Asian stocks fell as a a sign for China and Japan grow is slowing down due to concern that Europe’s debt crisis is worsening.
The MSCI Asia Pacific Index fell 2.3 percent to 112.45 this week after Moody’s Investors Service and Fitch Ratings warned that Europe faces lower credit ratings as it struggles to contain its debt crisis. Italy sold 3 billion euros of five-year notes on Dec. 14 with a yield of 6.47, the most since May 1997.
The Shanghai Composite Index (SHCOMP) sank 3.9 percent, extending losses for a sixth week.
Japan’s Nikkei 225 Stock Average (NKY) decreased 1.6 percent this week after the Bank of Japan’s Tankan survey showed sentiment among the nation’s largest manufacturers deteriorated more than economists expected. South Korea’s Kospi Index dropped 1.9 percent. Australia’s S&P/ASX 200 slid 1 percent. (Bloomberg)
Asian stocks (MXAP) rose as the euro and oil advanced after Italian Prime Minister Mario Monti introduced a proposal to cut his nation’s debt. The MSCI Asia Pacific Index increased 0.2 percent as of 1:11 p.m. in Tokyo, adding to the 8 percent surge last week. Standard & Poor’s 500 Index futures gained 0.8 percent. The euro added 0.2 percent to $1.3416, while the yen fell against most of its 16 major counterparts. Oil climbed for a second day to $101.48 a barrel. The Shanghai Stock Exchange Composite Index retreated 0.6 percent.
S&P 500 futures expiring in December climbed to 1,252.90. Treasuries fell, pushing the yield on the 10-year note up three basis points to 2.07 percent. Service industries in the U.S. probably expanded in November at the fastest pace in six months, a sign the economy is accelerating in the final months of 2011.
Uranium Exports
The Shanghai Composite (SHCOMP) has fallen for the past four weeks and tumbled 16 percent this year. A purchasing managers’ index of non-manufacturing industries for November fell to 49.7 from 57.7 the previous month, the China Federation of Logistics and Purchasing said on Dec. 3. A reading above 50 indicates expansion.
About the same number of stocks rose and fell in the MSCI Asia Pacific Index. Japan’s Nikkei 225 Stock Average climbed 0.6 percent and Australia’s S&P/ASX 200 jumped 1.1 percent.
Energy Resources of Australia Ltd., a uranium producer controlled by Rio Tinto Group, rallied 11 percent for the biggest advance in the S&P/ASX 200. (AS51) Deep Yellow Ltd. (DYL), which explores for uranium, jumped 6.9 percent. Australia, holder of the world’s biggest uranium reserves, cleared a political hurdle to supplying India with the nuclear fuel after the governing Labor Party voted yesterday to end an export ban.
Asian Growth
The euro extended its first weekly climb against the dollar in more than a month. A proposal to channel European Central Bank loans through the International Monetary Fund may deliver as much as 200 billion euros ($268 billion) to fight the crisis.
Oil for January delivery rose as much as 0.8 percent to $101.73 a barrel. Iran said oil will breach $250 a barrel if nations threaten to ban its purchases. Iran pumped 5 percent of the world’s oil last year.
The cost of insuring Asia-Pacific corporate and sovereign bonds against non-payment declined. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 7 basis points to 195 basis points, Credit Agricole SA prices show. The benchmark is set for its lowest close since Nov. 8. (Bloomberg)
Asian stocks and South Korea’s won rose for the first time in three days, and copper headed for the largest increase in a week after Chinese inflation eased and a pledge to resign by Italy’s prime minister eased concern Europe’s debt crisis will worsen.
The MSCI Asia Pacific Index rallied 1.4 percent as of 11:40 a.m. in Tokyo. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong jumped 2.6 percent. Standard & Poor’s 500 Index futures slipped less than 0.1 percent. The won strengthened 0.4 percent after South Korea’s unemployment rate unexpectedly fell. The euro was little changed at $1.3835. Copper rose 1.7 percent, while oil advanced for a sixth day. The cost of insuring Asia-Pacific debt from default decreased.
China’s consumer price inflation cooled to 5.5 percent in October from 6.1 percent the previous month, while producer prices fell by more than economists had forecast, signaling the government may be able to reduce measures to cool its economy. Italy’s Silvio Berlusconi agreed to step down after the approval of an austerity plan in a vote next week, following a surge in the nation’s bond yields to a euro-era record.
“Now that we see inflation easing, it suggests that Asian central banks can switch to a more pro-growth strategy,” said John Woods, Hong Kong-based chief Asian strategist at Citigroup Inc.’s private bank. “The markets will take the near-term resolution of political uncertainties in Europe positively,”
About seven shares advanced for every two that fell on MSCI’s Asian index, helping the gauge rebound from a two-day 0.9 percent loss. Japan’s Nikkei 225 Stock Average added 0.9 percent, Australia’s S&P/ASX 200 Index climbed 1.4 percent and South Korea’s Kospi Index gained 0.3 percent.
Nomura, Olympus
Nomura Holdings Inc. rose 7.4 percent in Tokyo, rebounding from yesterday’s 15 percent plunge, after Japan’s biggest securities firm said it is unaware of any involvement in Olympus Corp.’s concealment of losses. Olympus sank 20 percent, extending yesterday’s 29 percent plunge.
Industrial & Commercial Bank of China (1398) Ltd., the world’s largest lender by market value, gained 3 percent in Hong Kong, pacing an advance among Chinese companies. The decline in consumer prices matched analysts’ forecasts and was the slowest since May. The producer price index was expected to decline to 5.8 percent, according to economists surveyed by Bloomberg News.
“The trend is in favor of China taking measures to improve economic development,” Peter So, co-head of research at CCB International Securities Ltd., said in a Bloomberg Television interview in Hong Kong.
Copper, Oil
Copper for three-month delivery rose as much as 2.1 percent to $7,959.75 a metric ton on the London Metals Exchange, rebounding from a three-day, 1.3 percent decrease. Nickel added 2 percent and tin climbed 0.8 percent.
December-delivery oil rose 0.3 percent to $97.06 a barrel on the New York Mercantile Exchange. Prices climbed 1.3 percent yesterday to the highest settlement since July 28. U.S. gasoline supplies dropped 1.49 million barrels last week, the American Petroleum Institute said. An Energy Department report today may show they rose 1 million barrels, according to a Bloomberg News survey.
South Korea’s won strengthened as much as 0.9 percent to 1,111.38 per dollar. The unemployment rate fell to a three-year low of 3.1 percent in October from 3.2 percent the previous month, Statistics Korea said today. The median estimate in a Bloomberg News survey of 11 economists was for an increase to 3.3 percent. Taiwan’s dollar rose 0.2 percent to NT$30.055, and Malaysia’s ringgit gained 0.5 percent to 3.1120.
Berlusconi’s Pledge
The 17-nation euro traded at 107.40 yen from 107.52 yesterday and held onto a 0.4 percent gain versus the dollar. Berlusconi’s pledge to resign came after he failed to muster an absolute majority on a routine parliamentary ballot after key lawmakers defected from his party this week.
The yield on Italy’s benchmark 10-year bond jumped 11 basis points yesterday to 6.77 percent before Berlusconi’s announcement, the most since the euro’s introduction in 1999 and near the 7 percent level that drove Greece, Ireland and Portugal to seek international bailouts. The extra premium investors demand to hold the debt instead of German bunds closed at a euro-era record 497 basis points.
The cost of protecting Asia-Pacific corporate and sovereign bonds from default decreased, with the Markit iTraxx Japan index falling three basis points to 175 basis points, Citigroup Inc. prices show. The gauge is set for its biggest one-day drop since Nov. 4, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
Treasury 10-year yields were little changed at 2.07 percent, following a four-basis-point increase yesterday. The U.S. is scheduled to sell $24 billion of 10-year securities today and $16 billion of 30-year bonds tomorrow, after an auction of three-year notes yesterday attracted the highest demand on record. (Bloomberg)
Asian stocks fell, South Korea’s won weakened and the cost of insuring bonds against default rose as data added to evidence that regional economies are slowing as Europe’s debt crisis curbs exports. The Australian dollar slid after the central bank cut rates for the first time in 31 months.
