Asia Pacific market drifted lower on Tuesday, August 06, 2013, as risk aversion selloff across the region on concerns about the possible pullback of the Federal Reserve's aggressive bond-buying program after stronger growth in US service industries.
The MSCI Asia Pacific excluding Japan Index sank 0.5% to 440.95 on Tuesday, while the MSCI Asia Pacific Index (including Japan) rose 0.1% to 135.35.
Risk aversion triggered across the regional bourses on mounting speculation that the Federal Reserve might taper its bond-buying program sooner rather than later after the US growth outlook appeared firmer after better than expected Institute for Supply Management's July PMI for both manufacturing and service sector.
Meanwhile, selloff pressure flared further after comments from Federal Reserve Bank of Texas President Richard Fisher that advocated a quick tapering. Richard Fisher said the central bank is closer to slowing bond purchases that have stoked global equity gains.
Richard Fisher said on Monday that financial markets may have become too accustomed to what some have depicted as a Fed put, or the idea that the central bank will loosen credit after a market decline. Some have come to expect the Fed to keep the markets levitating indefinitely. This distorts the pricing of financial assets and can lead to serious misallocation of capital, Fisher added.
The Fed's Fisher, one of the most vocal critics of quantitative easing, warned investors not to rely on the central bank's $85 billion in monthly bond purchases.
In the Asia Pacific market, Australian stocks ended slightly lower as the Reserve Bank signaled it may be nearing the end of its easing cycle. The benchmark S&P/ASX200 fell 0.1% to 5105.60, with shares of bullion, mining, energy and consumer goods companies leading declines.
The RBA cut interest rates by 25 basis points for the second time this year, as it tries to prepare the economy for life after the mining boom. The cash rate now stands at 2.5%, its lowest since 1959.
Shares in New Zealand's market declined, with Diligent Board Member Services led retreat after saying it would restate three years of revenue, delaying its second-quarter results. Fonterra Shareholders' Fund rebounded in heavy trading on news China hasn't imposed a blanket ban. The NZX 50 Index fell 13.984 points, or 0.3%, to 4575.501.
Japan's share market ended higher after recouping intraday losses, thanks to yen weakening against greenback, purchases of stock index futures and stellar quarter earnings from some blue chip companies like Toyota and Nippon Telegraph.
The benchmark Nikkei 225 index closed 1% higher at 14,401.06. The benchmark index was trading lower in morning trade, briefly falling more than 200 points. But positive momentum increased in the afternoon, with speculation that the Bank of Japan will buy exchange-traded funds, as well as repeat buying of stock index futures, pushing the Nikkei index into positive territory.
The US dollar, which fell below 98 yen earlier in the day, rebounded to 98.57 yen in late hour Tokyo trade on Tuesday. The dollar was last quoted at 98.27 yen in New York on Monday.
Sony Corp stumbled 4.6% to 2039 yen after it rejected proposals from activist shareholder Daniel Loeb of Third Point to spin off a part of its entertainment business.
Nippon Telegraph & Telephone Corp rose 1.9% to 5300 yen after announcing a 6.5% rise in quarterly group profit, compared to a year earlier.
Toshiba Corp rose 1.4% to 430 yen after announcing it has sold 13.84 million of its shares in Ikegami Tsushinki Co to the broadcasting equipment maker, which was seeking to buy back its own stock.
In Taiwan, the Taiex lost 1.23% to 8,038.91, dragged down by phone maker HTC Corp (down 2.94%) after it posted a 37% on-year drop in revenue in July. The technology firm's stock has been under pressure in recent months and has lost 50% of its value so far this year.
In China, Chinese stocks advanced for sixth straight session, with the Shanghai Composite index rising 10.02 points, or 0.49%, to 2060.50. Shares in automakers, utilities, healthcare, telecom and energy players led rally.
Chinese automaker stocks climbed up after Macquarie Group predicted Chinese auto sales growth in the second half will exceed last year's level. SAIC Motor, the biggest-listed Chinese automaker, climbed 5.4% to 13.34 yuan. Chongqing Changan Automobile Co. surged 10% to 10.21 yuan after partner Ford Motor Co. reported a jump in July sales.
Hong Kong's share market ended lower, dragging down by steep losses in HSBC Holdings (down 5%) after the lender posted a drop in first-half revenue. The benchmark Hang Seng index eased 1.34% while the Hang Seng China Enterprises Index dropped 0.78%
HSBC announced its interim earnings after the market closed on Monday. Although the bank reported a 23% increase in net profit for the first half of the year, its stock was hit by fears that its revenues were being affected by slowing growth in emerging markets. As the single largest constituent in Hong Kong's Hang Seng Index, accounting for around 15% of the benchmark, the bank's decline weighed on the entire market.
In Singapore, the Straits Times Index ended 0.52% down at 3,224.89, weighed by Southeast Asia's biggest telecom firm Singapore Telecommunications went ex-dividend. SingTel shares declined 0.5%. Shares in Golden Agri-Resources fell 1% after the company posted a 58% fall in second-quarter net profit.
Malaysian benchmark KLSE Composite edged down 0.03%, as investors cashed in some profit on recent gainers amid weak global equities and broad-based selling across regional exchanges.
Indian stock market ended lower as weak global cues and a steep slide in rupee against the dollar rattled investor sentiment. The S&P BSE Sensex closed provisionally at 18733.04, down 449.22 points or 2.34% from prior day closure.
The Indian rupee dropped to an all-time record low of 61.79 per dollar on fresh dollar demand from banks and importers amid weakness of dollar in the overseas market and fall in the equity market.
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