Asia Pacific share market mostly down on Monday, 12 December 2016, as traders took profits after a post-US election rally and on caution ahead of the U.S. Federal Reserve's meeting this week that was expected to deliver an interest rate hike. The MSCI Asia Pacific Index fell 0.5 per cent to 137.69.
The US central bank is widely expected to raise interest rates for the first time in 2016 at a two-day meeting that begins on Tuesday, even as investors wait to see if policymakers take a more cautious tone on the economy. Investors will be watching whether Trump's election win will affect the Fed's outlook for rate increases next year
Oil prices soared in early Asian trade, as investors react to the weekend's news of the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC countries led by Russia arriving at their first output cutting agreement in Vienna, a first since 2001. The deal will help to ease a global supply glut after more than two years of low prices. U.S. crude soared 4.76 percent to $53.95 a barrel during Asian trade, as Brent crude jumped 4.2 percent to $56.61.
Over the weekend, the Organization of the Petroleum Exporting Countries reached an agreement with other oil-producing nations to remove 558,000 barrels a day of crude oil from the market. That would come on top of 1.2 million barrels a day in cuts already agreed to by OPEC, amounting to a total of almost 2% of global oil supply.
Among Asian bourses
Australia Market at 4-month high on boost from oil firms, financials
Australian share market ended marginally higher after hitting their highest in four months in early trading, as gains in oil and gas stocks offset losses elsewhere. At the closing bell, the benchmark S&P/ASX 200 index advanced 2.20 points, or 0.04%, to 5562.80, its highest close since Aug 1, while the broader All Ordinaries index inclined 3.30 points, or 0.06%, to close at 5619.10.
Shares of energy companies spurted, after oil prices rose to the highest in a year and a half high on Monday, after Opec and non-Opec producers agreed to cut oil output. Woodside Petroleum rose 2.9% to A$31.48 and Origin Energy gained 3.7% to A$6.79. Santos added 5.1% to A$4.52 and Oil Search jumped 3.5% to A$7.15.
Mining stocks were also higher as basic materials rose on the underlying bullish market sentiment for iron ore and steel, though the respective futures in China edged lower on Friday on profit-taking after a six-day rally. Rio Tinto added 0.2% to A$62.79 and BHP ended up 1.3% to A$26.32. Fortescue added 2.4% to A$6.84.
Flight Centre shares fell 7.5% to A$30.50 after Morgan Stanley statedin latest report that Flight Centre's guidance for the second half of 2017 looks too bullish. Qantas followed, losing 3.2% to close at A$3.32.
Nikkei rises to fresh one-year high
The Japan share market inclined to a one-year high, on tracking strong lead from Wall Street Friday and yen depreciation to upper 115 level against greenback triggered by bets that the Federal Reserve will raise rates this week. The Nikkei Stock Average rose 158.66 points, or 0.8%, to 19155.03, the highest level since December 17, 2015. The Topix index of all first-section issues finished up 6.07 points, or 0.4%, at 1,531.43.
Several food and other so-called defensive stocks, which are supported by stable domestic demand, led the market higher. Food maker Ajinomoto rose 4.6% to Y2,335.0. Beverage maker Kirin Holdings gained 3.9% to Y1,959.5.
Energy stocks rose after oil-producing nations, including Russia and Oman, reached a deal over the weekend to cut output along with the Organization of the Petroleum Exporting Countries. Japan Petroleum Exploration advanced 3.8% to 2,894 yen. Another oil explorer, Inpex, added 0.8% to Y1,257.5.
Bank issues were sold off as investors moved to secure profits after a recent rally. Mitsubishi UFJ Financial Group fell 1.3% to Y752.60 and Sumitomo Mitsui Financial Group slipped 1% to Y4,683.
China Market tumbles 2.47%
Mainland China stock market tumbled, as blue-chips were knocked by fresh regulatory curbs to rein in insurers' aggressive stock investments, while rising bond yields prompted profit-taking in equities. Meanwhile, comments Sunday by U.S. President-elect Donald Trump that there may be a change in the U.S.'s acceptance of the one China principle, a cornerstone policy that has helped maintain peace between China and Taiwan, also hurt investor sentiment. The Shanghai Composite Index slipped 2.47% to 3,152.97, the largest one day drop in six months, while the CSI 300 which tracks large companies listed in Shanghai and Shenzhen slipped 2.42%. The Shenzhen Composite Index, which tracks stocks on China's second exchange, declined 4.86% to 1,969.32. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, fell 5.5% to close at 1,984.40 points.
