Investment rationale for risk assets underpinned on speculation that the European Central Bank may ease further monetary policy soon. ECB Governing Council member and Bundesbank chief Jens Weidmann said earlier this week negative interest rates were an option to temper euro strength and buying loans and other assets from banks to support the bloc was not out of the question. Jens Weidmann comments surprised investors given the German central bank's long-held resistance to quantitative easing. ECB President Mario Draghi said on the same day that the bank stood ready to act if inflation slipped lower than it expected.
Risk sentiments received further blood from media reports that China will do more to support economic growth. It's reported that Chinese premier Li Keqiang is hinting that the country is ready to roll out targeted measures to help the economy for growth at a reasonable pace. Meanwhile, Li also expressed his confidence that the economy has great resilience and room China has the capability, confidence and condition to maintain the economic growth in a reasonable range.
Among regional bourses, Australian stock market finished last trading session of the week firmly higher, with financials, realty, materials and tech shares led rally. Australia's benchmark S&P/ASX200 and the broader All Ordinaries both finished 0.3% higher at 5366.90 and 5376.80, respectively. For the week, the benchmark S&P/ASX 200 Index rose 0.5%, while the broader All Ordinaries Index added 0.4%.
Australian lenders finished higher today. Commonwealth Bank of Australia added 0.8% to A$77.14, ANZ Banking Group 0.8% to A$32.82, Westpac Banking Corp 0.6% to A$34.43 and National Australia Bank 0.8% to A$35.32.
Shares of materials and resources companies climbed up, with index heavyweight BHP Billiton up 0.4% to A$36.14, while rival Rio Tinto added 0.1% to A$63.24 as it was revealed the $US 6 billion Oyu Tolgoi gold and copper project in Mongolia is likely to be delayed for another four months. Junior iron ore miner Fortescue Metals Group jumped 1.5% to A$5.34 as the spot price for iron ore, landed in China, gained $US1.60 per tonne to $US112.30 a tonne.
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GPT Group advanced 0.8% to A$3.63 after the company announced that its Wholesale Shopping Centre Fund (GWSCF) had acquired a 50% interest in Northland Shopping Centre for $496 million from the Canada Pension Plan Investment Board (CPPIB).
Australian dollar appreciated further against greenback and other major currencies on Friday, boosted by talk of China stimulus again, including Reserve Bank governor Glenn Stevens' comments on his upbeat outlook for the local economy in a speech in Hong Kong on Wednesday. China's Premier Li Keqiang was quoted by state media as saying the government would roll out targeted measures step-by-step to aid the economy. Around late afternoon, the Australian dollar was quoted at 0.9266 against US dollar, 0.6752 against the euro, 94.71 against the Japanese yen, 0.5573 against the British pound, 0.8228 against Swiss franc, 1.0205 against Canadian dollar, and 7.1886 against the HK dollar.
In New Zealand, equities on the New Zealand stocks advanced today, led by electricity shares as investors anticipate the National Party may win this year's election, boding well for the sector under threat of increased regulation and lower earnings should a Labour-Greens coalition gain power. The NZX 50 Index rose 16.363 points, or 0.319%, to 5142.896. Within the index, 23 stocks rose, 20 fell and six were unchanged.
The New Zealand dollar is heading for a 1.8% weekly gain against the greenback and near new post-float highs on a trade-weighted basis amid speculation China's government will take action to shore up a sluggish economy, adding to an upbeat outlook for local growth. The kiwi rose to 86.85 US cents from 85.32 cents at the New York close last Friday. It reached a two-and-a-half year high 86.96 US cents, and was up from 86.72 cents earlier and 86.25 cents yesterday. The trade-weighted index reached a new post-float high 81.03, trading at 80.94 from 80.43 yesterday. The TWI is heading for a 1.2% weekly gain from 80 at the New York close last Friday.
In Japan, Headline shares of the Japanese market rose, with the benchmark Nikkei-225 index up 0.5% from previous day to finish at 14696.03, on the back of upbeat Japanese inflation data and as fund managers shares add-on to boost their portfolios at the end of the fiscal year. For the week, the index added 3.3%, its best week since mid-February. It remains down 9.8% for the 2014 calendar year.
Fast Retailing ended up 1.9% and Daikin Industries added 1.7%. Shares of Internet service provider Yahoo Japan fell 6.4% after the firm said it will spend Y324 billion in June to acquire SoftBank unit eAccess.