The MSCI Asia Pacific Index slipped 1.2 percent at 12:33 p.m. in Tokyo. Standard & Poor’s 500 Index futures lost 0.7 percent. The euro weakened 0.1 percent to $1.3839 and the yen was little changed, after a 3.1 percent slump yesterday. The won fell 0.4 percent and Australia’s dollar dropped 0.5 percent. The Markit iTraxx Australia index of debt-default risk was set for the biggest gain in four weeks. Oil retreated for a third day.
China’s manufacturing, South Korean exports and Taiwan’s economy are all expanding at the slowest pace since 2009, based on data released since late yesterday. Greek Prime Minister George Papandreou pledged to hold a referendum on the European Union’s latest bailout plan for the nation, days before Group of 20 leaders gather Nov. 3-4 for a summit in Cannes, France, to discuss the debt crisis.
“Markets are taking a second look and they see a lot of gaps” in Europe’s debt accord, Hans Goetti, chief investment officer for Asia at Finaport Investment Intelligence, said in a Bloomberg Television interview from Singapore. “The fundamentals point in the direction of a recession in the U.S. and Europe and in recessionary times, you do have earnings downgrades. The market has some downside going into 2012.”
Two shares declined for every one that gained on MSCI’s Asia Pacific Index. Japan’s Nikkei 225 Stock Average decreased 1 percent, Australia’s S&P/ASX 200 Index declined 1.1 percent and Hong Kong’s Hang Seng Index lost 1.6 percent.
Panasonic, Harvey Norman
Among the 379 companies that have released quarterly results on the MSCI regional index, 201 have missed analysts’ profit estimates, compared with 118 that beat forecasts, data compiled by Bloomberg show.
Panasonic Corp. sank 4.3 percent after the maker of Viera televisions forecast its biggest annual loss in 10 years. Harvey Norman Holdings Ltd. (HVN) dropped 5.1 percent in Sydney after Australia’s largest electronics retailer estimated pretax profit before slumped 19 percent in the last quarter.
Futures signal the S&P 500 may extend yesterday’s 2.5 percent retreat. The gauge still rallied 11 percent in October, the biggest monthly increase since December 1991. Data today may show the Institute for Supply Management’s factory index rose to 52 this month from 51.6 in September, according to the median forecast of 85 economists surveyed by Bloomberg News.
Treasury 10-year yields climbed three basis points to 2.14 percent, after sliding 28 basis points in the previous two days.
Europe’s Economy
The euro extended yesterday’s 2.1 percent loss against the dollar amid speculation a report tomorrow will confirm the region’s manufacturing shrank for a third month. That may add pressure on the European Central Bank to consider cutting interest rates as early as its next policy meeting on Nov. 3.
Greece’s Papandreou also told lawmakers he’ll seek a vote of confidence in parliament. The referendum on the EU accord, which called for a 50 percent writedown on Greek debt as well as an expansion of the region’s bailout fund, will likely be held after details are wound up, Papandreou said.
“Investors are looking at the details of the European deal and they’re not satisfied,” Russ Koesterich, the San Francisco- based global chief investment strategist for the IShares unit of BlackRock Inc., said in a Bloomberg Television interview. “The problem is the same one we’ve been facing since April 2010: The deal tends to piecemeal, it tends to be complex and it doesn’t provide the finality that investors have been looking for.”
Won, Taiwan Dollar
The won and the Taiwan dollar retreated from six-week highs. South Korea said its exports increased 9.3 percent in October from a year earlier following an 18.8 percent gain in September. The Taiwan dollar depreciated 0.4 percent to NT$30.035 after the statistics bureau said yesterday gross domestic product grew 3.37 percent in the three months through September, the smallest increase in two years.
The China Federation of Logistics and Purchasing said its Purchasing Managers’ Index fell to 50.4 in October from 51.2 the previous month. China is Asia’s biggest economy and the No. 1 export destination for South Korea and Taiwan.
The yen declined as much as 1.1 percent to 78.99 per dollar before trading at 78.15. Japanese Finance Minister Jun Azumi said in Tokyo he will “continue to intervene until I am satisfied,” after yen sales yesterday that Credit Suisse Group AG analysts estimated may have exceeded $50 billion.
The Australian dollar weakened to $1.0502. The central bank lowered interest rates by a quarter of a percentage point to 4.5 percent and said inflation is now likely to be close to target.
Bond Risk, Oil
The cost of protecting Asia-Pacific corporate and sovereign bonds from default rose, with the Markit iTraxx Australia index increasing 13 basis points to 173 basis points, according to Westpac Banking Corp. The gauge is set for its biggest increase since Oct. 4, according to data provider CMA, after rising 10 basis points yesterday by New York close of trading.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan jumped 10 basis points to 189.5 basis points, BNP Paribas SA prices show, while the Markit iTraxx Japan index rose eight basis points to 169.5, according to Deutsche Securities Inc.
Crude for December delivery slid 0.7 percent to $92.53 a barrel on the New York Mercantile Exchange. The contract extended its decline after the PMI report from China, the world’s second-biggest oil user. Futures rose 18 percent in October, the biggest increase since May 2009.
Copper in London dropped as much as 1.4 percent to $7,880 a metric ton, falling for the second day, as base metals declined on concern the deepening European debt crisis will damp demand for raw materials. Zinc slumped 2.4 percent to $1,951.25 a ton.
Copper futures on the London Metal Exchange had open interest, or contracts outstanding, of 502,214 as of Oct. 24, the highest level since Dec. 16, 2008, exchange data on Bloomberg showed. The contract gained almost 14 percent last month, the most since December last year. (Bloomberg)
Asian stocks rose, sending the regional benchmark index toward its biggest weekly gain in more than two years, as the fastest U.S. economic growth in a year and Europe’s debt deal boosted the outlook for exporters.
Honda Motor Co., Japan’s second-largest carmaker by market value that gets 83 percent of its revenue abroad, rose 4.6 percent after U.S. household purchased beast estimates. Industrial and Commercial Bank of China Ltd. rose 1.8 percent as Europe’s announcements eased concerns about the global financial system. as copper prices headed for the biggest weekly gain since at least 1986. Jiangxi Copper Co., China’s No. 1 producer of the metal by market value, rose 2.4 percent to HK$20.20 as copper had its best week in at least 25 years.
“Consumer spending has contributed a lot into the U.S. growth, while inventory investment declined,” said Masaru Hamasaki, who helps oversee the equivalent of $24 billion as chief strategist at Toyota Asset Management Co. in Tokyo. “That’s a very good form of growth. Risk appetite should rise after Europe delivered a big answer to the debt crisis that’s plagued the market for a long time. I expect stocks to be firm after jumping.”
The MSCI Asia Pacific Index rose 1.4 percent to 124.68 as of 12:18 a.m. in Tokyo. The measure has gained 7.4 percent this week, the most since the week ended May 8, 2009. More than three stocks rose for each that fell on the gauge, which is set for its biggest month of increase since May 2009. All 10 industry groups on the gauge advanced.
U.S. Growth
Futures on the Standard & Poor’s 500 Index fell 0.4 percent. In New York, the index rose 3.4 percent yesterday after the U.S. economy grew in the third quarter at the fastest pace in a year as gains in consumer spending and business investment helped support a recovery on the brink of faltering. Household purchases, the biggest part of the economy, rose at a 2.4 percent pace, beating estimates.
Japan’s Nikkei 225 Stock Average added 1.4 percent and South Korea’s Kospi Index advanced 0.8 percent. Australia’s S&P/ASX 200 was little changed. Hong Kong’s Hang Seng Index (HSI) climbed 1.9 percent, headed for an 11 percent increase this week, its biggest such advance since May 2009.
The number of contracts to buy previously owned U.S. homes unexpectedly fell in September as lower prices and borrowing costs failed to support demand. A separate report showed fewer Americans filed applications for unemployment assistance last week, while those on benefit rolls dropped to a three-year low, signaling limited improvement in the labor market.
“It’s not an economic scenario at this stage that the U.S. will go into a recession,” saidTim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “The market has been pricing in less macro-economic risks as a result of what happened over the last 24 hours.”
