The Asian shares commenced trade with firm footing today on tracking a positive lead from Wall Street overnight. The US stock market rose on Wednesday after the release of minutes from last month's meeting of the Federal Reserve that detailed plans to finish tapering its program of quantitative easing in October, provided the US economic recovery stays on track.
But the market upward journey was capped after China Bureau of Statistics stated today that the trade balance of the world's second largest economy narrowed from a surplus of US$35.92 billion in May to a surplus of US$31.06 billion in June. Exports were up by 7.2% over the year compared with a rise of 7.0% in May while imports were up by 5.5% after a fall of 1.6% in May.
Risk sentiment was also hit after a record drop in machinery orders in May, suggesting companies remain cautious about investing record cash reserves. Core orders, a leading indicator of capital spending, dropped 19.5% from April, the Cabinet Office said today in Tokyo.
The regional markets also took a beating after European shares extended losses today, hurt by weak economic data from Italy and rising concern about the financial health of Portugal's major bank Banco Espirito Santo.
Among Asian bourses
Australia stocks rise for the first time in four
Australian share market advanced for the first time in four consecutive days, as investors chased for value buying following recent selloff and a solid rebound in the US market overnight. However, the rise on the upside was limited after the news that domestic unemployment has reached a 10-year high and some worse than forecast Chinese trade data. Most of the ASX sectors closed higher, with shares in industrials, materials, energy, realty and consumer discretionary sectors being the biggest gainers. The benchmark S&P/ASX200 and the broader All Ordinaries each grew 0.22% to 5464.40 and 5454.30, respectively.
The Australia Bureau of Statistics stated today that the unemployment rate rose to 6% last month. The result was worse than consensus expectations for a smaller rise in joblessness to 5.9%. On a more positive note, the participation rate ticked up slightly from 64.6% to 64.7%.
Employment in Australia rose by 15,900 in June after falling by a revised 5,100 in May (previously reported as a 4,800 fall in jobs). Full-time jobs fell by 3,800 in June after rising by 22,200 in May. Part-time jobs rose by 19,700 in June after falling by 27,200 in May. A total of 89,900 new full-time jobs have been created in the first six months of 2014 - marking the best start to a calendar year in four years.
Shares of material and resources companies mostly higher after the spot price for iron ore, landed in China, edged up 0.1% to $US96.60 a tonne. Resources giant BHP Billiton rose 0.4% to A$37.41 and main rival Rio Tinto added 0.4% to A$62.41, while Junior iron ore miner Fortescue Metals Group was down 0.7% to A$4.35. Junior iron ore miner Atlas Iron dropped 5.3% to 62, despite reporting record production in the June quarter that beat its guidance.
Financial stocks were mixed. Commonwealth Bank was up 0.1% to A$80.85 as Standard & Poor's reiterated the bank's credit rating is unaffected by the scandal over its financial planning practices. National Australia Bank added 0.4% to A$33.39. Westpac lost 0.3% to A$33.75 and ANZ edged down 0.1% to A$33.16.
Australia's biggest insurer, QBE Insurance Group, lost 0.7% to A$11.27. Suncorp Group shares dropped 0.4% to A$13.57 as Morgan Stanley downgraded its recommendation for Banking and insurance company to ''underweight''.
Education and training provider Navitas recovered 6% to A$5.15 after plummeting 31% the day before as it revealed a cancelled contract.
GrainCorp (GNC) shares lifted up 0.83% at $8.53 after Australia's largest listed grain handler announced it has taken a 10% equity stake in leading Egyptian flour miller called Five Star Flour Mills for around A$10 million.
Japan stocks extend losses on stronger yen, machinery order data
Japan share market declined for fourth consecutive day, dragged down by a record drop in machinery orders in May that cast doubt over the outlook for capital spending and the strength of its economic recovery. Meanwhile risk aversion selloff intensified by weak China trade data and yen strength against the dollar. The Nikkei 225 index ended down 0.56%, or 86.18 points, to 15,216.47 while the Topix index of all first-section issues was down 0.91%, or 11.57 points, to finish at 1,259.25.
Yen-sensitive exporters and financials largely underperformed the Tokyo market, with Canon dropping 1.4% and TDK falling 1.3%. Nomura Holdings lost 3.2% while Daiwa Securities Group slipped 1.7%.
Shoe retailer ABC-Mart added 1.1% after announcing first quarter results showing a sharp rise in both sales and operating profits, ahead of many forecasts.
Shares of Benesse Holdings lost 4.9% after the correspondence education provider revealed Wednesday that a database on millions of customers has been compromised.
Software developer Justsystems Corp. fell 15% following a Kyodo News report, citing sources close to Benesse, that it had appropriated at least some of the leaked data. Benesse said Wednesday it that it confirmed the leak of about 7.6 million pieces of customer information, and the number may eventually raise to a much higher amount before its investigation is complete.
ABC-Mart climbed 1.1% to 5after the company said its first-quarter operating profit rose 30% year on year to 13.2 billion yen, beating analyst estimates for 11.8 billion yen.
Samantha Thavasa Japan surged 21% to 873 yen, the biggest gain on record after the handbag maker boosted its net-income forecast by 41% to 1.48 billion yen.
China stocks fall on trade data
Mainland China shares closed mostly down, as appetite for risk assets dented after disappointing trade figures and lingering concern the slowing economy will hurt earnings. The benchmark Shanghai Composite was down 0.27 point, or 0.01%, to 2038.34. Trading turnover slightly declined to 84.74 billion yuan from yesterday's 84.75 billion yuan.
