Asia Pacific share market advanced on Monday, 25 August 2014, amid further sign of economic recovery in the world's biggest economy and on prospects for increased economic stimulus in Europe and Japan. The MSCI Asia Pacific Index added 0.1% to 148.71.
European Central Bank President Mario Draghi and Bank of Japan chief Haruhiko Kuroda raised the likelihood of measures to support growth during a meeting of central bankers in Jackson Hole, Wyoming.
Speaking at the Kansas City Federal Reserve's annual symposium in United States, Draghi called on European politicians to pivot away from tight budget policies that have held back euro-zone growth and pledged additional central-bank steps if needed to spur growth. Draghi said European central bankers and politicians both have a role to play in boosting demand and reducing joblessness. It would be helpful for the overall stance of policy if fiscal policy could play a greater role alongside monetary policy, he said. Expectations of future inflation in Europe exhibited significant declines at all horizons in August, he said.
The Bank of Japan (BoJ) may have to pursue its aggressive monetary policy easing for "some time" to fully vanquish deflation, BoJ Governor Haruhiko Kuroda said on Saturday, 23 August 2014. Speaking at the Kansas City Federal Reserve's annual symposium in United States, Kuroda said the central bank's efforts to overcome deflation by stimulating Japan's economy with large-scale asset purchases were proving effective. He added, however, that the public was not yet convinced Japan's central bank would hit its 2% inflation target. Creating that expectation was necessary to get firms to raise wages - a key step in Japan's long war with deflation, he said.
Fed Chair Janet Yellen delivered a balanced speech regarding the US labor market and monetary policy in the Jackson Hole symposium. She acknowledged that recent labor market data have performed better than the Fed's forecasts and discussed the cyclical and structural factors contributing to the current employment situation. Yellen judged that cyclical factors remained prominent as significant underutilization remains. Therefore, policymakers should stay patient to the gradual move toward the exit. Overall, the comments have not changed the dovish stance of the Fed and have not done much to alter the central bank's monetary policy outlook.
Even though some analysts noted that Yellen's speech was still dovish overall, her messages were inline with the FOMC minutes released earlier last week that Fed is on track to raise interest rates next year.
Among Asian bourses
Nikkei rises as yen weakens
Japanese share market closed higher, as solidly lower yen against the basket of major currencies aided export-related stocks. The benchmark Nikkei 225 index closed 74.06 points, or 0.48%, to 15613.25. The benchmark index returned to their winning ways after snapping its nine-session bull streak with a 0.3% loss on Friday. The broader Topix index ended up 0.4% to 1291.31
Exporter shares closed higher, benefiting from the weaker yen. The dollar was changing hands at 104.15 yen at the close of today trade, compared with 103.71 yen on Friday. A stronger dollar is better for exporters, inflating the value of their earnings abroad in yen terms and enabling them to price their goods more competitively overseas.
Toyota gained 0.7% to 5,985 yen. Hitachi Ltd., a maker of industrial machinery that gets 45% of its revenue outside Japan, rose 1.7% to 788.6 yen. Fast Retailing Co shares added 1.4% to 33355 yen, Tokyo Electron added 0.8% to 7146 yen, TDK Corp rose 1.5% to 5260 yen and Casio Computer Co 3.9% to 1880 yen.
Chugai Pharmaceutical Co lost 9.2% to 3325 yen on reports that Roche Holding AG had decided against bidding for the Japanese drug company, and instead will concentrate on its $8.3 billion acquisition of InterMune.
Shares of Murata Manufacturing added 0.8% to 10075 yen after the company announced that it will buy U.S. wireless device parts maker Peregrine Semiconductor, to strengthen its production of smartphone parts. Murata will buy all the shares it does not already own in the San Diego-based firm for $465 million by end-2014.
Shares of Itoham Foods rose 5.9% after it announced a share buyback after the Aug. 22 market close. The firm will repurchase up to 10 million shares of its own stock, the equivalent of 4.6% of all shares outstanding, from Sept. 1 through end-March.
