Headline bourses of the Asia Pacific share market closed mostly higher on Thursday, July 18, 2013, as appetite for risk assets underpinned after U.S. Federal Reserve chairman Ben Bernanke's suggested stimulus policies may continue for longer than expected.
Ben Bernanke, chairman of the US Federal Reserve, reiterated his dovish stance towards easy money in his semi-annual monetary policy report to the House Financial Services Committee on Wednesday. The Fed chairman highlighted that the risks to economic growth persist as the unemployment levels are still high and declining only gradually, and inflation too is running below the committee's longer-run objective. Therefore, a highly accommodative monetary policy will remain appropriate for the foreseeable future. Though the conditions in labor market are improving, the jobs situation is far from satisfactory, as the unemployment rate remains well above its longer-run normal level, and rates of underemployment and long-term unemployment are still much too high, he said.
He further said though risks to the economy have diminished since the fall, the risks remain that tight federal fiscal policy will restrain economic growth over the next few quarters by more than expected currently. The economy remains vulnerable to unanticipated shocks, including the possibility that global economic growth may be slower than currently anticipated, he added.
The Fed chairman appeared dovish regarding the timing of tapering the on-going bond buying programme (quantitative easing or QE) as well. 'The committee's decisions regarding the asset purchase programme (and the overall stance of monetary policy) depend on our assessment of the economic outlook and of the cumulative progress toward our objectives. I emphasize that, because our asset purchases depend on economic and financial developments, they are by no means on a preset course,' said Bernanke. This statement comes after the hawkish statement he made in June. Fed committee in June policy meet had indicated that if the subsequent data continued to confirm the pattern of ongoing economic improvement and normalizing inflation, they would start to reduce the pace of purchases in measured steps through the first half of next year, ending them around midyear.
The Tokyo market rallied today, thanks to dollar strengthening back above 100 yen and the Federal Reserve chief Ben Bernanke assurance the pace of its bond purchases would stay in place till US economic health revive completely. The benchmark Nikkei 225 index added 1.32% to 14,808.50, while the Topix index was up 0.72% to 1,222.01. The market is now focused on a meeting of the Group of 20 finance ministers and central bank governors in Moscow on Thursday and Friday. Also sights are national polls Sunday that will elect half of Japan's 242-member upper chamber of parliament, which Prime Minister Shinzo Abe's ruling party is expected to win.
Softbank Corp rose 4.03% to 6450 yen on news the Japanese telecommunications firm will form a 50-50 joint venture with Bloom Energy to deploy the U.S.-based firm's energy servers.
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Toshiba Corp. jumped 2.3% to 493 yen after the Nikkei newspaper reported the company planned to invest in capacity expansion for smartphone chips for the first time in about two years.
Australian stock market advanced as investors chased for high yielding stocks after the Federal Reserve boss Ben Bernanke assurance any unwinding of the central bank's stimulus program wasn't a done deal. The benchmark S&P/ASX200 rose 0.23% to 4993.40, while the broader All Ordinaries climbed up 0.21% at 4976.90.
Surfwear maker Billabong International rallied 8.96% to A$0.37 on top of Wednesday's 34% surge, following news it has secured a private-equity loan and that it was replacing the company's chief executive.
Shares of Woodside Petroleum closed flat at A$37.46 after recouping initial losses. The energy giant announced today a slide in revenue in the second quarter of the year due to a drop in oil prices and lower production. The company also expects its half year earnings to include up to $US140 million ($152.26 million) in write-down, mostly due to scrapped projects. Woodside's revenue in the June quarter of A$1.47 billion was down 6% from the same period last year, mostly due to the impact of maintenance work on its production ship in the Vincent oil field off the coast of Western Australia. Production was also lower due to planned maintenance at the company's Pluto liquefied natural gas (LNG) plant in WA and the North West Shelf project. An unplanned shutdown at the Pluto plant also hit production, the company said in its quarterly production report.
Woolworth's shares fell 1.1% to A$33.32 after the group said it would book an operating loss at its home improvement business. The division will post a loss of A$139 million in the year to June 30, 2013, compared with an earlier estimate of an $81 million loss. Elsewhere, Woolworths adjusted its overall annual earnings guidance to growth of between 5% and 6%, narrowing an earlier range of 4%-6%.