Honda, Hyundai
Asian exporters advanced. Honda added 4.6 percent to 2,504 yen. Hyundai Motor Co. (005380), South Korea’s biggest carmaker by market value, rose 2.9 percent to 230,000 won. Li & Fung Ltd. (494), a supplier of toys and clothes to Wal-Mart Stores Inc., rose 4.9 percent to HK$15.48. Nintendo Co., Japan’s maker of video-game players that gets 39 percent of its sales in the Americas, rose 5.3 percent to 11,700 yen.
Global stocks rallied yesterday after European leaders talked bondholders into accepting 50 percent writedowns on Greek debt and boosted their rescue fund’s capacity to 1 trillion euros ($1.4 trillion) in a crisis-fighting package intended to shield the euro area.
Banks rose. Industrial & Commercial Bank of China (601398) rose 1.8 percent to HK$5.01. HSBC Holdings Plc (HSBA), Europe’s biggest lender, rose 2.5 percent to HK$69. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second-biggest lender, rose 2.4 percent to 2,288 yen.
Mining Companies
The MSCI Asia Pacific Index declined 11 percent this year through yesterday, compared with a 2.1 percent gain by the S&P 500 and a 9.6 percent drop by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.6 times estimated earnings on average, compared with 12.9 times for the S&P 500 and 10.8 times for the Stoxx 600.
Mining companies advanced after copper in London jumped as much as 1.4 percent to $8,260 a metric ton, poised for the biggest weekly gain since at least 1986. Three-month copper on the London Metal Exchange has gained more than 15 percent this week. BHP Billiton Ltd. (BHP), Australia’s No. 1 mining company, added 1 percent to A$38.73. Jiangxi Copper rose 2.4 percent to HK$20.25. (Bloomberg)
Asian stocks climbed for a second day as reports showing better-than-estimated exports from Japan and China’s manufacturing expanding for the first time in three months tempered concern that Europe won’t provide a solution to the debt crisis threatening the global economy.
Honda Motor Co., a Japanese carmaker that gets over 80 percent of sales overseas, rose 1.7 percent in Tokyo. Industrial & Commercial Bank of China (1398) Ltd. led Chinese lenders higher after Barclays Plc said the banks will post “strong” third quarter earnings. BHP Billiton Ltd. (BHP), the largest global mining company, advanced 2.7 percent in Sydney after copper futures extended gains.
The MSCI Asia Pacific Index increased 1.9 percent to 118.61 as of 12:45 p.m. in Tokyo, even after European leaders meeting in Brussels yesterday ruled out tapping the central bank’s balance sheet to boost a regional rescue fund. The gauge of Asian stocks last week had its biggest weekly decline in a month after Germany said there would be no quick fix to the crisis.
“Economic expectations got so depressed during the September market rout that any signs of improvement in the economic outlook should have a positive effect on the market,” Nader Naeimi, a Sydney-based strategist for AMP Capital Investors Ltd., said by telephone. “There was no clear sign of division among European leaders, but there is also some disappointment that nothing concrete was announced.”
Nikkei 225 (NKY), Hang Seng
Japan’s Nikkei 225 Stock Average gained 1.7 percent. South Korea’s Kospi Index climbed 2.7 percent and Australia’s S&P/ASX 200 rose 2.7 percent. Hong Kong’s Hang Seng Index jumped 3.5 percent.
China’s Shanghai Composite Index added 0.4 percent, paring gains of as much as 0.7 percent, after Premier Wen Jiabao said the government would continue to maintain tight monetary policies to control soaring inflation and as a report showed China’s manufacturing may expand in October for the first time in three months.
Futures on the fStandard & Poor’s 500 Index rose 0.3 percent today after the European summit at the weekend. The gauge climbed 1.9 percent on Oct. 21, capping its longest weekly rally since February, as European governments considered deploying $1.3 trillion in funds to tame the crisis.
European leaders in Brussels yesterday outlined plans to aid banks, heading toward a revamped strategy to contain the debt crisis. The 13th crisis-management summit in 21 months excluded a forced restructuring of Greece’s debt, sticking with the policy of enticing bondholders to accept “voluntary” losses to help restore the country’s finances. The complete blueprint will be formed Oct. 26.
Withstanding Slump
Japanese exporters climbed after a report showed the nation’s shipments increased more than expected in September as demand for cars and auto parts rose, a sign the recovery in shipments is withstanding a weakening global economy.
Honda Motor advanced 1.7 percent to 2,335 yen. Toyota Motor Corp. (7203), Japan’s biggest carmaker by sales, rose 1.1 percent to 2,574 yen and Suzuki Motor Corp. (7269), Japan’s No. 4 automaker by sales, climbed 2.4 percent to 1,678 yen.
Bridgestone Corp., a tiremaker, jumped 4.1 percent to 1,765 yen. The company aims to boost annual sales to 3.6 trillion yen by 2012 as it plans to expand production in China to meet rising demand, Chief Financial Officer Akihiro Eto said on Oct. 21.
Chinese banks rallied after Barclays said the Hong Kong- listed lenders may post 32 percent profit growth on average in the third quarter. Industrial & Commercial Bank of China surged 4.6 percent to HK$4.34. China Construction Bank Corp., the nation’s second-biggest lender, climbed 2.9 percent to HK$5.27. Bank of China Ltd. increased 3.4 percent to HK$2.74.
‘Too Bearish’
“We believe the current share prices may reflect too bearish a scenario for asset quality deterioration,” Barclays analysts May Yan and Shujin Chen wrote in a report today. “Negative news flow may have peaked.”
China’s manufacturing may expand in October for the first time in four months, snapping the longest contraction since 2009, after a preliminary index of purchasing managers showed a rebound in new orders and output.
The reading of 51.1 for the index released by HSBC Holdings Plc and Markit Economics today was the highest in five months and compares with the final reading of 49.9 for September and August. A reading above 50 indicates expansion.
Raw material producers advanced as copper and oil futures extended gains. BHP Billiton gained 2.7 percent to A$36.65 in Sydney. Rio Tinto Group, the world’s second-biggest mining company by sales, jumped 4.8 percent to A$65.59. Inpex Corp. (1605), Japan’s biggest energy explorer, increased 2.6 percent to 516,000 yen in Tokyo.
The MSCI Asia Pacific Index declined 16 percent this year through Oct. 21, compared with a 1.5 percent drop by the S&P 500 and a 13 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.8 times estimated earnings on average, compared with 12.5 times for the S&P 500 and 10.3 times for the Stoxx 600. (Bloomberg)
Asian stocks fell, driving the region’s benchmark index toward its biggest drop in two weeks as Germany damped expectations of a fast resolution to Europe’s debt crisis and China’s economy grew at the slowest pace in two years.
BHP Billiton Ltd. (BHP), the world’s No. 1 mining company, slipped 3.4 percent in Sydney after commodity prices slumped. Sony Corp., which gets about 70 percent of its revenue overseas, dropped 1.7 percent in Tokyo. Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender, lost 1.8 percent after U.S. banks Citigroup Inc. and Wells Fargo & Co. said quarterly revenue dropped. China Coal Energy Co. plunged 7 percent in Hong Kong.
“The implied lack of urgency by European policy makers will create additional uncertainty regarding a robust, all- encompassing solution to Europe’s growing list of problems,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Increased uncertainty will feed through to investor nervousness and is likely to see risk reduced by investors as they move to lock in gains from the past couple of weeks.”
The MSCI Asia Pacific Index lost 2.2 percent to 116.62 as of 12:19 p.m. in Tokyo, on course for the biggest drop since Oct. 4. About 13 stocks declined for each that advanced after Steffen Seibert, spokesman for German Chancellor Angela Merkel, said Europe’s leaders won’t provide the quick end to a debt crisis that global policy makers are pushing for at an Oct. 23 summit.
China Growth
The measure deepened declines today after a report showed China’s economy grew 9.1 percent in the third quarter from a year earlier, the slowest pace since 2009, as the central bank tightened monetary policy and export demand weakened. Policy makers have raised interest rates five times over the past year, curbed lending and imposed limits on home purchases to rein in property and consumer prices.
“Some investors probably like to see better headline numbers, but it’s just unrealistic to expect China to grow double-digit,” said Diane Lin, a Sydney-based Pengana fund manager.