Fujifilm soared 4% to 3,205 yen after Japan's Chief Cabinet Secretary Yoshihide Suga told reporters that the government was willing to offer an unapproved Ebola drug if the World Health Organization requests.
JVC Kenwood Corp. soared 27% to 310 yen, after media reports that it was expanding its car-navigation partnership with Garmin to include systems built into vehicles.
Australia market snaps seven session winning run
Australian share market closed lower for the first time in eight consecutive sessions after hitting its latest six-year high early today. Most of the ASX sectors declined with shares of materials, financials, and property trusts being major losers, while shares of energy, technology, healthcare and utilities companies ended higher. The benchmark S&P/ASX 200 Index closed 10.70 points down at 5634.90 and the broader All Ordinaries Index dropped 7.70 points to 5632.80.
Shares of materials and resources companies dropped the most in the Sydney as a fall in iron ore prices. Iron ore plunged to a two-month low, falling 2% to $US90.10 per tonne on Friday. Excess inventories and a glut of supply in the market have pressured the iron ore price for most of the year.
Resources giant BHP Billiton fell 1.5% to A$37.25. Main rival Rio Tinto fell 1.3% to A$64.54 and Fortescue Metals sank 1.8% to A$4.34
BlueScope Steel shares plummeted 12.8% to A$5.32 after the company failed to meet market expectations for full-year profit. Australia's biggest steelmaker reported a net loss of A$82.4 million. While the result was an improvement on last year, the market had been expecting a better showing.
UGL shares added 0.3% to A$6.81 despite the utility provider's pledge to return capital to investors once it completes the sale of its property arm DTZ. However, UGL will not pay a final dividend, despite profit jumping by 22% to A$111.7 million.
Recall Holdings shares declined 6.3% to A$4.80 after Information management company reported 3% drop in profit in its inaugural full-year result. However, underlying profit, excluding significant items - largely associated with cost of demerger from Brambles - rose 57% to $US67.9 million.
Caltex Australia shares rose 7.4% to A$27.45 after the petroleum company posted a marginal 1% increase in half-year profit to A$173 million and announced to pay an interim dividend of 20 cents per share.
M2 Group shares gained 0.7% higher to $6.83 after the owner of Dodo and iPrimus reported 53% rise in full-year profit to A$67.1 million on net revenue of $1 billion in revenue.
Shanghai Composite drops 0.51%
Mainland China share market closed lower due to the weak performance of blue chips on concerns about the strength of the recovery after sign of the weakest credit growth this month and an unexpected slowdown in industrial output. Almost all sectors of the Shanghai market declined with shares of telecom, financial, technology, material, healthcare, energy, and consumer goods companies being the bigger losers. The benchmark Shanghai Composite declined 11.54 points, or 0.51%, to 2229.27 at the close. Turnover decreased to 134.45 billion yuan from last Friday's 140.35 billion yuan.
Shares of mainland lenders dropped after data this month showed the weakest credit growth since 2008. The nation's four biggest banks made new loans of about 56 billion yuan ($9.1 billion) in the first 17 days of August, Caixin reported Aug. 22. China Citic Bank Corp retreated 1.2% to 4.30 yuan, Huaxia Bank dropped 1.8% to 8.37 yuan. Ping An Bank Co. fell 1.4% to 10.21 yuan.
Shares of brokerage houses declined due to weakness in recent credit data and the HSBC Flash China Manufacturing PMI. Industrial Securities lost 2.5% to 10.77 yuan, while Pacific Securities decreased 2.9% to 8.15 yuan.
Shares of coal miners stumbled after newest China-Taiyuan Coal Transaction Price Index suggests a steady decline in coal trading price since the start of 2014. Wintime Energy Co dropped 5.5% to 4.85 yuan, while Anyuan Coal Industry Group Co was down 3.6% to 4.76 yuan.
Shares of civil aviation companies advanced in Shanghai after the China Business Journal reported on Aug. 23 that Capital Airports Holding Co., Hainan Airlines Holdings Group and some funds set up a civil-aviation investment fund, which plans to raise 20 billion yuan in the first phase. The fund will invest in airport construction and aviation economic zones in the near term, the newspaper reported. China Southern Airlines Co., the largest domestic carrier, gained 3.6% to 2.60 yuan. China Eastern Airline Corp jumped 9.9% to 2.78 yuan.
