Asian shares took a weak lead after major equity markets in the United States and around Europe declined on Friday night. However, the regional bourses managed to finish edge higher after flirting with gains and losses during the session. The region market gain largely underpinned on optimism about the health of the world's second-largest economy after China approved three private banks as part of an economic reform drive and industrial profits in the mainland grew at a stronger pace in the first half of the year.
The National Bureau of Statistics (NBS) said that Chinese industrial companies profit jumped 17.9% year earlier to 588 billion yuan in June, the fastest pace since September. The gain outpaced an 8.9% increase in May. For the first half of the year, profit at all Chinese industrial companies with annual sales of more than 20 million yuan ($3.2 million) was up 11.4% to 2.86 trillion yuan.
Sentiment has turned in favor of health of the world's second-largest economy after China cut reserve requirements for some banks, accelerated infrastructure spending and loosened property curbs as Premier Li Keqiang seeks to keep growth from falling below his 7.5% target.
Among Asian bourses
Nikkei surges to fresh 6-month highs
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Japan share market advanced to a fresh six-month high, on the back of yen depreciation against major currency rival and as Japanese earnings season gets into full swing. The benchmark Nikkei 225 index added 0.46%, or 71.53 points, to 15,529.40, its best finish since late January, while the Topix index of all first-section issues rose 0.37%, or 4.72 points, to 1,286.07.
More than 1,300 of the 1,809 companies on the Topix are scheduled to report earnings in the next two weeks. Of the 43 such businesses that posted earnings since July 1, 53% beat market expert projections for profit.
Resona Holdings Inc gained 5.4% to 609 yen, after the lender said it would repay public funds by buying back preferred shares. The lender said it will buy back and cancel 235 billion yen of preferred shares as part of a plan to repay a government bailout in 2003.
NTT Docomo Inc climbed 1.6% to 1,844.5 yen as the wireless operator's shares were upgraded by brokerage houses after reporting beteer than expected results last week. Nomura increased its investment rating on the stock to buy from neutral, and boosted its share-price target to 2,080 yen from 1,650 yen. HSBC Holdings Plc also upgraded the shares to overweight from neutral, while lifting its target price to 2,460 yen from 1,720 yen.
Hitachi Chemical Co jumped 9.5% to 1,860 yen after quarterly profit beat estimates and the company announced job cuts. The company said that its first-quarter profit was 6.5 billion yen. Hitachi Chemical also said it will cut about 1,000 jobs through buyouts, and raised its half-year net-income forecast to 12 billion yen from 11 billion yen.
Tokyo Electron sank 2.7% to 6,613 yen, amid concern its merger with Applied Materials Inc. is stalling. A merger filing for the chip-equipment maker and Applied Materials to China's Ministry of Commerce was withdrawn, according to an article by DealReporter. The merger received strong opposition from China's Ministry of Industry and Information Technology, the same publication said last week.
Australia stocks fall on profit taking
Australian stock market declined for second day in row, as investors continued withdrawing some profit off the table after headline indices surged to six year highs last week and on caution before company reporting season. The benchmark S&P/ASX 200 Index declined 6.10 points, or 0.11% to 5577.40, while the broader All Ordinaries Index shed 4.30 points, or 0.08%, to 5569.90.
The financial sector was down, with three of big 4 banks being the biggest loser. Commonwealth Bank of Australia fell 0.3% to A$82, Westpac Banking Corporation lost 0.3% to A$34.18, and ANZ Banking Group shed 0.7% to A$33.52. National Australia Bank lifted 0.3% to A$34.69 as it sold a parcel of distressed loans from its challenged United Kingdom business worth A$1.13 billion.
Shares of material & resources companies advanced, with resource giant BHP Billiton leading rally, higher by 0.3% to A$39.10 after miner said it is set to undertake a heap leaching trial at its Olympic Dam project in South Australia. Plans in 2012 to spend $US30 billion (A$31.9 billion) expanding the mine were deferred. Main rival Rio Tinto gained 0.4% to A$65.36 and Junior iron ore miner Fortescue Metals Group rose 3.7% to A$4.75, as the spot price for iron ore, delivered in China, added 0.7% to $US94.30 a tonne.
Engineering contract services provider Leighton Holdings dropped 2.4% to A$22.10 after it showed a 20% drop in first-half net profit. However the company maintained its full-year earnings guidance.
Mining services provider Boart Longyear rose 2.2% to A$0.23 despite the company warning it risks breaching its financial covenants if market conditions continue to deteriorate more than expected.
Healthscope (HSO) made its market debut today and managed to rise by 5.2% by the close of trade despite a slow start. HSO has a market capitalisation (size on the market) of A$3.7 billion.
