Headline shares of the Asia Pacific market declined on Monday, 07 October 2013, hit by growing fears about the looming US debt deadline. MSCI's broadest index of Asia Pacific shares outside Japan dropped 0.6%.
Risk aversion selling dominated the regional market as U.S. lawmakers remained deadlocked over ending the government shutdown and reaching an agreement to raise the debt ceiling deal before Oct 17, when the government runs out of cash to pay its bills and could default.
Investors were unnerved by an apparent hardening of stances by Democrats and Republicans over the weekend towards crucial negotiations to end a partial government shutdown and raise the U.S. borrowing limit, needed in 10 days to avoid a debt default.
The U.S. was forced to curtail government operations last week after a politically divided Congress failed to approve a short-term funding measure to allow the nation to pay its bills past the end of its fiscal year on Sept. 30. As a result, 800,000 federal workers were furloughed and scores of nonessential services were halted.
Now, Congress faces another deadline that could prove highly damaging to the U.S. economy if missed. The nation's debt ceiling, also known as its borrowing limit, must legally be raised before Oct. 17. The U.S. Treasury estimates it will have $30 billion of cash on hand on that day, but the money will be exhausted quickly _ government bills can run as high as $60 billion on a single day.
House speaker Boehner said over the weekend that "the votes are not in the House to pass a clean debt limit." Finger pointing continued as he warned "the nation's credit is at risk because of the administration's refusal to sit down and have a conversation."
Treasury Secretary Lew criticized that the "Congress is playing with fire" and warned "there is no option that prevents us from being in default if we don't have enough cash to pay our bills." Lew has already said before that US will exhaust the "extraordinary measures" to keep debt below the $16.7T limit on October 17. And, the CBO estimated that US would be unable to pay its bills sometime between October 22 and October 31.
Among Asian bourses, Japanese market declined sharply today, as the dollar weakened against the yen and worry about debt ceiling negotiations in the United States. The benchmark Nikkei Stock Average was 1.22% lower to finish the session at 13853.32, extending a hefty 5% decline last week.
Export related stocks were major drag on the Nikkei index, as yen strengthening against the US dollar making exporters products competitive with overseas rivals. Shares of Sony Corp dropped 1.8% to 1980 yen and Casio Computer Co shed 4.3% to 851 yen.
Sharp Corp shares lost 8.2% to Y291 as the firm's 480 million share secondary stock offer entered its Oct. 7-9 pricing window. The firm hopes to raise up to $1.5 billion in order to strengthen its capital base, which is expected to increase its total share count by over 40%.
Real estate-related shares also suffered heavy losses, hit by Prime Minister Abe officially decision on October 1 that the government will raise the consumption tax rate to 8% from the current 5% next April. Among realty stocks, Mitsui Fudosan dropped 2% to 3,140 yen and Sumitomo Realty & Development was off 2.8% to 4,290 yen.
Japan's foreign exchange reserves rose $19.24 billion to $1,273.45 billion as of the end of September from a month earlier, up for the third straight month, the Finance Ministry said Monday.
In Australia, share prices on Australian market tumbled, with the benchmark S&P/ASX200 index was 46.9 points lower at 5,161.1, while the broader All Ordinaries index was down 45.3 points at 5,160.6 on Monday, 7 October 2013, amid on-going uncertainty over the US debt situation.
Shares of precious-metal miners fell down in Sydney on profit taking, with Newcrest Mining drop by 0.9% to A$11.08 and Kingsgate sank 3.7% to A$1.555.
Shares of blood products and vaccines supplier CSL was 1.4% down at A$64.11 after it said it expects that settlement of an antitrust class action in the US will reduce its fiscal 2014 net profit by $US39 million ($41.47 million).
In Hong Kong, key benchmark indices of the Hong Kong market declined on Monday, 7 October 2013, extending last week's losses, on growing fears about the looming US debt deadline. The benchmark Hang Seng index was falling 0.71% to finish at 22973.95. The Hang Seng China Enterprises Index fell 0.86% to 10427.17.
Among the 50 HK blue chips, 8 rose and 41 fell, with 1 stock remaining steady. Kunlun Energy put on 3.2% to HK$11.76 extending its rally to fifth consecutive trading day, while Belle (01880) fell 2.6% to HK$11.16, making themselves the top blue-chip gainer and loser.
HSBC Holdings declined 0.71% to HK$83.75 following reports that an HSBC unit formerly known at Household International Inc. was unable to have a 2009 securities fraud trial verdict overturned, with a Chicago judge saying it's liable for roughly $1.5 billion in damages plus interest.
SHKP fell 2.6% to HK$102.4 after the developer launched its residential project of "The Cullinan" at a 10% discount to the secondary market price. Other developers were dragged down. Henderson Land (00012) fell 1.5% to HK$47.05. New World and Sino Land declined 1.9% and 1.7% to HK$11.54 and HK$11.32. Cheung Kong bucked the trend, inching up 0.5% to HK$123.8.
Casino stocks turned higher as the Golden Week holiday drew closer to an end, with shares of MGM China Holdings rose 5% to HK$27.25 and Wynn Macau jumped 1.1% to HK$28.45. Sands China shares, however, lagged by 0.7% to HK$49.95.
In India, Indian benchmark indices remained in red in mid-afternoon trade. Investor sentiment was hit adversely as European and Asian stocks fell and as trading in US index futures pointed to a weak opening of US stocks later in the global day as lawmakers in Washington remain deadlocked over extending the nation's debt limit to avoid default. In the foreign exchange market, the rupee dropped against the dollar.
At 14:18 IST, the S&P BSE Sensex was down 147.28 points or 0.74% to 19,768.67. The index lost 268.07 points at the day's low of 19,647.88 in mid-morning trade, its lowest level since 3 October 2013. The index fell 27.54 points at the day's high of 19,888.41 in early trade.
In the foreign exchange market, the rupee dropped against the dollar. The partially convertible rupee was hovering at 61.8925, weaker than its close of 61.43/44 on Friday, 4 October 2013. The Reserve Bank of India (RBI) will look at easing restrictions on the forex futures market once the rupee stabilises, Deputy Governor H.R. Khan said on Monday, 7 October 2013. The RBI is also in talks with stock market regulator Securities and Exchange Board of India (Sebi) on making the dollar-rupee over-the-counter and futures market trades on a delivery basis, Khan said on the sidelines of an event. The central bank will look at the "whole gamut of futures market" once stability improves in the forex market, Khan added.
Foreign institutional investors (FIIs) bought shares worth a net Rs 541.36 crore on Friday, 4 October 2013, as per provisional data from the stock exchanges.
Elsewhere in the region, New Zealand's NZX50 fell 0.07%. South Korea's Kospi lost 0.13%. Indonesia's JKSE Composite shed 0.33%. Singapore's Straits Times Index lost 0.05%. Taiwan's Taiex dropped 0.37%. Malaysia's KLSE Composite eked out 0.01% gain. There was no trading in Shanghai, as mainland China enjoyed the last day of its week-long National Week public holiday.
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