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Asia Pacific Market: Stocks gain after China rate cut

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Asia Pacific share market advanced on Monday, 26 October 2015, as risk sentiments bolstered by positive lead by US and European markets on Friday after the People's Bank of China decision late last week to ease monetary policy and the European Central Bank's indication of further stimulus likely in December in an effort to support its economy.

China's policy makers were stepping on the gas once again to combat the slowing economy. China's central bank cut interest rates for the sixth time since November on Friday, and it again lowered the amount of cash that banks must hold as reserves in another attempt to jumpstart a slowing economy. The People's Bank of China (PBOC) said that it was lowering the one-year benchmark bank lending rate by 25 basis points to 4.35%, effective from Oct. 24. The one-year benchmark deposit rate was lowered by 25 basis points to 1.50%. The RRR will also be cut by 50 basis points for all banks, taking the ratio to 17.5% for the country's biggest lenders, the PBOC said in a statement.

 

The PBoC moves followed Thursday's comments from European Central Bank President Mario Draghi, the news added to optimism the global central banks will provide further stimulus. . ECB President Mario Draghi has set the stage for a possible stimulus expansion in December as policymakers are increasingly concerned over the deteriorating growth and inflation outlook for the euro area.

Investors were keenly awaiting for the outcome of the Bank of Japan (BoJ) meeting on Friday amid speculation it will further loosen monetary policy to counter a downturn in the world's third largest economy. Investors are also looking for signs on the timeline for a long-anticipated Federal Reserve interest rate hike. The Fed will meet on Tuesday and Wednesday, after its policymakers opted to hold interest rates steady last month, amid concerns that a slowing global economy, particularly in China, could pose risks to the U.S. economic outlook.

Among Asian bourses

Nikkei gains on strong offshore lead

The Japanese share market finished higher, on the back of positive lead from Wall Street and European markets on Friday, coupled with the PBoC rate cut and the European Central Bank's indication of further stimulus likely in December. Total 28 TSE first-section sector sub-indexes ended up, with Air Transportation, Electric Appliances, Pharmaceutical, Machinery, and Insurance issues being major gainers. The Nikkei Stock Average added 121.82 points, or 0.65%, to end at 18947.12 points, having briefly reclaimed the 19,000 line for the first time in nearly two months. The broader Topix index added 0.72%, or 11.15 points, to 1558.99 at the close.

Hitachi jumped 6.1% after raising its first-half net income forecast. The electronic maker revised its first-half net income forecast to 97 billion yen ($801 million) from 70 billion yen. JPMorgan Chase & Co. raised its rating on the stock, saying it sees potential for profit growth from cost reductions and initiatives to reorganize operations.

Sony Corp. added 2.5% after reports that electronics maker is in talks to buy Toshiba Corp.'s image-sensor business for 20 billion yen. The move would bolster Sony's dominant position in making chips used to capture smartphone pictures, while helping Toshiba raise cash following an accounting scandal. Toshiba shares added 3.6%.

Australia market falls

The Australian share market closed marginally down after erasing early gains, as investors opted for a risk-off mode ahead of a big week for central bank meetings and bank profit results. Total 6 out of 10 ASX sectors declined, with telecommunication issue leading decliners, followed by industrial, utilities, energy, and consumer staple issues. The benchmark S&P/ASX 200 index declined 3.60 points, or 0.07%, to 5348 points, while the broader All Ordinaries index sank 1.80 points, or 0.03%, to 5386.30 points.

The banks and financial stocks ended mixed. Commonwealth Bank of Australia closed 0.2% higher to A$77.50 and Westpac Banking Corp gained 0.9% to A$31.84, while National Australia Bank closed down 0.06% at A$32.42. ANZ Banking Group ended flat at A$28.90. Macquarie finished the day 0.7% down at A$82.65, amid profit booking after a steady stream of buying following its acquisition of ANZ's Esanda business.

Shares of material companies were mostly down, with BHP Billiton lower by 0.1% to A$24.57 and Fortescue Metals down by 0.8% to A$2.56, but Rio Tinto was up 0.8% at A$53.81. Junior miner Arrium fell down 4.35% to A$0.11. Bluescope shares surged 11% to A$4.50 after the NSW government said it would defer A$60 million in payroll taxes to help keep the Port Kembla steel plant operating.