Panasonic lost 2.3% after chief executive Kazuhiro Tsuga was cautious on the company's outlook at a Thursday strategy briefing, saying the company needs to finish the transition into a more profitable entity before taking on risky investments for growth.
Japan's consumer price index from the Ministry of Internal Affairs and Communications released on Friday, showing Japan's core consumer price index (excluding perishables but including energy) rose an as-expected 1.3% on year in February, the ninth straight y/y rise after +1.3% in January and December.
Separately, the Ministry of Internal Affairs and Communications stated today that Japan's seasonally adjusted average unemployment rate fell to 3.6% from 3.7% in January, the lowest level since July 2007, when it was also at 3.6%. The pace of job creation from a year earlier accelerated to +410,000 from +340,000 in January and it marked the 14th consecutive year-on-year increase. The number of unemployed fell 450000 in February, the 45th straight drop from year-earlier levels. Looking at the near-term change, the number of payroll jobs rose 130,000 (+0.2%) from the previous month to a seasonally adjusted 63.32 million in February, marking the first monthly rise in two months following -300,000 in January. The adjusted number of unemployed fell by 3.7% to 2.33 million, the fourth consecutive drop after falling 0.8% in January.
Preliminary retail sales data from the Ministry of Economy, Trade and Industry released on Friday, showing Japan's retail sales rose 3.6% on year in February, posting the seventh straight year-on-year rise due to strong automobile and electronics sales before the April sales tax hike. However, the pace of increase decelerated from +4.4% in January as sales of automobiles rose only 14.9% in January, slowing from +21.2% in January due to heavy snowfalls.
In China, Mainland China stock market extended losses for third day in row, as jitters about liquidity crunch in the market overshadowing speculation China will do more to support growth. The benchmark Shanghai Composite Index, which tracks both A and B shares, declined 0.24% from prior day closure to finish at 2041.71, while the Shenzhen Composite Index, which covers the smaller mainland shares, slid 2.2% to 1044.14.
Volatility ruled the Mainland market as local shares swung between gain and losses throughout the day. The risk sentiments boosted initially on speculation Beijing is ready to roll out targeted measures to help the economy also supported local shares. But, market drifted lower as tightening liquidity conditions in the market spooked investor sentiments.
Money market rates swung above the comfort level today on growing concerns in the market about liquidity availability after People's Bank of China soaked up a net 98 billion yuan from the market this week, almost doubling the 48 billion yuan drain last week and 40 billion yuan removal prior to last week.
SAIC Motor Corp., China's biggest automaker, jumped 8.4% to 13.88 yuan, its biggest gain since February 2011. The carmaker posted net income of 24.8 billion yuan, exceeding estimates for a 23.2 billion-yuan gain.
Bank of China rose 0.8%to 2.58 yuan after the lender said its 2013 net profit rose 12%, marginally higher than market expectations, on the back of higher interest and fee-and-commission income. The bank's net profit was 156.91 billion yuan (US$25.7 billion), up from 139.43 billion yuan a year earlier. Bank of China, the fourth-largest lender in the country by assets, said net interest income rose 10.4% to 283.59 billion yuan and noninterest income from credit cards, wealth management product sales and international trade related settlement and clearing rose 13.5% to 123.92 billion yuan. Nonperforming loans of the bank stood at 73.27 billion yuan as of the end of 2013, up from 65.45 billion yuan a year earlier.
CHINA Eastern Airlines Corp dipped 0.8% to 2.46 yuan after the airline carrier stated its 2013 net profit fell 25% as intensifying competition weighed on its profitability. The carrier, which operates out of Shanghai, said Thursday its net profit for 2013 was 2.38 billion yuan (US$387 million), according to Chinese accounting standards, down from a net profit of 3.17 billion yuan a year earlier. Its revenue rose 1.9% to 88.01 billion yuan from 86.41 billion yuan.
ZTE Corp, the world's seventh-biggest smartphone maker, sees sales of 4G smartphones accounting for at least 40% of its global smartphone shipments in 2014, a company executive said on Thursday. ZTE aims to ship 60 million smartphones in 2014, up 20 million units from last year, ZTE global head of mobile devices Zeng Xuezhong told a press conference in Hong Kong. ZTE returned to net profit last year after making a loss in 2012, it said Wednesday. ZTE Corp shares dipped 0.9% to 12.81 yuan today.
In Hong Kong, equities on the HK market surged, sending the benchmark Hang Seng Index higher by 231.08 points, or 1.06%, to finish at 22065.53. The benchmark index opened 96 points higher and soared more than 300 points at one stage.