Hang Seng climbs to a fresh six-year high
Hong Kong share market closed to a fresh six-year high in volatile trade, amid further sign of economic recovery in the world's biggest economy and on prospects for increased economic stimulus in Europe and Japan. The Hang Seng Index rose 0.22%, or 54.68 points, to 25166.91, extending a six-year high. The benchmark index opened easier and fell 165 points at one point. It staged an intra-day reversal in afternoon session, and saw its gains widen to 131 points before paring the gains by market close. Market turnover stood at HK$63.41 billion, down from HK$63.67 billion on Friday.
Airline operators drew buying in afternoon trade after the China Business Journal reported on Aug. 23 that Capital Airports Holding Co., Hainan Airlines Holdings Group and some funds set up a civil-aviation investment fund, which plans to raise 20 billion yuan in the first phase. CEA (00670) jumped 3.8% to HK$2.72. CSA (01055) gained 2.6% to hK$2.72. Air China (00753) edged up 0.2% to HK$4.97.
Sinopec jumped 4.3% to HK$8.04 after saying net income increased 7.5% to 32.5 billion yuan ($5.3 billion).
Gome Electrical Appliances climbed 3% to HK$1.36 after reporting first-half profit doubled to 693 million yuan from 322 million yuan a year ago.
Xinjiang Goldwind Science & Technology Co. surged 28% to HK$12.10 after China's biggest wind-turbine maker said first-half profit more than tripled as it increased margins and won orders for new wind farms.
K Wah International slipped 2.3% to HK$5.20 after the company posted a 76% plunge to HK$213.8 million in first-half net income from a year earlier.
Indian indices lose ground after hitting record high
Indian shares surrendered all-time highs recorded earlier in the day after the Supreme Court declared coal block allocations between 1993 and 2010 as illegal. The Bombay Stock Exchange's 30-share Sensex closed 0.07%, or 17.47 points, higher at 26,437.02 points, while the National Stock Exchange's broader 50-share Nifty shed 0.09%, or 6.90 points, to close at 7,906.30 points.
Metal, mining and power generation stocks declined after the Supreme Court today, 25 August 2014, termed the method of allotment of coal blocks between 1993 and 2011 as illegal. In a ruling that may come as a blow to several companies, the Supreme Court deemed all coal block allocations made since 1993 as illegal. The allocations had no objective criteria and no fair and transparent procedure, the judges said, adding they were impermissible. The quashing of these allocations still remains to be decided in further hearings. The court suggested the appointment of a panel of retired apex court judges to help the court in this matter. The case will he heard on 1 September next. The Supreme Court further disallowed exploitation of captive mines by ultra mega power projects, adding that captive mines cannot be used for commercial purposes.
Among metal stocks, JSW Steel (down 3.52%),Jindal Steel & Power (down 13.97%), Sesa Sterlite (down 3.89%), Tata Steel (down 4.79%), NMDC (down 1.89%), National Aluminum Company (down 5.75%), Hindustan Copper (down 0.9%) and Hindustan Zinc (down 2.33%), edged lower.
Among power generation and power distribution companies GVK Power & Infrastructure (down 3.11%), Tata Power Company (down 3.42%), NTPC (down 0.28%), NHPC (down 2.96%), Adani Power (down 4.09%), Reliance Infrastructure (down 3.8%), JSW Energy (down 4.82%), Power Grid Corporation of India (down 1.3%) and Reliance Power (down 4.07%) declined.
Elsewhere in the Asia Pacific region-- South Korea's KOSPI index rose 0.2% to 2060.89. Taiwan's Taiex index gained 0.11% to 9390.62. New Zealand's NZX50 added 0.3% to 5182.74. Singapore's Straits Times index rose 0.14% to 3330.28. Indonesia's Jakarta Composite index declined 0.27% to 5184.96. Malaysia's KLCI fell 0.46% to 1862.31.
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