China market ends stronger after rate cut

The Mainland China stocks ended higher in volatile trade, amid enhanced risk appetite in the wake of further monetary easing by China's central bank on Friday, including a surprise cut to the country's key interest rate. All 10 SSE sectors advanced with technology, healthcare and financial issues being major gainers. The Shanghai Composite Index rose 0.5%, or 17.15 points, to close at 3429.58 points, the highest level since Aug. 21. The Shenzhen Composite Index, which tracks stocks on China's second exchange, grew 0.68%, or 13.74 points, to 2030.48. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, declined 0.43%, or 10.91 points, to close at 2527.48.

Shares of technology companies advanced the most among 10 industry groups in Beijing, led by Tsinghua Tongfang Co., a computer maker, up 10%, meanwhile Wangsu Science & Technology Co was up 3.5%.

Financial shares also rose after the rate cut, led by brokerages. Haitong Securities Co. climbed 1.5%, while Huatai Securities Co. surged 3.1%.

Hong Kong market ends down

Hong Kong stock market closed down after wiping out early gains, amid caution ahead of China's CPC Central Committee 18th Plenary Session started today and a big week for central bank meetings. The benchmark Hang Seng Index declined 35.69 points, or 0.15%, to 23116.25 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, jumped 5.64 points, or 0.05%, to 10747.68 points. Turnover was virtually unchanged at HK$72.8 billion compared to HK$72.5 billion on Friday.

Power producers were top losers in the HK market, with CR Power (00836) dipping 5% to HK$18.52. Huaneng Power (00902) and Huadian Power (01071) declined 5.5% to HK$8.87 and HK$6.31 respectively. Datang Power (00991) fell 3% to HK$3.01. China Power (02380) dropped 4% to HK$5.14.

Mainland developers were benefited from China's rate cut and RRR cut. COLI (00688) ascended 1% to HK$26.15. Its spin-off China OVS PPT (02669) soared 27% to HK$1.35. China Re (01508) closed flat from its IPO price of hK$2.7, but it registered huge turnover, totaling HK$2.72 billion.

Macau gaming counters were up on renewed buying interest by investors. Sands China (01928) jumped 2% to HK$28.8. Wynn Macau (01128) shot up 2% to HK$11.16 as a labour dispute regarding converting mass area into smoking VIP rooms has temporarily settled.

Sensex languishes in negative zone

Post result losses for shares of index heavyweight and housing finance major HDFC weighed on key benchmark indices in mid-afternoon trade. At 14:15 IST, the barometer index, the S&P BSE Sensex, was off 44.32 points or 0.16% at 27,426.49. The 50-unit CNX Nifty was off 15.95 points or 0.19% at 8,279.50.

Shares of index heavyweight and housing finance major HDFC edged lower in volatile trade after the company announced second quarter earnings. HDFC's net profit rose 18.19% to Rs 1604.56 crore on 12.13% rise in total income to Rs 7480.24 crore in Q2 September 2015 over Q2 September 2014. On a consolidated basis, HDFC's net profit rose 2.04% to Rs 2106.51 crore on 7.61% rise in total income to Rs 12530.28 crore in Q2 September 2015 over Q2 September 2014.

Godrej Consumer Products rose 2.37% after the consolidated net profit rose 22.44% to Rs 287.16 crore on 8.08% rise in total income to Rs 2264.02 crore in Q2 September 2015 over Q2 September 2014. Godrej Consumer Products' consolidated net profit after adjusting exceptional items jumped 37% on year-on-year basis in Q2 September 2015.

Gujarat State Fertilizers & Chemicals surged 9.29% after net profit rose 14.7% to Rs 142.64 crore on 18.9% growth in net sales to Rs 1762.18 crore in Q2 September 2015 over Q2 September 2014.

Elsewhere in the Asia Pacific region: Taiwan's Taiex index was up 0.8% to 8745.36. South Korea's KOPSI rose 0.4% to 2048.10. Singapore's Straits Times index rose 0.5% at 3083.10. Indonesia's Jakarta Composite index grew 0.8% to 4691.70. Malaysia's KLCI fell 0.2% to 1706.79. New Zealand market closed for holiday.

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First Published: Oct 26 2015 | 3:17 PM IST

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