Asia Pacific share market closed mostly down on Thursday, 28 May 2015, as fears over tighter requirements on margin financing in China, an expected Federal Reserve interest rate rise sometime this year, and risk of Greece debt default ignited risk-off sentiment. The MSCI Asia Pacific Index fell 0.3% to 151.47.
Brokerages across China are tightening rules for lending to stock investors to try to limit the risks from any market bust. The Shanghai Composite Index approached 5000 for the first time since 2008 this week, partly fuelled by individual investors leveraging their bets with borrowed money. Margin lending by brokerages exceeded 2 trillion yuan ($322 billion) as of May 27, five times the level of a year earlier.
Greece's embattled economy faces another crucial deadline. On June 5 the Greek government is scheduled to repay 300 million euros ($329 million) to the International Monetary Fund, the first of four payments totalling $1.76 billion. Greece is thought to have enough funds to make the first loan payment. But concerns are rising that, barring an agreement with creditors, it will default on its other obligations coming due next month.
The sign of US economy strengthening renewed hopes of the Federal Reserve prepares to raise interest rates in the autumn. The members of the Fed's policy board are locked in a debate on when will be the right time to raise rates, which have been near zero since December 2008. At its last meeting, the Fed removed all calendar references in its forward guidance and said that recent economic weakness might be transitory in nature. This means that bank is now entirely data dependent and a rate increase could happen at any future meeting.
Among Asian bourses
Nikkei touches fresh 15-years high
Japanese share market closed the session higher on Thursday, 28 May 2015, extending its gains to a 10th day, on the back of yen depreciation to fresh multiyear lows against major currencies and positive lead from Wall Street overnight. The Nikkei Stock Average ended up 0.39%, or 78.88 points, to 20551.46, after climbing as high as 20655.33, the highest since April 2000. The Topix index of all Tokyo Stock Exchange First Section issues advanced 0.69%, or 11.43 points, to 1672.76.
Shares of currency sensitive exporters mostly higher, on earnings optimism after the US dollar hit its highest against the yen since December 2002. The yen fell to a 12-year low versus the dollar on expectations the US Federal Reserve will raise interest rates later this year. Japan's currency touched 124.30 per dollar, the weakest since December 2002, before trading little changed at 123.73 at the Thursday's close. A weak yen is positive for Japanese exporters as it makes them more competitive abroad and inflates profits when repatriated.
Among globally exposed blue chips, TDK Corp rose 2.1%, Japan Display Inc added 1.8%, and Renesas Electronics Corp rose 0.2%. Nissan Motor Co climbed 1.4% and Toyota Motor Corp improved by 1.7%. Shares of Sony Corp traded 0.2% higher after the company announced the purchase of U.S. start-up Optical Archive Inc.
Retailers were mostly down, after April data showed a robust 5% on year gain for retail sales, but up slight 0.4% on month, suggesting that consumer appetites are recovering slowly. Among the largest names, Fast Retailing Co. moved 0.1% higher, but Isetan Mitsukoshi declined 0.1%, but J. Front Retailing Co. lost 0.5%, and e-commerce major Rakuten Inc. fell 2.2%.
Ain Pharmaciez soared 12% after the drugstore chain forecasted a 17% increase in its operating profit to 13.4 billion yen for the year through April 2016, and plans to pay 40 yen per share for dividends, up from 30 yen per share.
Australia market extends loss after capital expenditure data
The Australian share market declined for second straight day, as risk off selling triggered after the release of worse than expected capital expenditure figures, with material and resource-related stocks leading downfall. The benchmark S&P/ASX 200 Index declined 12.20 points, or 0.21%, to 5713.10, while the broader All Ordinaries Index fell 9.60 points, or 0.17%, to 5714.60. Market turnover was relatively healthy, with 1.62 billion shares changing hands worth of A$3.41 billion.
The Australian Bureau of Statistics business investment data released on Thursday showed companies expect to cut investment in the fiscal year starting July 1 by 24.6% compared with their expectations, a year ago, for the previous fiscal year, as the downturn in mining accelerates and creates a stiff headwind for growth. Meanwhile, actual business investment in buildings and equipment fell by 4.4% in the first quarter from the final three months of 2014. Investment in the mining sector in the coming fiscal year is estimated to be 34.9% lower than the forecast, a year ago, for the current fiscal year.
Shares of materials and resources companies closed down. BHP Billiton closed 0.5% down at A$29.20. South32 tumbled 3.1% to A$2.18 as Liberum Capital started its coverage of the miner's London shares with a sell rating. Rio Tinto rose 0.6% to A$57.65 and Fortescue Metals Group added 3% to A$2.43. BlueScope Steel fell 3.7% to A$3.41 after a CLSA downgraded its ratings for the shares.
Woolworths rose 0.3% to A$28.01 as the retail giant signed up Telstra to help it offer mobile services direct to its customers.
Testing and analytical laboratory services provider ALS dropped 6.8% to A$6.10 after it reported a net loss of A$174.5 million for the year to March 2015, compared to a net profit of A$154.4 million in 2014.