Shanghai Composite rises to 10-month high
Mainland China share market advanced highest level in 10 month today. Investor appetite for risk assets improved on the back of better than expected China July flash PMI, Chinese industrial companies profit for June and speculation government would roll out more stimulus to bolster economic growth. The benchmark Shanghai Composite advanced 51.33 points, or 2.41%, to 2177.95, the highest closing level since 11 September 2013. Trading turnover increased to 180.41 billion yuan from Friday's 111.41 billion yuan.
The National Bureau of Statistics (NBS) said that Chinese industrial companies profit jumped 17.9% year earlier to 588 billion yuan in June, the fastest pace since September. The gain outpaced an 8.9% increase in May. For the first half of the year, profit at all Chinese industrial companies with annual sales of more than 20 million yuan ($3.2 million) was up 11.4% to 2.86 trillion yuan.
Financial companies jumped the most in the mainland today on media report that Bank of Communications Co. applied for a mixed-ownership trial and Shenyin Wanguo parent agreed to an acquisition that would create China's fifth-biggest brokerage by assets.
Bank of Communications Co jumped 9.9% in Shanghai, after announcing plans to sell stakes to private investors under a government reform aimed at letting private capital play a bigger role in the economy. The application comes just over a week after the government named six State-owned enterprises (SOEs) that it wanted to revamp operations to attract investment.
Hang Seng climbs to fresh three-year high
Hong Kong share market advanced for a fifth straight session today, closing at fresh three years high, after reports said the so-called through train scheme, which would allow direct stock trading between Hong Kong and Shanghai, could be launched in mid-October. The benchmark Hang Seng Index climbed up 212.62 points, or 0.88%, to 24428.63, the highest close since April, 2011. Turnover increased to HK$85.46 billion from yesterday's HK$76.73 billion.
The National Business Daily reported earlier today that the "Shanghai-Hong Kong Stock Connect" scheme will be formally launched at 13 October. In response to the media report, the bourse said Hong Kong stock exchange has been intensively preparing for the stock connect, but it does not have an explicit start date yet.
Hong Kong Exchanges & Clearing the city's sole exchange operator, jumped 3.4% to HK$169, after the starting date report of the equity link with Shanghai was reported. Goldman Sachs Group Inc. raised its target price on the stock to HK$188 from HK$167.
Mainland banks posted solid gains, with Bank of Communications soaring 6.2% to HK$5.81 after reports the lender wants to sell more stakes to private investors as part of China's economic restructuring. China Minsheng Banking Corp. rose 3.6% to HK$7.76 and Agricultural Bank of China added 3% to HK$3.80.
Chinese Internet giant Tencent Holdings climbed 3.2% to HK$128.90, after China's top banking regulator approved the establishment of three private banks, including WeBank, in which Tencent has a 30% stake.
Share prices of brokerages rose across the board. First Shanghai (00227) shot up 20% to HK$1.31. Guotain Junan (01788) ascended 7.8% to HK$5.65. Citic Sec (06030) put on 3.7% to HK$19.66. Haitong Sec (06881) put on 5% to HK$13.7. CGS (06881) shot up 8.9% to HK$6.13. Shenyin Wanguo HK surged 18% to HK$4.34 after parent Shenyin & Wanguo Securities agreed to acquire Hong Yuan Securities for 39.6 billion yuan in stock.
Sensex, Nifty settles at one week low
Indian stock market closed edged lower for the second day in a row after Friday's uptick in crude oil prices. Yet, stocks found support at lower level as crude oil prices eased today, 28 July 2014, after Friday's gains. The barometer index, the S&P BSE Sensex, closed below 26,000 mark after alternately moving above and below that level in intraday trade.
The S&P BSE Sensex closed down 135.52 points or 0.52% to 25,991.23, its lowest closing level since 21 July 2014. The CNX Nifty was down 41.75 points or 0.54% to 7,748.70, its lowest level since 21 July 2014.
Hindustan Unilever (HUL) gained on decent Q1 result. Realty stocks declined. Index heavyweight Reliance Industries (RIL) edged lower. Bank of Baroda rose on good Q1 results. Cement stocks dropped. ACC declined as the stock turned ex-dividend today, 28 July 2014, for dividend of Rs 15 per share for the year ending 31 December 2014 (FY 2014).
Reliance Power and Jaiprakash Power Ventures gained after Reliance Power signed memorandum of understanding to acquire the entire hydroelectric power portfolio of Jaiprakash Power Ventures. Cairn India rose after the company in a clarification issued with regard to news item titled "Cairn tanks on $1.25-b Loan to Sesa arm" said that the company has complied with the applicable regulatory requirements in respect of the said transaction. Metal and mining stocks declined. Most IT stocks gained.
Elsewhere in the Asia Pacific region-- New Zealand's NZX50 fell 0.14% to 5187.14. South Korea's KOSPI index added 0.74% to 2048.81. Taiwan's Taiex index sank 0.2% to 9420.18. Shares market of Indonesia, Singapore and Malaysia were closed for public holidays.
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