Headline equities of the Asia Pacific market advanced for second consecutive day on Friday, 10 July 2015, as appetite for risk assets underpinned by tracking another day of stock market gains in China and hopes for Greek bailout talks over the weekend.
China's share markets widened gains for second straight day, as a flurry of government measures to stem an equity rout started to take effect. Chinese Officials have unveiled market-boosting measures almost every night over the past two weeks to shore up a stock market that lost $3.9 trillion in less than a month. In the latest effort to stem losses, the securities regulator suspended reviews of initial public offerings and other share sales. This week, China banned major stockholders from selling stakes in listed companies and announced that banks can roll over loans backed by shares. Over the past month, the government has also cut interest rates and halted IPOs, while a group of 21 brokerages set up a 120 billion yuan ($19.3 billion) fund to support stocks.
Investors reacted favourably to news that a new Greek proposal for economic policy overhauls and budget cuts appears to have moved closer to creditors' demands on some of the most divisive issues. Athens offered new measures including a tax hike on shipping companies and scrapping tax breaks for its islands, as the government races to win new funds to avert bankruptcy. Greece also plans to raise value added tax for restaurants, roll out pension reforms and to set a firm timetable for privatisations. In return, Athens wants the creditors to review the primary surplus targets for Greece over the next four years and wants funding worth 53.5 billion euros to cover its loan obligations until the end of June 2018. Eurozone finance ministers and European leaders are set to assess the proposals during crisis meetings on Saturday and Sunday.
Among Asian bourses
Australia stocks end higher
The Australian share market closed ended higher, as rally in the Chinese equities and hopes of Greek debt deal buoyed investors' confidence. Most of the ASX sectors closed higher, with shares of materials & resources and energy blue-chip companies being major gainers. The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index both advanced by 0.4% to 5492 and 5478.10, respectively. For the week, the benchmark S&P/ASX 200 Index lost 0.8%, while the broader All Ordinaries Index decreased 0.9%.
Materials and resources stocks advanced the most in Sydney market after the price of iron ore bounced back to $48.30 a tonne on Thursday. Among blue-chip miners, BHP Billiton gained 3% to A$26.65, Rio Tinto 2.3% to A$52.07, and Fortescue Metals Group 1.7% to A$1.815.
Citi has upgraded BHP Billiton and Rio Tinto to a buy, from neutral, after shares in the two miners fell sharply over the past weeks due to rising fears of a 'Grexit', China's fragile share market and a tumbling iron ore price. But the bank in a note to clients today also cut the target price on both stocks toA $29 for BHP (previously A$30) and $58 for Rio (from A$60), due to a predicted fall in earnings after base metals and oil prices fell.
Shares of energy players were also higher, boosted by 3% rebound in crude oil prices overnight. Woodside Petroleum rose 0.2% to A$33.57. Oil Search added 2.8% to A$7 and Santos added 1.9% to A$7.62.
The number of Australian home-loan approvals fell sharply by 6.1% in May from April, according to the Australian Bureau of Statistics data released on Friday. Home-loan approvals to build new houses fell by 8.3% in May from April. Approvals to buy existing new homes rose by 0.3%, while lending for already built houses fell by 6.2%.
Nikkei ends 0.4% down
Japanese share market ended lower, as fall in Retail, Electrical/Machinery, Textiles & Apparels, and Rubber heavyweight stocks were more than gains elsewhere. But, market losses were limited on the back of yen weakening against other major currencies and hopes for Greek bailout talks over the weekend. The Nikkei Stock Average declined 75.67 points, or 0.38%, to end at 19779.83 points. The broader Topix index rose 0.23%, or 3.66 points, to close at 1583.55 points. For the week, the Nikkei declined 3.7%, the biggest weekly drop since last October.
Shares of Fast Retailing tumbled 6% to 54010 yen, as a weak outlook for domestic sales during the June-August period eclipsed a 36% jump in the company's nine-month profit. Clothing retailer Fast Retailing Co. (9983.TO) said on Thursday that sales rose 24% to 1.35 trillion yen and net profit rose 51.5% to 132 billion yen in the nine months through May 31, aided by stronger sales in China and other Asian markets where the company is expanding rapidly. However, Fast Retailing said results underperformed expectations in some of its smaller operations, including its Theory luxury business. In Japan, the company has been raising prices, which has hurt customer traffic. In May, sales at Japan Uniqlo stores fell nearly 12% from a year earlier.
Honda Motor Co recouped losses to end virtually flat at 3832 yen following news that it is expanding a recall to replace faulty airbags made by Takata Corp. The Honda Motor's recall announced on Thursday raised to 57.5 million the total number of Takata air bag inflators recalled worldwide.