Among SSE sectors, 9/10 sectors of the SSE index declined. The consumer staple issue was leading losses, with a 1.14% drop, followed by information technology down 0.9%, financial down 0.5%, energy down 0.17%, consumer discretionary down 0.15%, and industrials down 0.1%.
Shares of technology companies declined the heavily in Shanghai bourse. GoerTek slid 6.2% while Zhejiang Dahua Technology Co., a maker of surveillance equipment, slumped 4.9%.
Shares of auto makers rose after the government said electric cars will be exempt from purchase taxes. the central government said on Wednesday that authorities will exclude new-energy autos -- China's term for electric cars, plug-in hybrids and fuel-cell vehicles --from the purchase taxes starting September 1 this year until the end of 2017. Xiamen King Long Motor surged the most in a week. Wanxiang Qianchao Co., the listed unit of China's largest auto-parts maker, added 2.9%.
Hang Seng bounces on strong overseas lead
Hong Kong shares finished the session modest higher, led by utilities and property developer companies, on tracking gains in the U.S. and Europe markets overnight. But, weaker than expected China's trade data was capping gain. The benchmark Hang Seng Index closed 0.27% up at 23238.99. Turnover fell to HK$47.6 billion from HK$64 billion on Wednesday.
Among the HK 50 blue chips, 39 rose and 18 fell, with three stocks remaining steady. China Resources Power Holdings Co advanced 3.2% to HK$22.90, contributing 4-points gain to the benchmark Index and becoming the best-performing blue chip. Cosco Pacific declined 1.8% to HK$10.74, contributing 1-points losses to the benchmark Index and becoming the worst-performing blue chip, due to the lower-than-expected trade data.
Power producers stocks showed strength on reports that the first draft on power industry reform has been completed and discussions were under way. CR Power (00836) added 3% to HK$22.9.
Auto makers were up after Tung Yang, the secretary-general of China Association of Automobile Manufacturers, said yesterday that the China's State Council is expected to exempt sales tax on buying three types of new energy cars from 1 September, in a support for the new energy car industry. BYD (01211) gained 3% to HK$46.55. FDG Eveicles (00729) added 2% to HK$0.54.
China railway infrastructure also rose on Citi Research's initiation report. CRCC (01186) and CRG (00390) put on 3.5% and 1.5% to HK$7.45 and HK$4.05 respectively. China CNR (06199) edged up 0.33% to HK$6.15. CSR (01766) rose 1.5% to HK$6.7.
Sensex ends 72 points down
The Indian markets ended a volatile session in the red as investors digested finance minister Arun Jaitley's maiden budget speech which, though lacked major announcements, still laid a roadmap for reforms in future. The 30-share benchmark BSE Sensex ended down 72.06 points, or 0.28%, at 25,372.75 points after swinging 800 points from its intra-day high to low. The National Stock Exchange's broader 50-share Nifty closed 17.25 points, or 0.23%, lower at 7,567.75 points.
The Budget was neither an out of the box idea nor there were any bitter pills. The finance minister said he will try to meet the fiscal deficit target of 4.1%.
The government increased FDI limit in insurance and defense sector to 49% from 26%. The minister announced the government will provide necessary incentives for Real Estate Investment Trusts (REITs). Jaitley said adequate REITs will cut pressure on existing bank lending.
Bank stocks declined after the finance minister said in the Union Budget 2014-15 that the capital of banks will be raised by increasing the shareholding of the people in a phased manner through sale of shares largely through retail to common citizens of the country. Construction stocks rose.
The Budget proposed that income of foreign portfolio investors from transaction in securities will henceforth be treated as capital gains and not business income. There is no long term capital gains tax on sale of shares if the shares are held for a period of more than a year. Short term capital gains tax on sale of shares is 15%. Short term capital gains tax is payable when the shares are sold within a year of buying.
The Finance Minster said the government is aiming sustained growth of 7-8% or above within the next 3-4 years along with macro-economic stabilization that includes lower levels of inflation, lesser fiscal deficit and a manageable current account deficit. The Finance Minister has kept a target of limiting fiscal deficit to 4.1% for the current fiscal and decided to reduce it further to 3.6% in 2015-16 and 3% in 2016-17. The Finance Minister said that the Centre is committed to implement GST at the earliest and the issues raised by state governments will be resolved soon.
Jaitley said the government will not ordinarily bring about any change in taxation retrospectively which creates a fresh liability for tax payers. He said that the government will constitute an Expenditure Management Commission to look into every aspect of expenditure reform. The government also intends to overhaul the subsidy regime while providing full protection to the marginalized, Jaitley said. With a revised Direct Tax Code already placed in public domain in March 2014, the government will consider the comments received from stakeholders on the revised Code, Jaitley said. He said that the government will review the DTC in its present shape and take a view in the whole matter.
Jaitley said that the government will promote foreign direct investment (FDI) selectively in sectors. The FDI cap in both the insurance sector and defence manufacturing is proposed to be increased to 49% from the current level of 26%, with full Indian management and control, through the FIPB route. FDI is also being encouraged in the development of smart cities, Jaitley said.
The Budget has forecast 26.9% growth in Plan expenditure at Rs 5.75 lakh crore in 2014-15.
Elsewhere in the Asia Pacific region- Taiwan's Taiex index was up 0.8% to 9565.12. South Korea's KOSPI index added 0.12% to 2002.84. Malaysia's KLSE Composite was up 0.08% to 1892.62. Singapore's Straits Times index fell 0.18% to 3269.50. New Zealand's NZX50 added 0.1% to 5128.01. Indonesia's Jakarta Composite Index advanced 1.46% to 5098.01.
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