Australian economic conditions remained unchanged in May following small gains in the previous four months, a report from the Conference Board revealed Thursday. The leading indicator index held steady at 123.2 in May following a 0.3 percent increase in April and a 0.2 percent rise in March. Despite no change in May, the indicator has been increasing at a modest pace since the beginning of 2013 and its six-month growth has picked up compared to the second half of last year, the Board said. The coincident index, a measure of current economic activity, also remained unchanged in May. The six-month growth rate of the index, however, accelerated to 1.1 percent compared to the preceding six months. The improvement in the six-month growth rate of both indicators suggests that the current rate of economic expansion is likely to continue, and could even pick up slightly in the coming months, the Conference Board said
Chinese market declined for second day in row on mounting concern over domestic economic slowdown. The benchmark Shanghai Composite index dropped 1.05% to 2023.40. Shanghai market trapped under heavy selling pressure since opening lead by cyclical shares after Premier signals caution over policy easing and the International Monetary Fund's alarm over slower growth in China.
Premier Li Keqiang said in State television CCTV on Tuesday that government won't rush into changing his policy of pushing reform as long as growth stays within the official comfort zone, but he has also signaled he is aware the government needs to be vigilant about a sharper slowdown.
Li's remarks, a restatement of his view that reform has to take precedence over growth figures to put the economy on a more sustainable footing and wean it off a reliance on exports and investment, come amid a slowdown in China that has raised questions over government plans. Neither should we change policy orientation due to temporary economic fluctuations, which may affect the hard-won restructuring opportunity, nor should we lack vigilance and preparations when the economy might slide below the reasonable range, Li's quoted.
The International Monetary Fund said in its latest report that China needs another round of "decisive measures" to make sure it continues its successful economic growth as its margins of safety are falling amid growing domestic problems. The world's second-largest economy has been underpinned by a mix of investment, credit and fiscal stimulus, but such a pattern of growth is unsustainable, the fund said on Wednesday in a report on its annual review of China's economy. "To secure more balanced and sustainable growth, a package of reforms is needed to contain the growing risks while transitioning the economy to a more consumer-based, inclusive, and environmentally friendly growth path," the report said. "While China still has significant buffers to weather shocks, the margins of safety are diminishing."
China's June new home prices rose in all but one city, led by the biggest metropolitan centers, underscoring Premier Li Keqiang's struggle to rein in speculative investment even as the economy cools.
Shares of property developers sank steeply in Shanghai of tightening concern on the sector after home prices climbed in 69 of the 70 cities last month. Prices climbed in 69 of the 70 cities the government tracked last month from a year earlier, the National Bureau of Statistics said in a statement today, matching the data in May. The southern business city of Guangzhou posted the biggest increase with a 16 percent advance from a year earlier. Prices climbed 13 percent in Beijing and 12 percent in Shanghai. All three cities had their biggest gains since the government changed its methodology for the data in January 2011.
China Vanke Co, the nation's biggest listed property developer, lost 2.6% to 10.12 yuan. Poly Real Estate Group Co, the second largest, sank 2.1% to 10.78 yuan. Gemdale Corp, the fourth biggest, retreated 3% to 6.91 yuan.
Hong Kong's stock market declined for the first time in four days. The benchmark Hang Seng Index finished 0.1% down at 21345.22 after rising as much as 0.3 percent. Decline in city bourses came as concern over China's economy slowdown outweighed comments by Federal Reserve Chairman Ben S. Bernanke that the U.S. is not on a preset course to taper stimulus.
Kong's seasonally adjusted unemployment rate decreased from 3.4% in March - May 2013 to 3.3% in April - June 2013. The underemployment rate remained unchanged at 1.6% in the two periods, data from the Census and Statistics Department showed.
The Hong Kong Monetary Authority announced today composite interest rate, which is a measure of the average cost of funds of banks, increased by 6 basis points to 0.32% at the end of June 2013, from 0.26% at the end of May 2013. The rise in the composite interest rate reflected a moderate increase in the weighted funding cost for deposits in June, while HIBORs were steady during the month.
Indian stock market closed higher. The barometer index, BSE Sensex, scaled its highest level in almost seven weeks above the psychological 20,000 level, after having alternately moved above and below that mark in intraday trade. The CNX Nifty also hit almost seven week high above the psychological 6,000 level, after having alternately moved above and below that mark during the day. The Sensex was provisionally up 202.56 points or 1.02%, up 195.09 points from the day's low and off 25.61 points from the day's high.
Elsewhere in Asia, Indonesia's Jakarta Composite rose 1%, Malaysia's KLSE Composite added 0.16% and Singapore's Straits Times rose 0.31%. South Korea's Seoul Composite fell 0.64% and Taiwan's Taiex closed 0.78% down. New Zealand's NZX declined 0.34%.
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