China market extends gain amid boost measures
Mainland China's stock market widened gains for straight second day, as sentiment turned for the better after latest government moves to restore investor confidence. All 10 industry gauges in the SSE index advanced, with shares of industrial, material, consumer-staple and health-care companies being top gainers. The Shanghai Composite Index spurted 168.47 points, or 4.54%, to 3877.80 points, adding to Thursday's 5.8% surge. The Shenzhen Composite Index, which tracks stocks on China's second exchange, ended up 4.09%, or 79.91 points, to 2035.26.
The relative calm in mainland markets followed a flurry of government measures this week as policy makers scrambled to put a floor under a stock market that had tumbled around 30% in just three weeks, wiping trillions of dollars off the market value. Chinese Officials have unveiled market-boosting measures almost every night over the past two weeks to shore up a stock market that lost $3.9 trillion in less than a month. In the latest effort to stem losses, the securities regulator suspended reviews of initial public offerings and other share sales. This week, China banned major stockholders from selling stakes in listed companies and announced that banks can roll over loans backed by shares. Over the past month, the government has also cut interest rates and halted IPOs, while a group of 21 brokerages set up a 120 billion yuan ($19.3 billion) fund to support stocks.
With more than 1,300 companies still halted on mainland exchanges, trading was limited to 53% of the market. About 90% of stocks that did trade soared by the maximum 10% daily limit, with shares of industrial, consumer staple and health-care companies being top performer.
HSI ends up 2.1% on China market recovery
The Hong Kong stock market advanced for second day in row, as another day of stock market gains in China and hopes for Greek bailout talks over the weekend bolstered risk sentiments. The Hang Seng Index advanced 508.49 points or 2.08% to finish at 24901.28 points, off an intra-day low of 24567.92. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, gained 412.18 points, or 3.6%, to 11858.55 points. Turnover reduced to HK$180 billion from HK$212 billion on Thursday.
HK market heavyweights remained higher. HKEx (00388) rose 2.4% to HK$239.2. Tencent (00700) marched 2% to HK$148.9. HSBC (0005) softened 0.5% to HK$68.1.
Securities counters rose across the board after the Securities Association of China said 22 A-share brokerages registered net profit of RMB80.77 billion for the first half of 2015, representing a growth of 336.9%. China EB (00165) leapt 8.4% to HK$21.5. CGS (06881) soared 8.7% to HK$8.28. CC Securities (01375) and GF Sec (01776) surged 6% to HK$5.21 and HK$16.96. Haitong Sec (06837) ended up 9.8% to HK$15.18 after issuing positive profit alert yesterday.
Macau gaming sector was also higher on HSBC's bullish comments. Sands China (01928), Galaxy Ent (00027) and MGM China (02282) all rose, with gains of 3%. Melco Dev (00200) shot up 7% to HK$12.7.
Indian market mixed after TCS' Q1 results
Volatility continued in mid-afternoon trade in the Indian stock market as the key benchmark indices hovered in small range, alternately swinging between positive and negative zone. At 14:24 IST, the S&P BSE Sensex was up 8.72 points or 0.03% at 27,582.38. The CNX Nifty was up 2.25 points or 0.03% at 8,330.80.
TCS declined 2.46% reacting to its Q1 June 2015 result which was declared after market hours yesterday, 9 July 2015. TCS' consolidated net profit rose 53.1% to Rs 5684 crore on 6% increase in revenue at Rs 25668 crore in Q1 June 2015 over Q4 March 2015.
Commenting on the Q1 performance, TCS CEO and MD, N Chandrasekaran said: "Demand from core markets like North America and greater traction for 'Digital' solutions in key verticals like Financial Services, Retail and Life-Sciences has driven volumes and growth in Q1. The significant investments in IP and platforms, digital capabilities and execution track record gives a firm foundation to capture growth in the current financial year." Chandrasekaran added: "Given the strong pipeline and market adoption of digital across industries, the company is investing to train over 100,000 professionals this year in all relevant technologies." Rajesh Gopinathan, TCS Chief Financial Officer, said: "The company's disciplined approach to all aspect of operations have helped maintain operating margins within stated range despite hedging volatility and the impact of annual cycle of salary hikes and promotions. The company continues to focus on optimizing cash conversion ratios and investing in people and technologies ahead of our business needs."
Shares of JSW Energy fell 2.17%. Monnet Ispat & Energy was locked at 20% upper circuit at Rs 42.75 after the company signed MOU with JSW Energy for entering into discussion to sell majority and controlling stake of its subsidiary, Monnet Power. The company made announcement after trading hours yesterday, 9 July 2015.
Elsewhere in the Asia Pacific region: South Korea's KOSPI rose 0.2% to 2031.17. New Zealand's NZX50 sank 0.2% to 5725.34. Singapore's Straits Times index added 0.4% at 3279.88. Indonesia's Jakarta Composite index was up 0.4% to 4859. Malaysia's KLCI rose 0.8% to 1715.58.
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