All 10 industry groups on the Asia-Pacific stock gauge retreated today, led by raw-material stocks. The MSCI Asia Pacific Index climbed 3.4 percent last week after Merkel and French President Nicolas Sarkozy pledged to deliver a plan to recapitalize Europe’s banks and address Greece’s debt crisis.
‘Complex Issue’
“The reality is that we’re dealing with a complex multi- year issue that has a lot of stakeholders involved and can’t be resolved overnight,” said Matt Riordan, who helps manage close to $6.6 billion in Sydney at Paradice Investment Management Pty.
Japan’s Nikkei 225 Stock Average fell 1.5 percent today and Australia’s S&P/ASX 200 Index lost 1.8 percent. South Korea’s Kospi Index declined 1.6 percent. China’s Shanghai Composite Index slid 1.6 percent, while Hong Kong’s Hang Seng Index slumped 3.4 percent.
The MSCI Asia Pacific Index climbed 2.1 percent yesterday after Group of 20 finance chiefs meeting in Paris endorsed parts of a plan to contain Europe’s debt crisis. Optimism the region’s officials were developing a plan to help banks weather losses on sovereign debt also fueled gains last week in stocks and the euro.
Futures on the Standard & Poor’s 500 Index fell 0.1 percent today. The gauge retreated 1.9 percent in New York yesterday after Germany said European Union leaders won’t provide a complete fix to the euro-area debt crisis. The S&P 500 rose 6 percent last week.
Heavy Selling
Germany “doused expectations there would be a definitive solution at this weekend’s European summit,” said Cameron Peacock, a market analyst at IG Markets in Melbourne. “So anticipated and hoped for has been this solution that any disappointments, setbacks during this current ‘gestation period’ are going to be met with heavy selling.”
New York-traded copper futures dropped 0.9 percent yesterday, while the London Metal Exchange Index of prices for six metals including copper and aluminum slipped 0.6 percent. Crude oil futures in New York slid 0.5 percent. Oil fell as much as 0.4 percent today, and copper futures declined as much as 1.9 percent.
The MSCI Asia Pacific Index dropped 13 percent this year through yesterday, compared with a 4.5 percent loss by the S&P 500 and a 14 percent decline by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.1 times estimated earnings on average, compared with 12 times for the S&P 500 and 10.1 times for the Stoxx 600.
The German spokesman’s comments are “another indication of the political obstacles to forging a workable solution for the eurozone,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “Investors have been reminded of the need for caution until details of any proposal are formally released and agreed on.” (Bloomberg)
The FBM KLCI fell into negative territory on Tuesday, Oct 18 as investors worried about external factors sold down to move away from risky assets as concerns over the global economic health reared its ugly head again.
Asian stocks fell on Tuesday after Germany's finance minister cautioned against hopes for a quick fix to Europe's debt problem, reminding investors not to become too optimistic about a rapid development to the two-year-old crisis, according to Reuters.
On Bursa Malaysia, the FBM KLCI fell 18.23 points to 1,447.12.
Market breadth was negative with losers beating gainers by 418 to 78, while 124 counters traded unchanged.
At the regional markets, Hong Kong’s Hang Seng Index fell 2.73% to 18,358.72, Japan’s Nikkei 225 lost 1.43% to 8,752.58, Taiwan’s Taiex was down 1.39% to 7,357.40, Singapore’s Straits Times Index fell 1.36% to 2,741.11, South Korea’s Kospi lost 1.35% to 1,839.98 and the Shanghai Composite Index shed 0.63% to 2,424.95.
BIMB Securities Research in note Oct 18 said European markets were down yesterday as the German finance minister warned that hopes for a solution to the euro zone debt crisis at a forthcoming summit were not realistic.
The Dow Jones closed lower as investors grew nervous following the news in Europe. Back to Asia, China’s 3Q GDP grew by 9.3% while inflation dipped to 6.1%, it said.
China’s latest inflation figures confirm that Beijing’s efforts to ease rising prices are bearing fruit, and reinforce predictions from market watchers that the central bank’s tightening cycle is over, said the research house.
“At home, we expect the market to remain volatile at least for a short period given negative news in the Europe and US.
“We shall see the KLCI’s immediate support level at 1,460 points and next level at 1,450 points, while on the bright side; resistance will be seen at 1,480 points,” it said.
Meanwhile, Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi in a note to clients Oct 18 said due to the US markets’ weaker tone last night, the local index could see a volatile tone.
“Some minor profit-taking activities could the local market slightly softer today,” he said.
Among the losers at mid-morning, Hong Leong Bank fell 36 sen to RM10.50, KLK 30 sen to RM20.68, MISC 24 sen to RM6.34, Tenaga 20 sen to RM5/37, Ta Ann and RHB Capital 18 sen each to RM4.70 and RM7.22, Genting 15 sen to RM9.97, MMHE 14 sen to RM6.01 and Petronas Chemicals 12 sen to RM6.02.
HWGB was the most actively traded counter with 25.6 million shares done. The stock shed half a sen to 37.5 sen.
Other actives included Leader Universal, Harvest Court, OSK, Tanco, SAAG and GPRO.
Meanwhile, gainers included PacificMas, AIC, Petronas Dagangan, and Genting Plantation's. (theedgemalaysia.com)
Asian stocks fell, ending a six-day winning streak for the regional benchmark index, after credit- rating downgrades of Spain and European banks fueled concern the region’s debt crisis slow global growth.
Chinese companies tumbled as a report showed continued high inflation, lessening the chances of monetary-policy easing in the world’s second-largest economy. Esprit Holdings Ltd., a clothier that gets 83 percent of its revenue in Europe, dropped 2.2 percent in Hong Kong. Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender, fell 1.2 percent after JPMorgan Chase & Co., the second-largest U.S. bank by assets, said profit declined. BHP Billiton Ltd. (BHP), the world’s No. 1 miner, fell 2.2 percent in Sydney after commodity prices slumped yesterday.
The MSCI Asia Pacific Index dropped 0.9 percent to 116.64 as of 12:39 p.m. in Tokyo. The gauge climbed 9.7 percent in the previous six days, setting the measure on course for its biggest weekly gain since March after German Chancellor Angela Merkel and French President Nicolas Sarkozy pledged to deliver a plan to recapitalize Europe’s banks and address Greece’s debt crisis.
“Investors are hoping Europe will find a solution to the sovereign-debt crisis, but if that doesn’t happen the market could come back down again,” said Lee King Fuei, a Singapore- based fund manager at Schroders Plc, which oversaw $323 billion as of June 30. “Politically, it’s going to be difficult to find a solution. Governments in the U.S. and Europe are left with limited stimulus options.”
Nikkei, Kospi
Japan’s Nikkei 225 Stock Average fell 0.8 percent, with Olympus Corp. tumbling 13 percent after saying its president will step down. Australia’s S&P/ASX 200 Index slid 0.8 percent and South Korea’s Kospi Index retreated 0.2 percent.
Hong Kong’s Hang Seng Index lost 1.3 percent after the National Bureau of Statistics said consumer prices in China increased 6.1 percent from a year earlier in September, reducing the chances of an end to monetary policy tightening. China’s Shanghai Composite Index slid 1.1 percent.
Esprit dropped 2.2 percent to HK$11.52 in Hong Kong. Billabong International Ltd. (BBG), a global surfwear maker, slumped 2.1 percent to A$3.70 in Sydney. Carmaker Honda Motor Co. lost 2.3 percent to 2,250 yen in Tokyo, while Canon Inc., a camera maker that depends on Europe for about a third of its sales, slipped 2.4 percent to 3,450 yen.
Olympus plunged 13 percent to 2,164 yen after saying President Michael C. Woodford will depart. Chairman Tsuyoshi Kikukawa said the ousted executive didn’t focus enough on bringing employees together toward a common goal. Woodford couldn’t be reached immediately for comment.
Debt Crisis
Futures on the Standard & Poor’s 500 Index lost 0.2 percent. The U.S. gauge slipped 0.3 percent in New York yesterday, paring gains from the best rally over seven days since 2009 after JPMorgan reported a 33 percent profit decline as investment banking and trading income slumped and amid speculation equities rose too much on optimism Europe’s debt crisis may be contained.