Among the HK 50 blue chips, 41 rose and 8 fell, with one stock remaining steady. China Resources Enterprise advanced 7.4% to HK$21.90, contributing 6-points gains to the benchmark Index and becoming the best-performing blue chip. CITIC Pacific declined 4.8% to HK$13.62, contributing 3-points losses to the benchmark Index and becoming the worst-performing blue chip.
Brilliance China Automobile Holdings shares gained 7.1% to HK$11.16 after reporting a 47% increase in full-year profit to 3.37 billion yuan.
Guangzhou Automobile Group Co. (2238), a Toyota Motor Corp. partner, rose 4.8% to HK$8.30, after Citi Research lifted its target price for the automobile company to HK$8.9 from HK$8.2 reflecting the improved outlook, and maintained its neutral call.
China Taiping Insurance Holdings Co. (966) surged 14% to HK$13.76 after the full-year profit beat analyst estimates. China Taiping Insurance said its net profit attributable to the shareholders increased 16.3% to HK$1,530 million for the year ended 31 December 2013, representing HK$0.775 per share. Gross premiums written were up by 41.7% to HK$85464 million. Within this, life insurance gross premium was HK$64,908 million, increasing by 44.9%; PRC property casualty insurance gross premium was HK$13,519 million, increasing by 41.6%. Total assets were at HK$315,016 million, increasing by 25.1%.
In India, Indian stock market closed slight higher in choppy trade, with the market sentiment boosted by data showing that foreign institutional investors (FIIs) resorted to heavy buying of Indian stocks on Thursday, 27 March 2014.
Foreign institutional investors (FIIs) bought shares worth a net Rs 2269.20 crore from the secondary equity markets on Thursday, 27 March 2014, as per the data from the Securities & Exchange Board of India (Sebi).
The S&P BSE Sensex was up 125.60 points or 0.57% to 22,339.97, a record closing high. Among the 30-share Sensex pack, 17 stocks gained and rest of them declined. All the BSE sectoral indices were in the positive zone with the power index shooting up over 3% and the banking, realty and metal up over 1%. The oil and gas, FMCG consumer durables, technology, IT and healthcare indices were up about 1%.
The INR appreciated to 59.90 per dollar at one point of time, its best level in eight months. The currency has risen 2.8% this month, the most among major Asian currencies.
The Reserve Bank of India (RBI) on Thursday, 27 March 2014, relaxed some of the forex hedging rules for importers and exporters, to allow greater operational flexibility. Importers and exporters can cancel up to 75% of their hedged forex exposures, as against 25% earlier, the RBI said. In addition, the profit or loss from these cancellations will be borne by the importer/exporter instead of passing it on to the customers as was mandated earlier.
India's external debt to GDP ratio stood at 23.3% at end-December 2013 vis-vis 21.8% at end-March 2013, the Ministry of Finance said in a statement today, 28 March 2014. At end-December 2013, India's total external debt stock stood at $426 billion, recording an increase of $21.1 billion i.e. an increase of 5.2% over the level at end-March 2013. The rise in external debt during the period was due to long-term debt particularly NRI deposits. A sharp increase in NRI deposits reflected the impact of fresh FCNR (B) deposits mobilised under the swap scheme during September-November 2013, the Ministry of Finance said. The long-term debt stood at $333.3 billion at end-December 2013, showing an increase of 8.1% over the end-March 2013 level, while short-term debt decreased by 4.1% to $92.7 billion. Short-term debt accounted for 21.8% of India's total external debt, while the remaining (78.2%) was long-term debt. Component-wise, commercial borrowings accounted for 31.5% of the total external debt, followed by NRI deposits at 23.2% and multilateral debt at 12.3%. Government (Sovereign) external debt stood at $76.4 billion, (17.9% of total external debt) at end-December 2013 as against $81.7 billion (20.2%) at end-March 2013. The share of US dollar denominated debt was the highest in external debt stock and stood at 63.6% at end-December 2013, followed by debt denominated in Indian rupee at 19.4%, SDR at 7.1%, Japanese yen at 5% and Euro at 3.1%.
Elsewhere in the Asia Pacific region, Taiwan's Taiex index fell 0.06%. South Korea's KOSPI index was up 0.15%. Singapore's Straits Times index added 0.3%. Indonesia's Jakarta Composite Index rose 1%. New Zealand's NZX50 rose 0.3%. Malaysia's KLSE Composite added 0.2%.
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