The selling pressure continued for third day across the Asian region, weighed down by tracking weak lead from Wall Street overnight and as offshore investors trimmed their Asian share portfolios ahead of expectations a depreciating region currency will eat into their profits.
Offshore investors are now taking their profits and running because they don't want their gains compromised by a strengthening US dollar. When stimulus is reduced it should translate to a stronger US dollar putting pressure on Asian market cross-rate.
Financial markets have become increasingly uncomfortable with the possibility that the Fed could start trimming back its bond-buying program as soon as next week following a spate of improving US economic data.
Meanwhile, concerns about an early reduction of Federal Reserve monetary stimulus intensified further after House and Senate negotiators announced a budget agreement late Tuesday designed to avert another economy-rattling government shutdown were seen as the main catalyst weighing on shares. The deal is good news, but because it's good news, speculation over the Fed's tapering increased.
Among Asian bourses, Japanese share market skidded for third consecutive session, as investors were continuing to reduce their exposure to risk positions on yen appreciation against the greenback and amid renewed concerns about an early slowdown of Federal Reserve stimulus. The benchmark Nikkei Stocks Average declined 173.24 points to 15341.82, while the broader Topix index dropped 8.22 points to 1242.23.
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Export related stocks were lower in Tokyo, with electronics firms and other techs helped lead the loss, pressured by the yen hardening against the U.S. dollar. The U.S. dollar slipping to 102.46 yen, down from around 102.80 yen at the start of the previous session, but off its lows in late Wednesday trade. A stronger yen trimmed overseas earnings prospects when they repatriate it home. Sony Corp fell0.27% to 1818 yen, Nikon Corp. 2.32% to 1938 yen and Alps Electric Co 0.71% to 1116 yen.
Electronic parts maker Nitto Denko fell 19% to Y4,180 after it cut its group net profit forecast to Y41 billion from Y56 billion for the fiscal year ending in March.
Shares of Yahoo Japan Corp. fell 3.08% to 567 yen on media report that the firm was offering its stake in market-research firm Macromill Inc to U.S. private-equity firm Bain Capital at a premium to its most recent close. Shares of Macromill were up 15.1% to 763 yen.
In Australia, shares on the Australian share market declined for sixth consecutive session, dragging the benchmark S&P/ASX 200 index down 41.70 points to finish at 5062.50.
Oz Minerals (OZL) recouped 12.1% to A$2.97 after falling heavily prior day in the wake of its gloomy trading update. Some analysts believe whilst OZL is facing short-term pain with its revised down CY14 production forecasts, longer term the future is brighter for the company with OZL investing in its future.
Natural gas Company Envestra added 2.4% to A$0.25 after lifting its full-year profit guidance by $5 million to $145 million.
Australia's seasonally adjusted unemployment rate increased by less than 0.1 percentage points to 5.8% in November, as announced by the Australian Bureau of Statistics (ABS) today. The ABS reported the number of people employed increased by 21,000 to 11,659,900 in November. The increase in employment was due to increased full-time employment, up 15,500 people to 8,107,900 and increased part-time employment, up 5,500 to 3,552,000. The increase in total employment was driven by increases in male full-time employment and female part-time employment. The number of people unemployed increased by 3,400 people to 712,500 in November, the ABS reported. The ABS monthly seasonally adjusted aggregate hours worked series showed a decrease in November, down 11.7 million hours (0.7%) to 1,634.4 million hours. The ABS reported the seasonally adjusted labour force participation rate remained steady at 64.8% in November.
In China, Mainland China share market closed weaker, as investors turned their focus to next week's Federal Reserve meeting, with speculation growing that the bank will scale back its stimulus program. The Shanghai Composite fell 31.37 points to finish at 2202.80, while the CSI 300 Index dropped 2.74 points to close at 2410.02.
Shares of financial companies declined the most among 10 SSE industry groups after the People's Bank of China said after the market closed yesterday that Local-currency loans were 624.6 billion yuan ($103 billion) last month compared with the 506.1 billion yuan in October. Aggregate financing was 1.23 trillion yuan, while M2 money supply increased 14.2% from a year earlier. China Life, the nation's biggest insurer, fell 1.5% to 15.42 yuan. Citic Securities lost 0.6% to 12.61 yuan.
Shares of technology companies advanced the most among 10 industry groups. Sanan Optoelectronics advanced 5.9% to 24.30 yuan. Beijing Enlight Media Co. (300251) led gains for small companies, jumping 10% to 41.55 yuan.
Shanghai-based companies rallied on speculation the local government are speeding up state-owned enterprise reform to boost profitability. Shanghai Lansheng Corp. surged by the 10% daily limit to 18.70 yuan after the government approved its restructuring plan and Goldman Sachs Group Inc. said SOE reform may reverse the Chinese stock market's underperformance.