Asian markets followed suit after Spain also had its long- term sovereign credit rating cut to AA- from AA by Standard & Poor’s with a negative outlook, the third reduction by S&P in three years. Separately, UBS AG, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc had long-term issuer default grades cut by Fitch Ratings, which put more than a dozen other lenders on watch negative.
Banks in Asia also declined as concern grew that defaults among European nations may trigger a credit crisis similar to the one after Lehman Brothers Holdings Inc. collapsed in 2008.
Mitsubishi UFJ fell 1.2 percent to 336 yen in Tokyo, while HSBC Holdings Plc (5), Europe’s biggest lender, sank 1.6 percent to HK$63.65 in Hong Kong.
‘Fiscal Austerity’
“Much uncertainty remains as to how Europe will support its banks, beef up the bailout fund and ensure a controlled ‘default’ of Greece,” Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd. wrote in a note to clients today. “Fiscal austerity will continue to bear down on growth.”
Stocks in Europe fell yesterday after the European Central Bank said imposing further losses on holders of Greek debt posed a risk to the euro area’s financial stability.
An escalation in Europe’s debt crisis may trigger a selloff in Asian assets and disrupt currency markets, the International Monetary Fund said yesterday. The IMF report came before Slovakia approved Europe’s enhanced bailout fund, completing ratification across the 17 euro countries.
BHP Billiton lost 2.2 percent to A$36.81 in Sydney and rival Rio Tinto Group, the world’s No. 2 miner by sales, declined 1.5 percent to A$68.29. Cnooc Ltd., China’s largest offshore energy producer, slumped 4.6 percent to HK$13.28.
Copper Drops
New York-traded copper futures fell 2.6 percent yesterday, while the London Metal Exchange Index of prices for six metals including copper and aluminum sank 2.4 percent. Crude oil futures in New York slipped 1.6 percent. Copper futures rose today, while oil was little changed.
The MSCI Asia Pacific Index dropped 15 percent this year through yesterday, compared with a 4.3 percent loss by the S&P 500 and a 14 percent decline by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12 times estimated earnings on average, compared with 12.1 times for the S&P 500 and 10.1 times for the Stoxx 600.
In Hong Kong, China Overseas Land & Investment Ltd., a developer controlled by the nation’s construction ministry, retreated 3 percent to HK$13.78 on concern China may continue with steps to slow inflation. Industrial & Commercial Bank of China Ltd., the nation’s biggest lender by market value, slid 3.4 percent to HK$4.29. (Bloomberg)
Asia stocks dropped, the euro fell to an eight-month low versus the dollar and bond risk jumped as data signaled global economic growth is slowing and European officials prepared to weigh the risk of a Greek default.
The MSCI Asia Pacific Index tumbled 3.1 percent at 12:34 p.m. in Tokyo, after slumping last quarter by the most since 2008. Standard & Poor’s 500 Index futures declined 0.6 percent. The euro slid 0.4 percent to $1.3329, the Malaysian ringgit sank to a 14-month low and Taiwan’s dollar weakened for a third day. Oil dipped 1.4 percent in New York and copper fell for a fourth day. The Markit iTraxx Asia index of default risk headed for its highest close since May 2009.
European finance ministers meeting in Luxembourg today will grapple with how to shield banks from the debt crisis and mull a further boost to the region’s rescue fund. The Greek government said yesterday it approved 6.6 billion euros ($8.8 billion) of austerity measures. U.S. factories grew last month at the slowest pace since July 2009, a report today may show, while the Tankan survey showed sentiment among Japan’s largest manufacturers remains worse than before the March earthquake.
“We might face more risks, particularly in a market that hasn’t had enough of a correction,” said Diane Lin, a fund manager with Sydney-based Pengana Capital Ltd., which manages about $1.1 billion in global assets. “The U.S. is not falling into recession, and we haven’t seen enough evidence yet, but it’s definitely slowing down.”
Almost 13 shares fell for every one that gained on MSCI’s Asia Pacific Index, which declined 16 percent in the three months ended Sept. 30. The gauge has fallen every quarter this year and is down 20 percent in 2011.
Asian Stocks Drop
Japan’s Nikkei 225 Stock Average slipped 2.5 percent, Australia’s S&P/ASX 200 Index lost 2.4 percent and Hong Kong’s Hang Seng Index sank 4.4 percent. Financial markets in China and South Korea are closed for holidays today.
Mitsui OSK Lines Ltd. dropped 7 percent after Japan’s second-biggest shipping line by sales reported a net loss for the six months ended September. The quarterly Tankan index of sentiment at large manufacturers rose to 2 in September from minus 9 in June, the Bank of Japan said in Tokyo today. The reading was below the reading of 6 in March and in line with the median estimate of 23 economists surveyed by Bloomberg News.
The benchmark U.S. stocks gauge sank 2.5 percent on Sept. 30, rounding off a 14 percent quarterly loss that was the biggest since the three months to December 2008. The MSCI All- Country World Index tumbled 18 percent last quarter amid signs of faltering U.S. growth.
U.S. Factories
The U.S. Institute for Supply Management’s factory index probably fell to 50.3 from 50.6 in August, according to a Bloomberg survey of economists ahead of data today. A reading of 50 is the dividing line between contraction and expansion. The yield on 10-year Treasuries was little changed at 1.91 percent.
The euro earlier fell to $1.3322, its weakest since Jan. 18. The 17-nation currency traded at 102.64 yen from 103.12 yen on Sept. 30, when it lost 1.3 percent.
Europe’s “crisis will probably be stretched for many, many months,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-largest lender. “A crisis prolonged means the euro will keep sliding.”
Today was the original target for approving an 8 billion euro ($11 billion) loan payment to Greece, the sixth installment of a 110 billion-euro lifeline put together in May 2010. That decision has been pushed back until mid-October as Greece seeks to repair its finances. The new measures will help cut the deficit to 6.8 percent of gross domestic product from 8.5 percent this year, the finance ministry said last night.
Ringgit, Taiwan Dollar
“Risk aversion is back in play,” said Akira Banno, a treasury adviser at Bank of Tokyo-Mitsubishi UFJ in Kuala Lumpur. “Lingering concerns over Europe’s debt crisis will continue to weigh on emerging-market assets.”
The Dollar Index, which tracks the U.S. currency against those of six trading peers, rose 0.6 percent, a fourth day of gains. Malaysia’s ringgit dropped as much as 0.8 percent to 3.22 versus the dollar, the weakest level since July 2010, and Taiwan’s currency declined as much as 0.5 percent to NT$30.672.
The cost of insuring corporate and sovereign bonds in Asia against non-payment rose, with the Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan increasing 15 basis points to 259.5 basis points, Royal Bank of Scotland Group Plc prices show.
The risk benchmark is headed for its highest close since May 4, 2009, according to data provider CMA, which is owned by CME Group Inc., and compiles prices quoted by dealers in the privately negotiated market.
Oil, Copper
Crude for November delivery fell as much as 1.6 percent to $77.90 a barrel in electronic trading on the New York Mercantile Exchange before trading at $78.72. OPEC production last month climbed to the highest since November 2008 as Iraqi and Libyan gains outpaced a Saudi cut, a Bloomberg News survey showed.
Royal Dutch Shell Plc shut crude-processing units at its biggest refinery after a fire last week at the Singapore site. The company declared force majeure, a legal clause exempting it from fulfilling contracts.
Three-month copper tumbled 2.5 percent to $6,843 a metric ton on the London Metal Exchange, headed for the lowest close since July 2010. Futures dropped 26 percent last quarter. December-delivery corn retreated 1.8 percent to $5.82 a bushel. Prices have slumped 6.8 percent this year. (Bloomberg)
Asian stocks fell after European policy makers failed to introduce a plan to stem the region’s debt crisis, dimming the earnings outlook for banks, exporters and raw-material producers. BHP Billiton Ltd. (BHP), the world’s biggest mining company, dropped 2 percent in Sydney as crude and metal prices sank. Esprit Holdings Ltd. (330), a clothing retailer with 83 percent of its sales in Europe, tumbled 16 percent in Hong Kong. Asian financial shares slumped, paced by Westpac Banking Corp. in Sydney. Industrial & Commercial Bank of China Ltd. slid 3.4 percent on speculation China won’t loosen measures to control inflation.
