Asia Pacific shares were mixed on Wednesday, 18 June 2014, amid mounting concerns over the conflict in Iraq and on caution ahead of the U.S. Federal Reserve's policy statement later in the day.
Rebels from the Islamic State of Iraq and the Levant attacked Iraq's largest oil refinery, located in Baiji in northern Iraq, with mortars and gunfire on Wednesday, keeping crude oil prices high and sapping investors' appetite for risk.
Brent rose to the highest level this week as fighting in Iraq damaged the northern energy infrastructure, while the main oilfields in OPEC's second-biggest producer were spared. West Texas Intermediate also gained.
In energy trading, benchmark crude oil for July delivery added 41 cents to USD 106.77 in electronic trading on the New York Mercantile Exchange after militants pressing a major offensive in Iraq attacked the country's biggest oil refinery. Investors were also focused on the Federal Reserve's two-day monetary policy meeting that ends tonight. Many of the investors awaited on the sidelines to view an update on the direction of monetary policy in the world's largest economy following some mixed data.
The central bank is expected to update its forecasts for the world's biggest economy and scale back economic stimulus another notch. It's less certain whether policymakers will give any hints on when they want to start raising short-term interest rates from record lows. But dealers will pore over its economic projections for clues to when the central bank would start hiking interest rates.
Among Asian bourses
Australia market sinks to two-month low
Australian share market declined to lowest level in two months, as risk off selloff amidst geopolitical concerns in Iraq and on caution ahead of the Federal Reserve decision. Most the sectors dived into sea of red, with shares of energy companies and lenders leading decline. The benchmark S&P/ASX200 and the broader All Ordinaries each declined by 0.3% to 5382.70 and 5363.90, respectively.
Energy sector suffered heavy losses in the Australian bourse today, dragged down by steep 4.6% drop in Australia's biggest oil producer Woodside Petroleum to A$40.90 after the company emerged from a trading halt after Royal Dutch Shell sold a 9.5% stake. Santos was down 1.3% to A$14.31 and Oil Search 0.8% to A$9.69.
Shares of material and resources companies were mixed with earnings dominated by iron ore were mostly higher after the spot price, delivered in China, ended a six-day losing streak with a 0.3% gain to $US89.30 a tonne. Rio Tinto, the biggest Australian iron ore producer, rose 0.8% to A$57.90, while Fortescue Metals Group, the third biggest local producer, lifted 2% to A$4.02. Diversified resources giant BHP Billiton shed 0.2% to A$35.28.
Australian dollar declined slightly from yesterday's closure level against greenback and other major currencies on Wednesday after negative comments on the local economy from the Reserve Bank of Australia. In the minutes of its June board meeting, released on Tuesday, the RBA said it was unclear how much the tough federal budget and expected declines in mining investment will impact the economy.
Nikkei surges 0.93%
Japan share market extended winning streak for second day in row, on the back of positive cues from Wall Street overnight and weaker yen against the dollar. But, disappointing May trade data capped gains. The benchmark Nikkei 225 index climbed 0.93% to 15115.80 and the Topix index of all first-section issues ended up 0.88 at 1249.15.
Tokyo investors took advantage of yen weakening against the major currencies as it makes the country's export less costly for overseas buyers. In foreign exchange trade, the dollar bought 102.27 yen in Tokyo, against 102.13 yen late in New York.
The finance ministry said on Wednesday that Japan's May trade deficit narrowed 8.3% from a year ago to 909 billion yen, marking the 23rd consecutive monthly shortfall, as imports turned down for the first time in a year and a half, data showed Wednesday, but weaker shipments abroad helped keep the trade balance in the red. Imports were down 3.6% to 6.5 trillion yen, the first on-year drop in 19 months as crude oil shipments fell by nearly 20% in volume terms. May exports fell 2.7% to 5.6 trillion yen, the first downturn in over a year as demand for refined fuel and vehicles fell overseas.
Shares of exporters and inflation-sensitive stocks such as brokerages and real estate companies climbed up, on the back of yen weakening against the US dollar. Suzuki Motor led exporters with a gain of 2.3% to 3223 yen as investors eye the firm's chances of expanding its business in India, where the new pro-growth Bharatiya Janata Party (BJP), led by Prime Minister Narendra Modi, is being counted on to revive India's economy.
Nintendo, which makes video-game consoles, climbed 2.1% to 12,340 yen. Toyota Motor Corp., the world's biggest carmaker, rose 1.1% to 5,884 yen. Nomura advanced 2.3% to 728 yen. Daiwa Securities Group Inc., Japan's second-biggest brokerage, added 2% to 870 yen.
Nikon Corp sank 2.6% to 1616 yen after JPMorgan reduced its rating on the stock to underweight from neutral, citing high costs and downside risks to existing businesses in the camera maker's plans to increase its medical business sales.
Resona Holdings Inc gained 2.8% to 559 yen following a Deutsche Bank reiteration of its Buy recommendation, citing progress in the bank's plan to pay back government bailout funds received over the last several years.
China stocks drop 0.54%
Mainland China share market extended falling streak for second consecutive day, amid concerns a property slowdown will hurt economic growth and new share sales will divert funds. The benchmark Shanghai Composite closed 0.54% down from prior day to 2055.52. Market turnover decreased to 70.47 billion yuan from yesterday's 70.92 billion yuan.
China's Bureau of Statistics said on Wednesday that new home prices raised by 5.6% in May from a year earlier, slowing from April's 6.7% rise. China's national housing prices declined 0.2% on average in May, the first month-on-month decline since June 2012. JPMorgan Chase & Co. said in latest report that China's property market remains the biggest risk to the economy in the near term after housing data showed prices sliding in May for the first time in two years.
