The direct real impact on Asia-Pacific economies from the U.K.'s decision to leave the EU (Brexit) is likely to be limited since the relevant linkages are weak, said S&P Global Ratings in a report published on Yuesday, 28 June 2016, titled "Brexit Impact On Asia-Pacific Is Largely Credit Neutral."
"Whether we get any measurable real impacts from Brexit depends on a couple of things. One, on how long the market volatility lasts, and whether it begins to spill over to the real economy. And two, whether we get any political aftershocks, including EU exit/entry votes, from other European markets," said S&P Global Ratings' Asia-Pacific chief economistPaul Gruenwald.
Brexit is expected to be challenging but is not likely to have widespread near-term negative rating consequences for home-grown Asia-Pacific banks and other financial institutions. Although, it's still early days as the geopolitical ramifications of Brexit are yet to fully play out. The direct exposures of most Asia-Pacific financial institutions to the U.K. appear to be manageable at current rating levels, the credit rating agency noted.
"The Japanese yen's status as a safe-haven currency could lift its value, which will likely have a direct negative impact on the overall earnings of companies with net export exposures," said S&P Global Ratings credit analyst Terry Chan.
"For Australian corporates, currency volatility will have only marginal impact. That's because most borrowers maintain a high level of currency hedging for non-Australian-dollar denominated debt and/or have protection through non-Australian dollar cash flows for offshore operations." Chan added.
Among Asian bourses
Japan Market closes mixed
The Japan share market finished mixed after recouping early losses, encouraged by signs that Japanese authorities are preparing fresh stimulus measures to underpin the economy. But gains were marginal as Britain deciding to leave the European Union continued to weigh heavily on investor sentiment with the yen's strength against a basket of other currencies compounding a dour market mood. Total 19 out of 33 TSE sectors declined, with Transportation Equipment, Rubber Products, Insurance, Securities & Commodities Futures, and Oil & Coal Products issues being major losers, while Construction, Retail Trade, Foods, and Pharmaceutical issues were notable gainers. The 225-issue Nikkei Stock Average gained 13.93 points, or 0.09%, to 15323.14. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 1.14 points, or 0.09%, to 1224.62.
Financial stocks were sluggish in the wake of the "Brexit" vote. They were also under pressure as record-low interest rates in Japan are squeezing the profitability of domestic lenders.Mizuho Financial Group sagged 1.9%, while Mitsubishi UFJ Financial Group dropped 1.6%.
Takata rose 2.2%, after Shigehisa Takada, chairman of the troubled air bag maker, said at a shareholders meeting that he will step down after its restructuring following the global recall crisis makes certain progress.
Shimamura climbed 8.8%, after the discount clothing retailer released Monday brisk results for the first quarter through May 20.
Link and Motivation climbed 10%, after the management consulting firm announced Monday a share buyback plan.
Australia Market closes down
Australian share market declined, as Britain's shock vote to leave the European Union continued to weigh down investors sentiments. At close of trade, the benchmark S&P/ASX 200 index added 24 points, or 0.47%, to 5137.20. The broader All Ordinaries climbed up 23.40 points, or 0.45%, to 5216.20.
Shares of big miners were mostly down. BHP Billiton ended 0.3% lower to A$18.03 but Rio Tinto rose 0.6% to A$44.20. Fortescue Metals Group handed back around half of the previous day's gains, falling 3.7% to A$3.40.
Shares of banks and financial companies ended higher. Commonwealth Bank of Australia was the biggest lift by weight, rising 0.4% to A$73.10. Westpac Banking Group rose 0.5% to A$28.52, National Australia Bank climbed 0.5% to A$24.63 and ANZ Banking Group rose 0.1% to A$23.29.
British exposed financial stocks managed to trim much of their losses by close. Henderson Group ended 1.3% lower to A$3.70, BT Investment Management fell 1.7% to A$7.69, and CYBG lost 0.7% to A$4.11
Gold miners declined as gold prices fell 0.6% during the Asian session after climbing 0.8% overnight. St Barbara, fell 8.5% to A$3. Evolution Mining shares fell 4% to A$2.44 despite announcing it doubled its dividend rate following a strong performance on production and operating costs in the 2016 financial year.