Investors were hoping for “a firm, positive response to Europe’s debt crisis,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Instead, what they got was just greater uncertainty, and nothing was resolved.”
The MSCI Asia Pacific excluding Japan Index fell 2 percent to 406.26 at 12:03 p.m. in Seoul, extending two straight weeks of losses. More than five stocks retreated for each that rose. Markets in Japan are closed today for a public holiday.
South Korea’s Kospi Index slid 0.6 percent and Hong Kong’s Hang Seng Index dropped 2.4 percent. Australia’s S&P/ASX 200 Index lost 1.8 percent, while New Zealand’s NZX 50 Index declined 0.3 percent in Wellington. A report today from Westpac Banking Corp. (WBC) and McDermott Miller Ltd. showed New Zealand consumer confidence was unchanged in the third quarter.
Consumer Confidence
Futures on U.S. Standard & Poor’s 500 Index dropped 1.6 percent today. The gauge advanced for a fifth straight day on Sept. 16, capping a 5.4 percent weekly gain, after a report showed U.S. consumer confidence climbed.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 57.8 this month from 55.7 in August, the report showed. The median estimate of economists surveyed by Bloomberg News called for a reading of 57. The group’s measure of consumer expectations six months from now dropped to the lowest level since May 1980.
Asian stocks fell today after finance chiefs from the euro region said last week that the 18-month debt crisis leaves no room for tax cuts or extra spending to spur an economy on the brink of stagnation. Economic reports on Germany this week are forecast to show a decline in investor confidence and a slowdown in manufacturing in Europe’s largest economy.
Greece’s ability to avoid default hangs in the balance as international monitors assess whether Prime Minister George Papandreou can meet the conditions of rescue loans.
Aid Payment
European Union and International Monetary Fund inspectors will speak with Finance Minister Evangelos Venizelos today to judge whether the government is eligible for its next aid payment, due next month, and on track for a second rescue package approved by EU leaders on July 21.
“The fragility of the Greek position has the potential to threaten the solvency of euro banks, in turn creating added risk for the other highly leveraged European governments,” said Angus Gluskie, who manages more than $300 million at White Funds Management in Sydney.
BHP fell 2 percent to A$37.46 in Sydney. Rio Tinto Group, the world’s second-largest mining company by sales, lost 1.6 percent to A$70.15. Jiangxi Copper Co., China’s No. 1 producer of the metal, lost 4.4 percent to HK$17.84 in Hong Kong and Aluminum Corp. of China Ltd., the listed unit of nation’s biggest maker of the lightweight metal, slumped 1.6 percent to HK$4.39.
Oil, Metals
A measure of primary metals traded in London fell 0.4 percent on Sept. 16, while copper futures for December delivery declined 0.6 percent on the Comex in New York. Today, New York- traded copper sank as much as 2.2 percent. Crude oil for October delivery dropped 1.6 percent on the New York Mercantile Exchange on Sept. 16, and as much as 1.4 percent today.
Asian exporters also fell. Esprit tumbled 16 percent to HK$10.26. Li & Fung Ltd., a supplier of toys and clothes to Wal- Mart Stores Inc., retreated 4.6 percent to HK$13.56. Billabong International Ltd. (BBG), a surfwear maker that gets a fifth of its sales from Europe, fell 4.1 percent to A$3.02 in Sydney.
Westpac dropped 2.7 percent to A$19.39, while in Hong Kong, HSBC Holdings Plc, Europe’s largest bank by market value, lost 2.2 percent to HK$63.20.
The MSCI Asia Pacific ex Japan Index lost 13 percent this year through Sept. 16, compared with a 3.3 percent drop for the S&P 500 and a decline of 17 percent for the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 11.2 times estimated earnings on average, compared with 12.2 times for the S&P 500 and 9.6 times for the Stoxx 600.
China Inflation
Industrial & Commercial Bank slipped 3.4 percent to HK$4.61 in Hong Kong and Belle International Holdings Ltd., a Chinese retailer of women’s shoes, lost 2.4 percent to HK$13.98 after a report showed new-home prices rose in August in all 70 cities monitored by the government for the first time this year.
Prices in Beijing gained 1.9 percent from a year earlier, while those in Shanghai, the nation’s financial center, increased 2.8 percent, the statistics bureau said on its website yesterday.
China Coal Energy Co., a unit of the country’s second- biggest producer of the commodity, plunged 17 percent to HK$8.26 before trading in the stock was suspended in Hong Kong. Its parent, China National Coal Group Corp., was ordered to cease operations in China’s Shanxi province after flooding at a pit killed 10 people, Xinhua News Agency reported Sept. 17, citing provincial Vice Governor Li Xiaopeng.(Bloomberg)
Asian stocks climbed, with the regional benchmark index rebounding from its lowest level in more than a year, after French President Nicolas Sarkozy and German Chancellor Angela Merkel said Greece will stay in the euro zone.
Commonwealth Bank of Australia (CBA), the nation’s largest lender by market value, gained 1.3 percent in Sydney. Samsung Electronics Co., which receives 20 percent of its revenue from Europe, rose 3.1 percent in Seoul. S-Oil Corp. (010950), which refines and sells petroleum, surged 10 percent. Chipmaker Elpida Memory Inc. (6665) jumped 7.1 percent in Tokyo after saying it may shift some domestic production overseas to counter a strong yen. Taiwan Semiconductor Manufacturing Co. advanced 3.4 percent on higher dynamic random-access memory chip prices.
“Germany and France’s commitment to continue supporting Greece’s European Union membership diminishes the likelihood that it will be allowed to default,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “If Greece avoids default, it lessens any flow-on impact through the global banking system, which in turn is positive for Asian stocks.”
The MSCI Asia Pacific Index gained 1.3 percent to 117.78 as of 12:44 p.m. in Tokyo. All 10 industry groups on the measure rose, with about seven stocks gaining for every two that declined. The index yesterday fell to its lowest level since Aug. 25 last year. Concern the global economy was slipping back into a recession amid a worsening European-debt crisis triggered a 17 percent plunge in the MSCI Asia Pacific Index between this year’s high on May 2 and yesterday.
Greece and Europe
Japan’s Nikkei 225 Stock Average climbed 1.6 percent. South Korea’s Kospi Index rose 1.8 percent and Australia’s S&P/ASX 200 Index advanced 1.3 percent in Sydney. Hong Kong’s Hang Seng Index added 0.5 percent, while China’s Shanghai Composite Index was little changed.
Futures on the Standard & Poor’s 500 Index lost 0.2 percent today. In New York, the index advanced for a third day, rising 1.4 percent yesterday. Sarkozy and Merkel are “convinced” Greece will remain in the euro area, according to a statement issued by Sarkozy after they spoke to Greek Prime Minister George Papandreou by telephone.
Stocks also rose after U.S. Treasury Secretary Timothy F. Geithner said “there is no chance that the major countries of Europe will let their institutions be at risk in the eyes of the market.” At a meetings with European Union finance ministers on Sept. 16, Geithner will likely urge European governments to step up their crisis-fighting efforts.
Banks Gain
Commonwealth Bank of Australia gained 1.3 percent to A$44.55. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest publicly traded lender, rose 1.5 percent to 330 yen in Tokyo.
Financial shares provided the biggest support to the MSCI Asia Pacific Index as a group. Consumer discretionary stocks posted the second-biggest gain on the measure, rising 1.6 percent.
Samsung Electronics rallied 3.1 percent to 776,000 won in Seoul, the biggest boost to the MSCI Asia Pacific Index. Toyota Motor Corp. (7203), the world’s largest carmaker, gained 2 percent to 2,687 yen, while Honda Motor Co., which receives about 80 percent of its revenue from outside Japan, jumped 3.5 percent to 2,376 yen.
“We’re seeing some risk-on trading on hopes that the European issue will be pushed further down the road,” said Belinda Allen, senior analyst of investment markets research at Colonial First State Global Asset Management in Sydney, which oversees about $150 billion. “Despite the comments from the French and German leaders, Europe still has a lot of issues to work through that will impact markets over coming months.”
S-Oil, Elpida
S-Oil surged 10 percent to 120,000 won in Seoul as prices of paraxylene, used in synthetic fibers, gained ahead of winter season, according to Cho Seung Yeon, an analyst at HMC Investment Securities Co. The stock posted the biggest gain on the MSCI Asia Pacific Index.
