Asia Pacific Market: Stocks shine on value buying

Asia Pacific shares closed slight higher in holiday thinned trade on Friday, 31 January 2014, as investors chased for value buying following steep losses this week. Meanwhile positive finish of Wall Street overnight also supported bargain buying.

However, gains on the upside were marginal across the Asian bourses due lack of regional cues as handful of Asian markets closed today. Financial markets of China, Hong Kong, South Korea, Taiwan, Indonesia, Singapore, Malaysia and the Philippines closed for national holiday.

Asian market suffered heavy losses for three out of five trading sessions this week due to the United States Federal Reserve’s announcement of further reduction in the size of its bond-buying program in February and as growing emerging market turmoil.

The United States Federal Reserve on Wednesday, 29 January 2014, ignored investor nervousness about capital outflows from emerging markets and took another gradual step toward exiting its controversial bond-buying program, remaining stoic in the face of market turmoil. As expected, the Fed decided to reduce the pace of monthly asset purchases to $65 billion, from January’s $75 billion. The Fed will purchase mortgage-backed securities at a pace of $30 billion per month and add to its holdings of Treasury’s at a pace of $35 billion per month beginning in February.

Risk sentiments dampened further after the HSBC-Markit released final reading of Chinese manufacturing on Thursday, 30 January 2014, signalling a deterioration of operating conditions in manufacturing sector for the first time in six months. After adjusting for seasonal factors, the HSBC Purchasing Managers’ Index (PMI) posted at 49.5 in January, down fractionally from the earlier flash reading of 49.6, and down from 50.5 in December, underscoring a slowdown in Asia’s biggest economy amid government efforts to clamp down on risky lending.

Among stock markets not observing the holiday, Australian market finished slight higher as gain in utilities and retailer counters were more than offset elsewhere. The benchmark SP/ASX 200 index added 1.90 points to 5190, while the broader All Ordinaries rose 5.70 points to 5205.10. Over the course of the month, the benchmark SP/ASX 200 Index fell 162.2 points, or 2.9%, to end the month at 5190, its worst January in four year.

Shares of Australian materials and resources companies dropped on tracking weakness in prices for some commodities — including a nearly 2% loss for Comex gold and a nearly two-month fall for copper. Resources giant BHP Billiton skidded 0.3% to A$36.57, while rival Rio Tinto closed shed 0.2% to A$65.64. Junior iron ore miner Fortescue Metals Group rose 1.9% to A$5.33.

Financials shares saw relatively muted moves ahead of next week’s Reserve Bank of Australia policy decision, with Australia New Zealand Banking Group up 0.3% to A$30.13 and Commonwealth Bank 0.04% to $74.23. National Australia Bank shed 0.06% to A$33.25 and Westpac Banking Corp 0.6% to A$30.87.

David Jones (DJS) was a standout, rising 4.2% to A$2.99 after the upmarket retailer confirmed it had rejected a merger approach from rival Myer Limited (MYR). MYR shares fell 1.6% to A$2.53. MYR told the ASX the merger would have maximised the value of DJS property assets and generated A$85 million of costs savings.

Private sector credit (lending) rose by 0.5% in December after a 0.3% lift in November. Annual credit growth rose from 3.8 to 3.9%. Housing credit is up 5.4% on a year ago, the strongest annual growth in two years. Business and consumer credit recorded a healthy lift. Bank term deposits fell by 0.6% in the year to December, marking the first fall in over a decade (March 2003).

The broad measure of business inflation, the producer price index (PPI), or final stage prices, rose by a subdued 0.2% in the December quarter to stand 1.9% higher than a year ago.

In Japan, shares in Tokyo market finished lower after wiping out gains in early trade, as the yen strength against the dollar and decision by the US Federal Reserve to taper their monthly asset purchase by an additional $10 billion unnerved investors risk sentiments. The benchmark Nikkei-225 index decreased 92.53 points to 14914.53, while the Topix index of all first-section shares withdrew 3.45 points to 1220.64.