Four companies aim to rise up to 1.7 billion yuan (US$273.80 million) via initial public offerings (IPOs) in Shanghai and Shenzhen, the first firms to push forward with listings after a four-month lull. The securities regulator last week approved the listing plans of seven firms, effectively resuming the IPO market which halted in February after a two-month flurry of activity ended a 14-month drought that started in November 2012. Shanghai Lianming Machinery Co. aims to sell up to 20 million shares at 9.93 yuan a piece, the company said in a statement posted on the Shanghai Stock Exchange's website yesterday, meaning it will raise 198.6 million yuan if fully subscribed.
The other three will list on the smaller Shenzhen Stock Exchange and aim to raise a total of 1.5 billion yuan, the companies said in statements. Wuxi Xuelang Environmental Technology Co. aims to sell up to 20 million shares at 14.73 yuan each for a total of 294.6 million yuan if fully subscribed, with Pacific Securities Co. acting as underwriter. Shandong Longda Meat Foodstuff Co. aims to sell up to 54.59 million shares at 9.79 yuan each for a total of 534.4 million yuan if all sold, while Feitian Technologies Co. aims to raise up to 662.9 million yuan with shares priced at 33.13 yuan.
China plans to have about 100 IPOs from June through the end of this year, according to the data from China Securities Regulatory Commission on May 19. The share sales will be spread over time to ensure there are a similar number each month, according to the statement.
Shares of consumer related stocks declined the most in Shanghai market. Qingdao Haier dropped 1.7%, while Great Wall Motor dropped 1.8%. Anhui Conch paced losses for material companies with a 1.3% retreat. Shanghai Waigaoqiao Free Trade Zone Development Co. paced losses for property companies with 2.7% slid.
Tasly Pharmaceutical jumped 3.5% after the company announced plans to raise up to 2.5 billion yuan ($401 million) in a private share placement.
Hong Kong stocks fall ahead of FOMC meeting decision
Hong Kong share market finished slightly lower in volatile trade, extending falling streak for third consecutive session, amid caution due to guidance on the future direction of global monetary policy ahead of statements from the United States Federal Reserve and Bank of England. The benchmark Hang Seng Index closed 21.87 points down from prior day closure at 23181.72. Trading turnover decreased to HK$46.35 billion from yesterday's HK$49.11 billion.
New World (00017) rebounded 2% to HK$8.97, becoming the top blue-chip gainer. Want Want (00151) was the biggest blue-chip loser, falling 2% to HK$10.28. Hutchison Whampoa (00013) also dipped 1% to HK$103.4. HSBC edged up 0.12% to HK$80.9 due to fund buying in afternoon session. China Life (02628) fell 1% to HK$21.25.
Chow Tai Fook (01929) put on 6% to HK$11.66 after it reported inline earnings. The Jewellery group also announced to acquire all stake in Hearts On Fire, a luxury branded diamond company in the US, for HK$1.17bn. Meanwhile, Luk Fook (00590) also soared 7% to HK$20.8.
Casino stocks declined after UBS lowered its forecasts for Macau 2014 VIP revenue growth from 9% to 2% after seeing demand weakness in previous three months. Wynn Macau (01128) slid 3.4% to HK$27.1. Galaxy Ent (00027) fell 1% to HK$56.1. SJM (00880) retreated 2.2% to HK$18.68.
Sensex tanks on fears costlier oil to hurt economy
Indian stock market finished steep lower on across-the-board selling as crude oil prices rose and the rupee fell against the dollar on a flare up of militant violence in Iraq, a key oil exporter. The S&P BSE Sensex was down 274.94 points or 1.08% to 25,246.25, while the CNX Nifty was down 73.50 points or 0.96% to 7,558.20, a lowest closing level since 16 June 2014.
State-run oil companies stocks came under pressure on fears that rising oil prices in the global market would raise subsidy burden. Shares of BPCL, HPCL and Indian Oil Corp slumped up to 4.82%.
Cipla edged higher in choppy trade after the company denied rumours that promoters are in talks with a multinational firm for selling their stake. The stock was up 2.7% at Rs 424. The stock hit high of Rs 443.20 and low of Rs 418.55. Cipla also said that the company has time and again denied such rumours in the past and continue to do so.
Kotak Mahindra Bank gained 1.98% to Rs 958.05 after scaling record high of Rs 971.80 in intraday trade. Kotak Mahindra Bank proposed to raise the ceiling for Foreign Institutional Investors (FIIs), Foreign Portfolio Investor (FPI) and Qualified Foreign Investor (QFI) investments in the bank to 40% from 37% to help it comply with RBI directive to bring down its current promoter stake by one-fourth in little over next two and half years. The private sector bank in its notice to shareholders for the upcoming annual general meet on 16 July 2014 has sought members' approval to pass a resolution to this effect.
Bank of India lost 3.65%. Bank of India's board of directors at a meeting held on 29 May 2014 approved the raising of Tier-1 and Tier-2 capital by issue of fresh equity shares and Tier-1 and Tier-2 bonds at an appropriate time subject to all necessary approvals. The state-run bank made this announcement after trading hours on Tuesday, 17 June 2014.
Elsewhere in the Asia Pacific region- Taiwan's Taiex index rose 0.43% to 9279.93. South Korea's KOSPI index was down 0.6% to 1989.49. Indonesia's Jakarta Composite Index sank 0.44% to 4887.86. Malaysia's KLSE Composite jumped 0.11% to1876.58. New Zealand's NZX50 fell 0.17% to 5184.46. Singapore's Straits Times index rose 0.07% to 3276.80.
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