In Hong Kong, shares in the Hong Kong market declined for third day in row, weighing the benchmark Hang Seng index down by 120.12 points from prior day to finish at 23218.12.
Among the HK 50 blue chips stocks, 16 rose and 33 fell, with one stock remaining steady. Li & Fung (00494) was the biggest blue-chip loser, falling 4.7% to HK$9.47 after UBS reduced its target price. Galaxy Entertainment (00027) added 2% to HK$64.75, making itself the top blue-chip winner. Sands China (01928) added 1.5% to HK$62.3. Wynn Macau (01128) soared 6.5% to HK$34.55.
Shares of Mainland Chinese banks were mixed after data showed new yuan-denominated loans rose to 624.6 billion yuan ($102 billion) in November, more than 100 billion yuan above the year-earlier figure. Among the top banks, Bank of China fell 0.55% to HK$3.60, Bank of Communications Co 1.44% to HK$5.46, and Industrial & Commercial Bank of China 1.84% to HK$5.35.
Among other blue chip stocks, Aluminium Corp. of China dropped 1.10% to HK$2.71 after saying it could see a drop of up to 37% in output from a key Peruvian copper mine. Angang Steel Co. rose 1.11% to HK$5.47 after Citi rose its rating to buy from sell. China Southern Airlines Co rose 0.7% to HK$3.07 as Kim Eng Securities citing news the carrier would add 6,700 flights to handle the Chinese New Year travel rush. Market new comer China Cinda (01359) shined. It soared to HK$4.5, or 25.7% above its IPO price.
In South Korea, shares in the Seoul market declined, with the benchmark KOSPI down 0.51% to 1967.93. South Korea's central bank on Thursday kept its benchmark interest rate steady at 2.5%, standing pat for a seventh straight month amid a tentative economic recovery. The last rate move was a surprise quarter-percentage-point rate cut in May. At that time, the government also introduced a $16 billion extra budget, seeking to revive the economy that grew just 2% in 2012, the slowest in three years.
In India, Indian benchmark indices extended losses in late trade, with barometer index, the S&P BSE Sensex, falling below the psychological 21,000 mark. Investor sentiment was hit adversely as Asian and European stocks dropped on speculation a US budget agreement will boost prospects for the Federal Reserve to start tapering its monetary stimulus for the US economy.
As per provisional figures, the S&P BSE Sensex was down 260.19 points or 1.23% to 20,911.22. The index lost 269.94 points at the day's low of 20,901.47 in late trade, its lowest level since 4 December 2013. The index declined 67.61 points at the day's high of 21,103.80 in early trade.
From the 30-share Sensex pack, 26 stocks fell and rest rose. Jindal Steel & Power (down 2%), Coal India (down 2.65%) and Hindalco Industries (down 1.91%) declined.
State Bank of India (SBI) lost 1.02%. The state-run bank early this week said that the Government of India (GoI) has accorded its approval to the bank to raise Rs 9576 crore of equity during the current financial from the market by way of Qualified Institutions Placement (QIP) as per law with the condition that the Gol holding shall not come down below 58%. The GoI has also accorded its approval to SBI to increase its "Issued Capital" by Rs 11576 crore in accordance with Section 5(2) of SBI Act, 1955, subject to requisite approvals. Among other PSU bank stocks, Canara Bank, Union Bank of India, Bank of India, Bank of Baroda and Punjab National Bank dropped 0.58% to 2.16%.
Lupin rose after the company said its US subsidiary -- Lupin Pharmaceuticals, Inc. (LPI) -- has launched its Duloxetine Hydrochloride Delayed-release (HCI DR) Capsules 20 mg, 30 mg and 60 mg strengths in the US. The stock was up 0.41%. LPI on Wednesday, 11 December 2013, received final approval from the United States Food and Drugs Administration to market Duloxetine HCI DR Capsules USP, 20 mg, 30 mg, 40 mg and 60 mg strengths in the US.
ONGC dropped 2.79%, with the stock falling for the third day in a row. ONGC early this week said the Gujarat High Court vide its order dated 30 November 2013 has decided that royalty on crude oil is to be paid on pre-discount price. The court has directed ONGC to make payment towards shortfall royalty for the period from April 2008 till this date, within a period of two months. ONGC said that the company is in the process of filing an appeal in the Supreme Court of India against the order of the Gujarat High Court and making the Union Government as party. The company's management has already directed Corporate Legal to engage best possible advocate for the case, ONGC said.
Elsewhere in the region, Taiwan's Taiex index dropped 0.86%. New Zealand's NZX50 index rose 0.08%. Singapore's Straits Times index fell 0.06%. Malaysia's KLSE Composite sank 0.49%. Indonesia's Jakarta Composite index lost 1.39%.
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