China's insurance regulator, which recently warned it would curb "barbaric" acquisitions by insurers, said late on Friday it had suspended Evergrande Life, the insurance arm of China Evergrande Group, from conducting stock market investment. That hit the market hard as insurers' relentless buying in modestly-priced industry-leading blue-chips was one of the main drivers behind the recent strong advance in the market. The sell-off was exacerbated by signs of tighter liquidity in the banking system, signalled by a slump in bond future contracts, whose prices move inversely with yields.
Also on Friday, Foresea Life, an arm of Chinese financial conglomerate Baoneng Group, pledged to gradually reduce holdings in a Shenzhen-listed, home-appliance heavyweight. This would mean an unwinding of the stake-building activity that led to harsh disapproval from Chinese regulators.
Shares of Chinese insurers were among the big decliners in the A-shares market on Monday, with China Life Insurance paring earlier losses to end down 1.1%, and New China Life Insurance ending 1.8% lower after steep declines initially.
Shenzhen-listed China Vanke Co., the country's second-largest real-estate developer, tumbled 6.3%. As of the end of November, China Evergrande Group, via unspecified affiliated companies, had scooped up a 14.07% stake in Vanke, according to the latter's filing to the stock exchange.
China State Construction Engineering Corp., the nation's top home builder, dropped 5%. Anbang Insurance Group Co., now the second-largest shareholder of the state-run firm, has accumulated a 10% stake in it over the past months. Similarly, Gree plunged 6.1% after Foresea Life's announcement about phasing out its roughly 4% investment.
Hong Kong Market falls on property, insurer stocks selloff
The Hong Kong stock market finished down on caution ahead of the Federal Reserve two-day policy board meeting which concludes on Wednesday, where interest rates will likely increase for the second time in a decade. Meanwhile, selloff pressure intensified after mainland Chinese stocks suffered their worst loss in six months amid concern over the country's ties with the U.S. and on measures to regulate insurance money into equity markets. The Hang Seng Index ended down 1.44%, or 327.96 points, to 22,433.02, while the Hang Seng China Enterprises index declined 1.71%, or 168.64 points, to 9,699.31. Turnover increased to HK$77.7 billion from HK$76.4 billion on Friday.
Property counters were pressured on cautious ahead of a Federal Reserve's policy meeting later this week which is widely expected to bring a US interest rate hike for the first time this year. Hong Kong's currency peg to the US dollar ensures that interest rates follow that of the United States, meaning higher borrowing costs for real estate developers. CK Property (01113) sank 3% to HK$51.3. SHKP (00016) and New World (00017) dipped 2.5% and 1.4% to HK102.6 and HK$8.66.
Chinese insurers were softer after mainland equity market slump. NCI (01336), China Life (02628) and Ping An (02318) slipped 4.7%, 3.6% and 1.3% respectively.
Shares of Casino players continued their retreat after sharp declines on Friday, following a report by the Post about greater restrictions on mainland-issued China Union Pay bank cards, which came into effect Saturday. Galaxy Entertainment Group dropped 1.43% and Wynn Macau was down 2.29%.
Indian Market snaps 2-day winning streak
Banking, telecom and index heavyweights ITC and Infosys led modest-to-strong losses for key benchmark indices. The barometer index, the S&P BSE Sensex, fell 231.94 points or 0.87% to settle at 26,515.24. The Nifty 50 index fell 90.95 points or 1.10% to settle at 8,170.80. Weakness in European stocks weighed on sentiment on the domestic bourses. Adding to global cues, domestic data over the weekend showing decline in the industrial production in October affected investors' sentiment.
Axis Bank fell 2.56%. The bank announced the acquisition of shares representing 13.67% of the total paid up capital in Assets Care and Reconstruction Enterprise from IFCI at Rs 31 per share for cash aggregating Rs 22.72 crore. The announcement was made after market hours on Friday, 9 December 2016.
IndusInd Bank fell 2.41%. The bank announced that the finance committee of the board on Friday, 9 December 2016, allotted 15,000 unsecured redeemable non-convertible bonds in the nature of debentures for an amount of Rs 1500 crore, to the identified investors on private placement basis. The announcement was made after market hours on Friday, 9 December 2016.
India's industrial production declined 1.9% in October 2016 over October 2015. Twelve out of 22 industry groups in the manufacturing sector showed negative growth in October 2016. The data was released by the government after market hours on Friday, 9 December 2016.
Elsewhere in the Asia Pacific region: New Zealand's NZX50 shed 0.2% to 6864.94. Indonesia's Jakarta Composite index added 0.1% to 5308.13. Taiwan's Taiex fell 0.5% to 9349.94. South Korea's KOSPI index was up 0.1% to 2027.24. Malaysia's KLCI slipped 0.1% to 1641.42. Singapore's Straits Times index fell 0.1% to 2952.19.
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