Asia Pacific share market finished last trading session of the week and of the month ended 28 February 2014 firmly in green, as comments by Fed Chairperson Yellen boosted confidence in the strength of the U.S. economy. MSCI’s broadest index of Asia-Pacific shares outside Japan rose a slender 0.1% for a 4% gain on the month.
Fed Chair Janet Yellen said that the Fed was monitoring closely the recent run of disappointing macroeconomic data from US. She said that it remained to be seen if recent data could be wholly explained by cold weather. She further remarked that the Fed would be open to reconsidering it (pace of QE tapering) if there was a significant change in the outlook.
But worries over the tense political situation in Ukraine limited gains across the regional bourses.. Political tensions in Ukraine intensified after armed men shot their way into regional government buildings in the country’s Crimean region and raised Russian flags on Thursday. After the incident, Ukraine’s acting president warned that any movements by the Russian military in Crimea, aside from the Russian Black Sea fleet’s base in Sevastopol, would be treated as an act of aggression. NATO chief Anders Fogh Rasmussen, via his Twitter account, urged Russia not to take any action that would escalate tension. Meanwhile, the International Monetary Fund said Ukraine has asked for assistance. The United States told Russia to demonstrate in coming days that it was sincere about its promise not to intervene in Ukraine, as armed men stormed the regional parliament and hours later others seized the airport in a mainly ethnic Russian region.
Among Asian markets, Japan’s stock market declined today, as risk aversion selloff continued on blue chips stocks after the yen appreciated against the greenback on a cautious view of the US economy by Federal Reserve chief Janet Yellen.
The benchmark Nikkei-225 index dropped 0.55% to finish the session at 14841.07, while the broader Topix index of all first-section shares declined 0.47% to 1211.66. The benchmark index is now off 8.9% for 2014 after adding 57% last year.
Tokyo market were trading mostly flat by midday, but selling pressure in the local shares mounted in the afternoon, on tracking yen appreciation under the psychologically important Y102 mark against the greenback.
Exporters and other asset plays that were sensitive to dollar movements declined the most as a weaker U.S. currency hurts the ability of large manufacturers to cut prices on goods they sell overseas. Among exporters, Honda Motor lost 1.4%, Sumitomo Realty Development dropped 1.2% and Sumitomo Mitsui Financial Group surrendered 1.9% ND Mitsubishi UFJ down 1.5%. Subaru-maker Fuji Heavy Industries lost 1.7% despite a stock-rating upgrade from Deutsche Bank
Industrials players did well today thanks to better-than-expected industrial output data. TDK Corp added 0.9%.
The Ministry of Economy, Trade and Industry released Preliminary retail sales data on Friday, showing Japan’s retail sales surged 4.4% on year in January, posting the sixth straight year-on-year rise due to strong automobile and electronics sales before the April sales tax hike. The pace of increase accelerated from +2.5% in December as sales of machinery (TVs, air conditioners/heaters, watching machines, etc.) rose 7.5% on year in January after rising 0.8% in December, thanks to strong demand before the sales tax hike in April. Automobile sales jumped 21.4% after +14.5% in the previous month.
Separately, the Ministry of Economy, Trade and Industry said on Friday that Japan’s preliminary industrial production surged 4.0% on the month in January, marking the second consecutive monthly rise after +0.9% in December.
The Ministry of Internal Affairs and Communications said on Friday that Japan’s consumer price index (excluding perishables but including energy) rose 1.3% on year in January, the eighth straight y/y rise after +1.3% in December and +1.2% in November. CPI excluding food and energy, a stricter measure to judge whether deflation is fading, rose 0.7% on year in January, up for the fourth straight month after rising 0.7% in December. In October 2013, the “core-core” reading posted the first y/y rise in five years since October 2008. Meanwhile, central Tokyo core CPI rose 0.9% in February. It was the 10th straight y/y rise after +0.7% in January, led by higher electricity bills and casualty insurance premiums as well as a rebound in accommodations. The rise in TV prices slowed.
In Australia, Australian stock market finished weaker as investor some garnered profit made during the month. The benchmark SP/ASX 200 index dropped 6.60 points, or 0.12%, to 5404.80. The broader All Ordinaries shed 5.60 points, or 0.1%, to 5415.40. The benchmark SP/ASX 200 Index gained 4.2% during February, while the broader All Ordinaries Index added 4.1%.
Among ASX sectoral indices, information technology issue dived 0.9%, while consumer discretionary issue rose 0.6%, making them top sectoral gainer and loser. Meanwhile financial sector dived 0.3%, energy down 0.2% and consumer staples down 0.1%. Healthcare, utilities and realty issues rose 0.2% each.
Virgin Australia (VAH) shares closed steady at A$0.35 despite the airline announcing a loss in the fiscal first half and declined to issue guidance due to uncertain economic conditions and did not declare an interim dividend. The airline company, joined rival Qantas (QAN) in posting a first half loss, posting the A$49.7 million loss before tax as compared to A$61 million profit in the same period last year. Revenue rose by 6.4% in the period to A$2.2 billion. QAN, which lost 9% in the wake of its A$252 million loss announced yesterday, rose 0.9% to A$1.165.