Elpida jumped 7.1 percent to 575 yen. The company said it plans to shift some production from Japan to Taiwan as part of a plan to deal with a strong yen and an industry slump. Goldman Sachs Group Inc. said in a report today that the shift overseas by Elpida may help cut an surplus in dynamic random-access memory chips, which would be positive for DRAM prices.
Chipmakers boosted information technology stocks to the biggest gain among the 10 industry groups on the MSCI Asia Pacific Index after DRAM prices jumped. Taiwan Semiconductor Manufacturing advanced 3.4 percent to NT$69.5 in Taipei, and Hynix Semiconductor Inc. rose 5.5 percent to 20,950 won in Seoul.
The price of DDR3 2-gigabit dynamic random-access memory jumped 8.9 percent at yesterday’s close, the most since Jan. 28, according to data by TrendForce Corp.’s DRAMExchange.
The MSCI Asia Pacific Index declined 16 percent this year through yesterday, compared with a 5.5 percent drop by the S&P 500 and a 19 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.6 times estimated earnings on average, compared with 11.9 for the S&P 500 and 9.4 times for the Stoxx 600. (Bloomberg)
Asian shares edged higher on Tuesday, July 26, rebounding from Monday's fall, but the dollar slid to a record low against the Swiss franc after a speech by U.S. President Barack Obama gave no sign a deadlock in Washington over raising the debt limit was easing.
Short-term speculators took aim at the dollar after Obama delivered a prime-time address to Americans, warning that a default on U.S. bond obligations would be a "reckless and irresponsible outcome". But he gave no indication a compromise was imminent.
So far investors have shown few signs of panic even as Republicans and Democrats have failed to bridge their differences with just a week to go to the Aug. 2 deadline the U.S. Treasury has set for when it may fail to pay out on Treasuries.
The market reaction to a sudden breakdown in talks over the weekend was limited given the threat of a technical default and a potential cut in the United States' top-notch AAA credit rating.
But some market players were taking no chances, shifting funds into safe-haven gold and the Swiss franc, driving both to record highs in U.S. dollar terms. Gold was steady in early trade at $1,614.14 an ounce.
"The unfolding U.S. debt ceiling drama should add to the headwinds for market risk sentiment, with a potential downgrade of the world's ultimate risk-free asset - the U.S. Treasuries - fuelling more flight to quality into gold and Swiss franc," said currency analysts at Citigroup in a note to clients.
Portfolio managers and traders have said they believe an agreement will be reached in Washington at the last minute, and that even a technical default or rating downgrade may only cause short-term market volatility rather than a full-fledged crisis.
Asian bonds, currencies and even shares have been one of the beneficiaries from all the debt trouble in Europe and the political gridlock in the United States, with investors viewing the region's stronger growth and fundamentals as a relative safe-haven.
The MSCI index of Asia-Pacific shares outside Japan was up 0.8 percent and is up about 1 percent on the month and year, withstanding the occasional bouts of volatility from the U.S. deficit debate and euro zone debt crisis.
Gains were fairly broad, if on light trade. By sector, telecom, energy, financial and resource shares were driving the rise.
JAPAN WEATHERS STORM
Japan has also weathered the storm as its big automakers and manufacturers have recovered more quickly than expected from the March 11 earthquake and tsunami.
Japan's Nikkei average clung to positive territory, thanks in part to solid earnings from blue-chip companies such as Canon despite the yen's persistent strength.
In currencies, the dollar erased gains scored against the euro the previous day on widening Spanish and Italian bond yield spreads and hit a six-week low against a basket of currencies.
The euro rose 0.6 percent to $1.4470 , while the dollar hit an all-time low of 0.8006 Swiss francs . The dollar hovered near 78.00 yen after briefly falling below that level.
The yen pushed back towards a record high hit against the dollar in March, stirring some speculation Japanese authorities may soon intervene to stem further gains. The dollar briefly spiked against the yen, but traders said no intervention had been spotted.
Option markets -- where investors typically hedge themselves against potential risks -- were also showing no signs of panic across the dollar, S&P futures and Treasury futures.
While the closely watched VIX index of S&P implied volatility ticked up on Monday to 19.35, it remains off peaks of 24.65 and 31.28 struck earlier this year.
Implied volatility on Treasury futures was also higher this month but historically subdued.
U.S. Treasuries slipped for a second day, with long-term Treasuries under the most pressure from the worries about a rating downgrade.
Ten-year notes were down 4/32 in price to yield 3.017 percent, up a basis point. Thirty-year bonds fell 5/32 to yield 4.328 percent, also up a basis point.(Reuters)
Asian stocks fell, led by banks and exporters, as U.S. lawmakers failed to reach an agreement to raise the federal debt limit, increasing the prospect of a default that may threaten the global recovery, and as Greece’s credit rating was cut by Moody’s Investors Service.
Toyota Motor Corp., the world’s biggest carmaker by market value, slid 1.4 percent in Tokyo, leading consumer discretionary stocks lower. Honda Motor Co., the Japanese automaker which receives 44 percent of its revenue from North America, declined 1.6 percent. Commonwealth Bank of Australia, the nation’s biggest lender by market value, slipped 1.9 percent in Sydney. China Railway Construction Corp. tumbled 6.7 percent in Hong Kong to its lowest level on record after two high-speed trains collided in China, killing at least 36 people.
“The ongoing saga of needing to raise the debt ceiling in the U.S. is likely to remain a concern for stock markets as the deadline heads closer with no apparent signs of agreement,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “If talks fail, we should expect a credit-rating downgrade and another turn downwards in the U.S. economy.”
The MSCI Asia Pacific Index lost 0.9 percent 137.81 as of 6:29 p.m. in Tokyo. About three stocks fell for each that gained on the gauge. The measure rose 2.5 percent last week, erasing the regional benchmark index’s loss for the year, as steps by European leaders toward easing the region’s sovereign debt crisis, including fresh aid for Greece, boosted the earnings outlook for Asia’s banks and exporters.
Asian Benchmarks Fall
Most stock market benchmarks in the region fell today. Japan’s Nikkei 225 Stock Average lost 0.8 percent while South Korea’s Kospi index declined 1 percent. Australia’s S&P/ASX 200 Index slipped 1.6 percent.
Hong Kong’s Hang Seng Index slumped 0.7 percent, and China’s Shanghai Composite index declined 3 percent, the biggest decline among regional benchmarks, along with the Shenzhen Composite Index, which dropped 3.8 percent.
Futures on the Standard & Poor’s 500 Index fell 0.9 percent today. House Speaker John Boehner told Republicans that there’s no agreement on a plan for raising the U.S. debt ceiling before a default threatened for Aug. 2. A Republican congressional official said Boehner, speaking by telephone to lawmakers, is reporting that discussions are continuing. The impasse has boosted the chance S&P Ratings Service will cut the U.S. credit rating from AAA within three months to 50 percent, the company said July 21.
Exporters Decline
Asian exporters to the U.S. declined on concern failure to reach an agreement on debt talks may damp the economic recovery and jeopardize their earnings prospects.
Toyota, which receives 28 percent of its sales from North America, slid 1.4 percent to 3,290 yen. Honda dropped 1.6 percent to 3,185 yen. Samsung Electronics Co., which counts America as its second-biggest market for revenue, declined 0.4 percent to 847,000 won in Seoul.
Asian banks also declined on concern credit rating agencies may lower their outlook for U.S. debt, further roiling credit markets. Both S&P and Moody’s Investors Service are weighing a downgrade of the U.S. credit rating.
The amount of U.S. Treasuries held in Japan was estimated at $912.4 billion at the end of May, the highest since at least 2000, according to U.S. Treasury data compiled by Bloomberg. China is the largest holder of U.S. debt, with $1.16 trillion at the end of May, the data show.
‘Mini Sell-Off’
Mitsubishi UFJ Financial Group Inc., Japan’s largest listed lender by market value, lost 2 percent to 399 yen. Sumitomo Mitsui Financial Group Inc., Japan’s No. 2, fell 1.3 percent to 2,497 yen. Commonwealth Bank of Australia declined 1.9 percent to A$49.54 in Sydney.