Shanghai Composite tumbles 6.5% on liquidity woes
Mainland China share market closed steep lower on Thursday, 28 May 2015, snapping seven days of winning streak, on concerns over liquidity squeeze and stricter requirements for margin trading. The Shanghai Composite Index wiped out 321.45 points, or 6.5%, to finish at 4620.27, its second-worst session of 2015, or its 10th worst session in 15 years, on record turnover of 1.2 trillion yuan. The CSI300 index declined 347.52 points, or 6.71%, to 4834.01.
Investor jitters over tighter market liquidity renewed as subscriptions for 23 initial public offerings due next week which expected to lock up 4.9 trillion yuan ($790 billion) of liquidity. Meanwhile, concerns about stricter requirements for margin trading resumed after China's regulators asked lenders to report their investment in stocks.
All 10 SSE industry gauges declined, with shares of financial, energy and material companies suffered heavy losses. Citic Securities Co plunged 9.4%, Changjiang Securities Co. dropped 9.5% and Guosen Securities Co. tumbled 9.9% after both brokerages increased its margin requirement, the collateral put up by an investor when borrowing.
Industrial & Commercial Bank of China slid 5% and China Construction Bank Corp. dipped 5.9% after the sovereign investment firm Central Huijin Investment cut its holdings in ICBC's Shanghai-listed shares to 45.89% from 46%, and in Construction Bank to 2.14% from 5.05%. PetroChina Co slid 8.6% on profit booking after 9.7% rally in previous five sessions. Jiangxi Copper Co. slumped 6.2%. Poly Real Estate Group Co. led declines for developers, plunging 8.5%.
HSI sinks 2.23%
The Hong Kong stock market finished steep down, as investors rushed to sell on catching drop in Mainland China market after brokerage firms' tightened margin trading requirements for clients. The benchmark index opened up 81 points but reversed gains and saw its loss widened to over 800 points at one stage to 27,242. The Hang Seng Index ended down 626.90 points or 2.23% to 27454.31, off an intra-day high of 28162.25 and day low of 27242.11. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, dropped 518.88 points, or 3.53%, to 14183 points. Turnover increased to HK$206.05 billion from HK$157.5 billion on Wednesday.
Hong Kong top-weighted index component shares were lower, with China Mobile L falling 2.1%, while Tencent Holdings gave up 1.7% and HSBC Holdings traded 0.9% lower.
Hong Kong bourse listed Chinese securities firms suffered heavy losses after several brokers tightened up their margin-financing requirements, including increasing the amount of cash clients must put down for their deposits. China Everbright slid 3.2%, Southwest Securities International lost 3.9%, and Guotai Junan International Holdings fell 4.5%.
Shares of realty players were down, with Sunac China Holdings stocks leading downfall, with drop of 5.7%, after Chinese property developer has dropped its proposed acquisition of struggling Chinese property company Kaisa Group Holdings as conditions for the takeover reportedly weren't met. Among other property stocks, China Overseas Land & Investment slipped 2.9%, China Resources Land fell 2.7%, and Sino-Ocean Land Holdings dropped 3.8%.
Sensex registers small losses
Indian stock market ended marginally in the red in a volatile session marked by the expiry of monthly derivatives contracts, even as growing concerns over lacklustre corporate earnings hurt the sentiment. Weak global cues too dampened the domestic sentiment. The 30-share BSE index Sensex provisionally ended lower by 57.95 points or 0.21% at 27,506.71 and the 50-share NSE index Nifty ended down by 15.6 points or 0.19% at 8,319.
Hindalco Industries declined after the company reported weak Q4 results during market hours today, 28 May 2015. The stock shed 1.57% at Rs 132. The stock hit a high of Rs 133.90 and a low of Rs 130.20 in intraday trade. Hindalco Industries' net profit fell 35.71% to Rs 159.53 crore on 11.03% growth in total income to Rs 9601.63 crore in Q4 March 2015 over Q4 March 2014.
BPCL shrugged off weak Q4 results announced during market hours today, 28 May 2015. The stock was up 3.17% at Rs 822. The stock hit a high of Rs 824.20 and a low of Rs 796 in intraday trade. BPCL's net profit fell 29.87% to Rs 2852.89 crore on 30.94% decline in total income to Rs 51928.12 crore in Q4 March 2015 over Q4 March 2014.
Foreign portfolio investors sold Indian shares worth a net Rs 934.98 crore yesterday, 27 May 2015, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 594.03 crore yesterday, 27 May 2015, as per provisional data released by the stock exchanges.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index grew 0.2% to 9712.84. South Korea's KOSPI added 0.16% to 2110.89. New Zealand's NZX50 grew 0.34% to 5777.64. Singapore's Straits Times index fell 0.2% to 3417.77. Malaysia's KLCI rose 0.03% to 1755.56. Indonesia's Jakarta Composite index fell 0.3% to 5237.40.
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