$31.57, National Australia Bank 0.7% to A$34.26 and Australia & New Zealand Banking Group 2.1% to A$31.78. QBE Insurance Group improved by 5.4% to A$11.49 and IAG Group advanced 2.2% to A$5.67.
Telstra shares rose 1.8% to A$5.20 after announcing that it will sell its majority stake in Hong Kong-based mobile business CSL to HKT for $1.8 billion.
In Australian economic news- The Commonwealth Bank Business Sales Indicator (BSI) showed a broad-based lift in economy-wide spending in the latest reading. Economy-wide spending has continued to grow at a healthy, sustainable pace according to the new survey. The Commonwealth Bank Business Sales Indicator (BSI) - a measure of economy-wide spending - rose by 0.5% in trend terms in November. This was the 15th consecutive month of spending growth. The more volatile seasonally adjusted estimate of spending was up 0.2% in November after a 4.1% increase in October and a 1.4% decline in September. Annual growth eased from 10.7% to 9.4% in November.
China- Headline shares of the Mainland China financial market extended losses for ninth consecutive session, with the benchmark Shanghai Composite index down by 43 points to finish at 2084.79, amid mounting jitters about tight liquidity situation. All sectors of the SSE index dived into the sea of red, with shares of financial, industrial, materials and energy companies led declines.
The central bank's injection of funds to selected lenders failed to ease concern that liquidity will tighten before the resumption of share offerings next month.
Chinese money market rates continued to rise on Friday as traders shrugged off a liquidity injection by the People's Bank of China amid a scramble for funding. The benchmark seven-day repo rate opened Friday at 4.98% but quickly surged to as much as 9.00% before settling at 7.980%, the highest level since the June liquidity crunch. The PBOC said after the Thursday close that it injected funding via Short-term Liquidity Obligations, and local media said Friday that the bank added CNY200 billion. But it hasn't been enough to stem panic in the market, with small banks complaining that the funding went to their larger rivals, who are unwilling to lend given current uncertainties.
Shares of Financials led the decline in Shanghai with Merchants Bank down 3.5% and Hua Xia Bank 4% lower. China Construction Bank Corp. sank 6.2% after touching its lowest level in almost five years. Ping An Insurance (Group) Co. dropped 4.7%.
Shares of Chinese material companies declined with Aluminum Corp. of China down by 2.5%. Gold miners also underperformed as bullion prices hovered near six-month lows. Shandong Gold led losses by over 5% while Zhongjin Gold lost 4%.
Hong Kong- HK stock market closed lower in volatile trade on concerns over a renewed cash crunch in China after interbank rates rose again. The benchmark Hang Seng Index was provisionally down 76 points to 22812.
Among the HK 50 blue chips, 15 rose and 28 fell, with seven stocks remaining steady. Power Assets (00006) was the biggest blue-chip gainer, rising 1.8% to HK$61, after it announced plan to spin off HK Electric. Ping An (02318) fell 4.6% to HK$67.1, making itself the top blue-chip loser. Its banking unit Ping An Bank denied talks of default in interbank market.
Market heavyweights were mixed. HSBC (00005) inched down 0.1% to HK$82. China Mobile (00941) put on 0.6% to HK$79.9 despite its 3G net adds hit a new year low in November. Elsewhere, China Everbright Bank fell 4% to HK$3.96 after the lender raised $3 billion in the city's biggest first-time share sale this year to strengthen capital buffers.
HKT-SS soared 12.5% to HK$7.58, while PCCW jumped 6% to HK$3.36 after PCCW's (00009) unit HKT-SS (06823) announced plan to buy back all CSL stake. Other telecom operators were also chased on M&A hopes. SmarTone (00315) shot up 18.6% to HK$8.81. HutchTel (00215) surged 11% to 2.83.
In HK economic news- Hong Kong recorded a Balance of Payments (BoP) deficit of HK$28.7 billion (as a ratio of 5.2% to GDP) in the third quarter of 2013, as against a BoP surplus of HK$25.4 billion (as a ratio of 5.2% to GDP) in the second quarter of 2013. Reserve assets correspondingly decreased by the same amount in the third quarter of 2013. The current account recorded a surplus of HK$33.5 billion (as a ratio of 6.1% to GDP) in the third quarter of 2013, compared with a surplus of HK$25 billion (as a ratio of 4.8% to GDP) in the same quarter of 2012. On a year-on-year comparison, the increase in the current account surplus was due to an increase in the invisible trade surplus and a slight decrease in the net outflow of secondary income, partly offset by an increase in the visible trade deficit and a decrease in the net inflow of primary income.
In India- a sudden buying frenzy propelled the key benchmark indices to intraday high in late trade. The barometer index, the S&P BSE Sensex, moved past the psychological 21,000 mark in late trade. The Sensex, and the 50-unit CNX Nifty, both, hit their highest level in more than a week. The Sensex was provisionally up 394.52 points or 1.91%, up 357.20 points from the day's low and off 14.85 points from the day's high. The market breadth, indicating the overall health of the market, was strong. Investor sentiment was boosted after news reports said that the stock market regulator Securities and Exchange Board of India (Sebi) has relaxed the rules on trading of thinly-traded stocks. The market sentiment was also boosted by data showing that foreign funds made substantial purchases of Indian stocks on Thursday, 19 December 2013.
Index heavyweight Reliance Industries (RIL) surged on reports that the government has allowed the company to charge higher prices for gas from April 2014 after the company offered financial guarantees to the government to settle any claims against it over a shortfall in its gas output. GAIL (India) rose after the company said that the media reports on Thursday, 19 December 2013, indicating that the company had doubled margin on gas sourced from ONGC are factually incorrect and does not reflect the issue in the right perspective.
IT stocks extended Thursday's gain after Accenture Plc on Thursday, 19 December 2013, said at the time of announcing its Q1 November 2013 results that it expects its consulting business to turn the corner this financial year. IT major Infosys hit record high. Tech Mahindra and Wipro hit 52-week high. Tata Consultancy Services (TCS) rose after the company after market hours on Thursday, 19 December 2013, announced the launch of TCS Insurance Telematics Solution, a mobile application that turns consumers' smartphones into mobile telematics devices.
Elsewhere in the region, South Korea's KOSPI rose 0.39%. Taiwan's Taiex index ended tick 0.01% up. Singapore's Straits Times index gained 0.79%. New Zealand's NZX50 index shed 0.55%. Malaysia's KLSE Composite shed 0.44%. Indonesia's Jakarta Composite index fell 0.86%.
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