Headline indices of the Asia pacific market declined in cautious trade on Wednesday, June 19, 2013, as investors awaited the Federal Reserve's monetary-policy decision for clues on its bond purchases.
The Fed meeting is one of the key focus points for investors globally today. Market participants are awaiting the outcome of two-day meeting of the Federal Open Market Committee for signal regarding an asset-buying program.
Traders were cautious amid uncertainty over Fed's massive quantitative easing scheme after the Financial Times reported that Federal Reserve Chairman Ben Bernanke plans to say he is close to tapering the central bank $85-billion-a-month in asset purchases.
Financial markets have been gyrating since Fed Chairman Ben Bernanke signaled in May the central bank could reduce its $85 billion in monthly bond purchases, known as quantitative easing, if there's sustainable improvement in employment. The key economic data the Fed is watching are mostly employment and inflation.
Super-easy monetary policies by central banks in advanced economies like the U.S. prompted money to flow into Asian markets, which could see a reversal when the global central banks unwind their aggressive stimulus programs.
Asia Pacific stocks mostly lower, with Japan, Australia and India were a rare bright spot. Japan's Nikkei Stock Average climbed up 1.83%, to 13,245.22, on the back of strong rally in export related stocks after official data showed Japan's exports soared in May.
Japan's latest economic data showed the country's trade deficit widened nearly 10% in May to 993.9 billion yen as the weak yen pushed up import costs. But exports jumped 10.1% from the same month a year earlier as the cheaper currency helped make Japanese exporters more competitive overseas.
Australia's benchmark S&P/ASX200 index also advanced 1% to finish at 4861.40, led by materials, industrials, energy, and consumer goods stocks.
Whitehaven Coal shares rose 4.3% to A$2.20 after the US investment fund Farallon acquired a 9.91% stake in the NSW based coal producer. Farallon believes WHC's closing price of A$2.11 (yesterday) doesn't reflect the true value of the business. WHC shares dropped 37% this year, adding to 2012's 27% tumble.
Shares of WorleyParsons climbed up 3% to A$19.88 after the mining engineer company received contract worth of US$100 million offshore oil and gas contract in Nigeria $US100 million South Korean shipbuilding. The news comes a month after a profit downgrade saw its shares plunge to a four-year low of A$19.50 on May 17. Samsung Heavy Industries (SHI) awarded WorleyParsons a design and engineering contract for a floating production, storage and offloading vessel, which will operate at an offshore deepwater oil field in Nigeria. WorleyParsons chief executive Andrew Wood said the contract to design topside process modules for the floating vessel was significant and represented ''a strong development of our ability to locally support the offshore oil and gas business in West Africa''.
China's stock market slipped to lowest level of the year today, dragged down by financials, realty, retailers, and energy stocks. The Shanghai Composite Index sank 0.73% to 2,143.45 while the smaller Shenzhen Composite Index lost 0.45% to 975.07. The Chinese market has slumped more than 12% from this year's high on February 6 on concern the nation's economic slowdown is deepening.
Decline in the Chinese came on mounting concerns about liquidity crunch after media news that Shanghai and the other mainland China bourses are planning to allow new initial public offerings after eight month of halts.
China's one-year interest-rate swap, which exchanges fixed payments for the floating seven-day repurchase rate, surged as much as 31 basis points to 4.29%, the highest level since September 2011. The bid-to-cover ratio at an auction of 10-year sovereign bonds today was 1.43 times, the lowest since August 2012.
Chinese developers had worst day amid speculation the government might introduce more property curbs to contain rising prices after property prices climbed in 69 of 70 major cities in May. China Securities Journal reported the country may expand property tax trials to more cities soon. China Vanke paced declines for developers, retreated 2.4% to 10.19 yuan. Poly Real Estate, the second-biggest developer, dropped 1.6% to 10.94 yuan.
Hong Kong's Hang Seng Index declined 238.99 points to 20,986.89, on tracking negative cues from Mainland bourses and other regional bourses. Risk aversion selloff dominated across the sector on worries of IPO re-open in July by the CSRC in China and the potential tapering of the Fed's assets purchase plan.
HK heavyweight HSBC Holdings PLC slipped 0.4% after the Hong Kong Monetary Authority Tuesday said it was investigating HSBC and other banks over the possible rigging of local benchmark interest rates.
India's share market erased intraday losses and registered small gains on hopes of further liberalization of foreign direct investment (FDI) regime. The S&P BSE Sensex was provisionally up 17.04 points or 0.09%, up close to 175 points from the day's low and off about 30 points from the day's high.
Telecom stocks were in spotlight today in Indian market on reports that a government panel has recommended a major liberalization of the foreign direct investment (FDI) regime, including raising the FDI limit to 100% from 74% in telecom. Tata Teleservices (Maharashtra) hit maximum permissible 10% upper circuit after the company's board decided to propose bonus share issue in order to comply with the minimum public shareholding requirement. Reliance Communications (RCom) and Idea Cellular, both, hit 52-week high. Shares of basmati rice exporters surged.
As per reports, a panel headed by Economic Affairs Secretary Arvind Mayaram has recommended a major liberalization of India's foreign direct investment (FDI) regime, including raising the FDI limit to 74% in multi-brand retail and allowing complete foreign ownership of telecom and aviation companies. The committee has also favored allowing 100% FDI in internet service providers (ISPs), private security agencies, satellite, ground handling operations, cable networks, direct-to-home services, mobile TV and teleports.
The Indian finance ministry has pitched for a complete re-look at the FDI policy framework as part of the current reforms drive to boost FDI flows that shrunk by 34% to $22 billion in 2012-13. At present, sectoral caps are at four levels 26%, 49%, 51% and 74%. The panel has recommended sectoral caps at three levels 49%, 74% and 100%.
Elsewhere in the region, South Korea's Kospi declined 0.7%. Taiwan's Taiex shed 0.1%. New Zealand's NZX50 shed 0.4%. Indonesia's JKSE dropped 0.7%. Singapore's STI shed 0.5%. Malaysia's KLSE edged down 0.1%
Powered by Capital Market - Live News