Market sentiments were hammered by yen appreciation against the major currency baskets. The dollar bought 102.47 yen in late Asian trade, down from 102.71 yen in New York overnight but firmer than the 102.30 yen earlier Thursday in Asia. The euro weakened to 138.75 yen from 139.21 yen overnight.

NEC Corp. escalated 10.74% after the company said it plans to book 27 billion yen gain in the fiscal year ending March on the sale of its Internet services operations Biglobe Ltd. to Japan Industrial Partners.

Shares of Fujitsu rose 12.89% after the company swung to a third-quarter profit of 12 billion yen.

Ministry of Economy, Trade and Industry said on Friday that Japanese industrial production rose 1.1% on month in December 2013 on a demand rush ahead of an April sales tax increase. The increase in industrial output was due to a rise in production in the general purpose and production machinery sectors as well as electronic parts and devices. It also comes after a 0.1% decline in November. Companies expect output to rise 6.1% in January, and then increase 0.3% in February, according to a corporate survey released with the data. METI kept its assessment that output was picking up unchanged.

The core consumer price index, which excludes volatile fresh-food costs, climbed 1.3% from a year earlier in December, faster than a 1.2% gain in the previous month, according to data released by the Ministry of Internal Affairs and Communications. It was the biggest rise since a 1.9% increase in October 2008. The core index for 2013 increased 0.4% after a 0.1% fall the previous year.

In Thailand, shares in the Thai market advanced today, as month-end buying lifted large caps such as PTT Plc and Siam Cement Plc, but trading volumes dropped due to holidays in the region and caution ahead of the Sunday election.

The SET index finished up 0.8%, its first gain in five sessions, led by index heavyweights such as PTT. Shares in Siam Cement rose 1% after it reported better-than-expected fourth-quarter earnings.

The benchmark fell for a third month in January, down 1.9% and taking its loss since November to around 12%, the region’s worst performer, hit by the prolonged domestic political turmoil.

In India, key benchmark indices ended the session marginally in the green on selective buying by funds and retail investors amid firm European cues. The 30-share BSE index Sensex was up 15.6 points or 0.08% at 20513.85.

Barring auto, all other BSE sectoral indices ended in the green. Among them, realty, metal, oil gas and TECk indices remained investors’ favourite and were up 1.63%, 1.27%, 1.18% and 1.04%, respectively. Only auto index was down 0.43%.

Bank stocks gained after the Reserve Bank of India (RBI) on Thursday, 30 January 2014 laid out a road map to deal with a surge in bad loans in the banking system. State Bank of India (SBI) rose after the state-run bank after market hours on Thursday, 30 January 2014 said that it has raised Rs 8031.64 crore by selling shares through qualified institutional placement.

Punjab National Bank (PNB) gained 6.98% after the state-run bank reported fall in ratio of net non-performing asset to 2.8% as on 31 December 2013 from 3.07% as on 30 September 2013. The bank net profit declined 42.14% to Rs 755.41 crore on 3.68% growth in total income to Rs 11922.30 crore in Q3 December 2013 over Q3 December 2012. The Q3 result hit the market during trading hours today, 31 January 2014.

Oriental Bank of Commerce rose 5.22%. The bank’s net profit fell 31.28% to Rs 224.30 crore on 4.49% increase in total income to Rs 5063.98 crore in Q3 December 2013 over Q3 December 2012. The result was announced during trading hours today, 31 January 2014.

In the foreign exchange market, the rupee was little changed against the dollar. The partially convertible rupee was hovering at 62.5650, compared with its close of 62.56/57 /11 on Thursday, 30 January 2014.

Foreign direct investment (FDI) inflows into India rose 54.8% in November to $1.64 billion compared with $1.06 billion a year ago, a government statement said on Friday. Total FDI inflows in the first eight months for the current fiscal year that ends in March were down 2% from a year earlier at $15.46 billion, compared with $15.85 billion during the year-ago period, the statement said.

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Asia Pacific Market: Stocks shine on value buying