China Stocks closed at three-week high
Mainland China stock market finished at three-week high, as the Premier Li Keqiang promised government will take measures to keep its financial and capital market stable and avoid wild fluctuations. All 10 SSE sectoral indices advanced, with healthcare issue being top gainer, followed by consumer discretionary and consumer staples issues. Meanwhile, buying pressure was also evident in utilities, industrials, energy, and financial issues. The CSI300 index of the largest listed companies in Shanghai and Shenzhen grew 0.51%, to 3136.40, while the Shanghai Composite Index rose 0.58%, to 2912.56 points.
The People's Bank of China reiterated on Monday that it would continue with a prudent monetary policy and push forward interest-rate and exchange-rate reforms while further opening up the capital account. The central bank said it would still step up risk- prevention measures and work to properly control risks from possible bond default cases. Monetary policy would remain prudent, the PBOC said, adding that it would use open market operations, interest rates, deposit reserve ratios and relending tools to keep banking system liquidity reasonably ample and to lower funding costs.
The central bank said it would further push forward interest rate reforms and build s new policy-rates framework. It pledged to step up use of short-term repo rates and the Standing Lending Facility to build short-term policy rates, while using relending, its Medium-term Lending Facility and Pledged Supplementary Lending to guide medium and long-term market rates.
The PBOC said it would further open up the capital account, including making it more convenient for Chinese investors to invest abroad and foreign investors to invest in domestic market, gradually lifting quota controls for two-way investment and allowing more overseas institutions to sell and trade yuan bonds in the onshore market.
The central bank also pledged to further improve the yuan exchange rate formation mechanism, to let market forces play a decisive role in setting the yuan exchange rate while boosting the yuan's two-way flexibility. It said it would maintain a stable yuan against a basket of currencies.
Hong Kong Stocks extend losses
The Hong Kong stock market declined for third day in row, as investor sentiments continued to be gripped by anxiety after Britain's stunning vote to exit the European Union last week, although losses were pared as other Asian markets picked up on hopes for stimulus. Among sectors, insurance, hotels and entertainment led the declines, while retailers gained. The benchmark Hang Seng Index fell 54.84 points, or 0.27%, to 20172.46 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, slipped 31.05 points, or 0.36%, to 8536.16. Turnover increased to HK$65.8 billion from HK$62.6 billion on Monday.
Stocks with business exposure to Britain and Europe extended their losses for the third trading day in a row after UK's rating was slashed. HSBC (00005) softened 0.6% to HK$46.35. Standard Chartered (02888) fell 2.1% to HK$55.95.
Macau gaming sector were pressured as Daiwa said weakening CNY will drag down GGR for the industry. Galaxy Ent (00027) and Sands China (01928) declined 2.2% and 1.8% to HK$22.25 and HK$25.2.
CKI (01038) dipped 2.6% to HK$65.75 after Daiwa Research lowered its target price to HK$75.8. It was the worst performing blue chip today. CKH Holdings (00001) slid 1.8% to HK$82.
Esprit Holdings increased 3.3% to HK$ 5.65 after chairman Raymond Or Ching-fai said it would cut 10% of its headcount in Germany. Regal Hotels International added 2.2% to HK$ 3.68.
Lenovo Group shares fell 1.7% to HK$4.58, after Bank of America Merrill Lynch lowered its target price from HK$4.6 to HK$4.5 on concerns that the computer maker's business in Europe would be affected by weaker local currencies and an economic slowdown after Brexit.
Indian stocks extend gains on global cues
Indian stocks market closed higher, on the back of firm global cues, moderately rebounding rupee and hopes of good monsoon. he barometer index, the S&P BSE Sensex, rose 121.59 points or 0.46% to settle at 26,524.55. The Nifty 50 index rose 33.15 points or 0.41% to settle at 8,127.85.
Metal and mining stocks edged higher as copper prices rose in global commodities markets. Idea Cellular moved higher after the company said in an analysts meet presentation submitted to the stock exchanges that the company is gaining both revenue and traffic share in both mobile voice and data segments. IT stocks extended recent losses triggered by concerns that losses for the British pound and euro in the wake of the UK's vote last week to leave the European Union (EU) will adversely impact Indian IT companies' revenue in dollar terms.
Elsewhere in the Asia Pacific region: New Zealand's NZX50 rose 0.4% to 6716.58. South Korea's KOSPI index rose 0.5% to 1936.22. Taiwan's Taiex index added 0.55% to 8505.51. Malaysia's KLCI climbed up 0.3% to 1634.04. Indonesia's Jakarta Composite index rose 1% to 4882.17. Singapore's Straits Times index added 1% to 2756.53.
Powered by Capital Market - Live News