“The outcome of U.S. debt talks was one of the big concerns for investors, so this will trigger a mini sell-off in stock markets,” said Prasad Patkar, who helps manage the equivalent of $1.7 billion at Sydney-based Platypus Asset Management Ltd. “Failure to reach a debt deal would jeopardize the U.S.’s credit rating, and this has the potential to cause a seizure in global credit markets.”
Greece’s Rating Cut
Stocks also fell as Moody’s Investors Service cut Greece’s sovereign credit rating by three steps to Ca from Caa1, saying the European Union’s financing package for the debt-laden nation implies “substantial economic losses” for private creditors.
Esprit Holdings Ltd., the clothing retailer which counts Europe as its biggest market, dropped 3.5 percent to HK$23.30 in Hong Kong. Cosco Pacific Ltd., which operates container facilities at Greece’s Piraeus port, slipped 0.3 percent to HK$13.10. Trend Micro Inc., the internet security software maker which receives 19 percent of its revenue from Europe, slid 2.1 percent to 2,521 yen in Tokyo.
The MSCI Asia Pacific Index rose 1 percent this year through July 22, compared with a gain of 7 percent by the S&P 500 and a drop of 1.4 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.8 times estimated earnings on average, compared with 13.5 times for the S&P 500 and 11.1 times for the Stoxx 600.
China Rail Crash
Chinese railway-related companies fell after at least 36 people died and 200 were injured when a high-speed train that broke down after being struck by lightning was rear-ended by another locomotive two days ago in China, according to the state-run Xinhua News Agency.
China Railway Construction sank 6.7 percent to HK$5.46, its lowest level since listing in Hong Kong in March 2008. China Railway Group Ltd., which builds railroads, plunged 6.7 percent to HK$3.05. CSR Corp., which makes locomotives, freight wagons and passenger carriages, tumbled 8.9 percent to 6.04 yuan in Shanghai.
The accident will “substantially undermine” people’s confidence in the country’s high-speed rail network and “significantly discourage” usage, Barclays Capital said.
Airline and expressway operators gained in China on speculation passengers will increase airplane and car travel following the rail crash.
China Eastern Airlines Corp. climbed 1.2 percent to 5.09 yuan in Shanghai. Air China Ltd. increased 3.6 percent to HK$8.08 in Hong Kong. China Southern Airlines Co. advanced 3.4 percent to HK$5.17. Shenzhen Expressway Co., which manages and operates highways and expressways in China, rose 2.9 percent to 4.90 yuan.
“We expect travelers to gradually turn to alternative transport means, including expressways,” Patrick Xu and Jon Windham, analysts at Barclays Capital, wrote in a report today.(Bloomberg)
Asian shares rose on Wednesday as indications of progress on a U.S. budget-reduction deal boosted investor confidence while encouraging quarterly numbers from Apple and International Business Machines helped Asia's beaten-down tech sector gain for a second day.
94.28 (+1.41%)], which measures markets across Asia, jumped 1.3 percent. 3.05 (+0.82%) 
], with more gains in sight as Japan heads into its earnings season. 116.18 (+1.17%) ] closed up 1.2 percent at 10,005.90, jumping the most since June 29, while the broader Topix gained 0.8 percent to 860.66. 9.93 (+5.67%) ] announced forecast-beating quarterly results. 24.74 (+1.16%)] closed up 1.16 percent at 2,154.95 points.
* Jakarta stocks hit record high, up 0.6 pct
* Bank stocks help Philippine shares rise 0.8 pct
* SE Asian stock trading volume below 30-day moving average
Indonesian and Philippine stocks on Friday rose on optimistic earnings expectations in the financial sector, while Malaysian stocks were under pressure after a warning of a U.S. credit rating downgrade by Standard & Poor's hurt industrial shares.
South East Asian stock market activity was subdued with trading volumes in markets below their 30-day moving averages.
Worries about a potential debt default in developed economies kept investors' appetite for riskier assets at bay, Asia's relatively robust earnings outlook may keep attracting capital flows, analysts said.
Foreign investors bought a net $25.0 million in Indonesian stocks on Friday, exceeding the 55-day moving average of net flows at $19.3 million, according to Thomson Reuters data. Foreigners also purchased a net $10.8 million in Manila shares, above a 55-day moving average of $8.0 million.
Investors sought companies with high dividend yields and expected to release strong earnings as the reporting season gets under way this month, brokers in the region have said.
That helped the southeast Asian stocks to outperform other Asian markets on the week.
The MSCI index of Southeast Asia fell for the week, but less than the MSCI index of shares for ex-Japan As of 0900 GMT, the former lost 1.07 percent from last Friday while the latter has fallen 3.14 percent.
Indonesian stocks hit a record high with the sub-index for the country's financial sector up 1.00 percent. Bank Mandiri , Indonesia's largest lender, gained 1.28 percent.
Manila stocks also were supported by banks and financial firms.
The financial sector sub-index outpaced the overall market, gaining 1.05 percent. Metropolitan Bank & Trust Co , the Philippines' second-biggest lender by assets,jumped as much as 3.4 percent to 79.55 pesos a share, the highest since November last year.
"Spillover buying could result in smaller banks receiving attention," said a local brokerage house SB Equities in a research note, adding Rizal Commercial Banking Corp and Union Bank of the Philippines remain undervalued.
Malaysian stocks ended down 0.16 percent led by falls in industrial names, while Singapore shares dipped.
Still, southeast Asian stocks are not free from risk-off mode on worries about the global economic slowdown and fiscal problems in the euro zone and the United States, analysts said.
"In SE Asia, it is earnings season and we could see some stocks surprising on upside, especially resource owners and commodity names, but the macro trend seems to be generally headed lower," said Tey Tze Ming, Market Strategist for Saxo Capital Markets in Singapore.(Reuters)
Asian stocks swung between gains and losses after Moody’s Investors Service put the U.S. under review for a credit-rating downgrade, hurting the outlook for exporters. Commodity producers climbed after prices advanced yesterday.
Toyota Motor Corp., the world’s biggest carmaker by market value, dropped 0.9 percent in Tokyo as the yen advanced against the dollar for a fifth day. Sony Corp., which gets about a quarter of its revenue from the U.S., lost 0.9 percent. David Jones Ltd. (DJS), Australia’s second-biggest department-store chain by sales, tumbled 16 percent in Sydney after cutting its profit and sales forecasts. Korea Zinc Co. surged 4.8 percent in Seoul as metal prices rose after the U.S. Federal Reserve signaled it may add more stimulus to prevent economic growth stalling.
“Moody’s action is a shot over the bows in terms of telling U.S. politicians that failure to reach agreement on the debt ceiling would have dire consequences for the economy,” said Tim Schroeders, who helps manage $1 billion in global equities at Pengana Capital Ltd. in Melbourne. “Meanwhile, the Fed is saying growth is patchy and may require stimulus and that they’re prepared to step in to provide it as required, which has to be seen as positive.”
The MSCI Asia Pacific Index was little changed at 136.02 as of 11:59 a.m. in Tokyo. Almost five stocks declined for every three that advanced. The gauge last week extended its rally for a third week as European Union leaders hammered out proposals to roll over debt to prevent Greece from defaulting and after reports showed retail sales in the U.S. increased in June and China’s latest interest rate increase sparked speculation a tightening cycle may soon end.
Faster Pace
Japan’s Nikkei 225 (NKY) Stock Average lost 0.4 percent today. South Korea’s Kospi Index sank 0.5 percent and Australia’s S&P/ASX 200 Index fell 0.5 percent. New Zealand’s NZX 50 Index slid 0.5 percent, even as a report showed the economy expanded at a faster pace, signaling the nation is recovering from its deadliest quake in 80 years.Futures on the Standard & Poor’s 500 Index slid 0.2 percent today. In New York, the index pared gains to 0.3 percent from as much as 1.4 percent yesterday.
Moody’s Investors Service put the U.S., rated Aaa since 1917, under review for a credit-rating downgrade for the first time since 1995 on concern the government’s $14.3 trillion debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes even though the risk remains low. The rating would likely be reduced to the Aa range and there is no assurance that Moody’s would return its top rating even if a default is quickly cured.(Bloomberg)
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