Woolworths shares closed down 1% to A$36.07 today in spite of Australia’s largest retailer by market value posted a 14.5% increase in first half profit to A$1.32 billion, driven by strong supermarket sales. Its Masters Home Improvement business delivered a worse than expected A$71.9 million loss in the period. Shareholders will receive a fully franked interim dividend of 65c per share. Rival Wesfarmers (WES) added 0.8% to A$42.95.
Shares of James Hardie (JHX) added 6.1% to A$14.50 after the building products maker announced a special US28c dividend to commemorate its 125th anniversary. JHX posted third quarter profit of A$48.76 million thanks to a resurgence in the US housing market.
Oil Search (OSH) shares rose 0.9% to A$8.54 after reporting full year net profit of US$205.7 million, a rise of 17%.
Reserve Bank of Australia said on Friday that private sector credit (lending) rose by 0.4% in January after a 0.5% lift in December. Annual credit growth rose to 4.1% – an 18 month high, in January 2014 from 3.9 in December 2013. Overall housing credit is up 5.6% on a year ago, with investor housing finance up 7.4% – marking the strongest annual growth in three years. Business and consumer credit recorded a healthy lift.
In China, Mainland China stock market finished higher after recouping intraday losses, helped by strength in financials, realty, and consumer related stocks. The benchmark Shanghai Composite Index closed 8.95 points higher at 2056.30, extending this month’s gain to 1.1%. The measure, however, slumped 2.7% this week amid concerns the economy will slow as banks curb lending to the real-estate market and a weaker yuan spurs capital outflows.
The Shanghai market closed higher for third day in row. But move on the upward was limited amid caution ahead of Chinese manufacturing data tomorrow and next week’s meeting of the National People’s Congress. Policy makers will meet at the NPC in Beijing on March 3. Market pundits are whispering that policy makers likely to be discuss on topics covering state-owned enterprises, financial industry deregulation, environmental protection, free-trade zones and pension rules.
Shares of Chinese developers and financials rebounded on bargain buying, following steep losses recently, thanks to media reports that China’s major lenders have not tightened or halted their property-related lending business. Domestic media have reported that some lenders such as Industrial Bank Co. had stopped lending to developers, fuelling concerns over a cooling property market. China’s top five banks Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China, China Construction Bank and Bank of Communications all said there was no policy change in their real estate-related lending business
Among China Vanke, the largest developer, increased 2% to 6.72 yuan, the most since Jan. 24. Gemdale Corp. advanced 1.2% to 6 yuan. Among lenders, ICBC, the nation’s biggest lender, lost 0.6% to 3.34 yuan, while rival China Construction Bank Corp. declined 0.8% to 3.86 yuan. Founder Securities surged 10% to 5.71 yuan.
Shares of consumer related companies also ended higher. Kweichow Moutai led gains for consumer-staples producers, surging 3.5% to 150.02 yuan. Bright Dairy Food Co. rose 4.4% to 17.63 yuan.
In Hong Kong, shares in the city market extended winning streak for third day in row, thanks to gain in the realty counter which managed to offset losses elsewhere. The benchmark Hang Seng index rose 8.78 points from prior day to finish at 22836.96.
Investment rationale for cyclical assets in the HK supported firmly after comments from Hong Kong’s Financial Secretary John Tsang on Wednesday that the southern Chinese city’s economy is expected to grow by as much as 4% this year compared to 2.9 per cent in 2013.and 1.5% in 2012.
Hong Kong unveiled a modest package of measures for its working class in its budget on Wednesday, as it tries to ease pressure on its finances while appeasing voters increasingly concerned about the city’s growing income gap. In a speech focused on maintaining Hong Kong’s competitiveness, Financial Secretary John Tsang said its economy grew 2.9% last year compared with 1.5% in 2012, and was expected to expand 3 to 4% this year. The budget contained some tax cuts for the working class but a bumper “give-away” package didn’t materialise this time. Tsang did budget around HK$20 billion in one-off relief measures including tax concessions, rent subsidies for public housing tenants and welfare handouts. But that was below the previous year’s HK$33 billion in one-off assistance. The city’s lower- and middle-income families struggle with rising costs from home prices that have more than doubled since 2008, and the spillover effects of a strengthening yuan. The government recorded a provisional surplus of HK$12 billion ($1.6 billion) for the 2013/14 fiscal year, in line with expectations, but far less than HK$64.8 billion last year.
Among the HK 50 blue chips, 22 rose and 27 fell, with one stock remaining steady. Citic Pacific (00267) was the largest blue-chip loser, retreating 3.6% to HK$11.18. New World (00017) was the top blue-chip performer. It rose 2.3% to HK$10.04. Market heavyweights were mixed. HSBC (00005) nudged up 0.4% to HK$82.25. China Mobile (00941) inched down 0.3% to HK$73.75.
Hong Kong Monetary Authority said total deposits with authorised institutions increased 0.1% in January. As the contraction in demand and savings deposits exceeded the expansion in time deposits, Hong Kong-dollar deposits went down by 0.3% in January. Overall foreign-currency deposits edged up 0.4% in January, and renminbi deposits in Hong Kong grew by 3.8% to Rmb893.4 billion at the end of January. The total remittance of renminbi for cross-border trade settlement amounted to Rmb492.3 billion in January, compared with Rmb469.6 billion in December 2013. Total loans and advances picked up 3.7% in January. Loans for use in Hong Kong including trade finance expanded by 4.2% from a month ago, and loans for use outside Hong Kong grew 2.6%. As Hong Kong-dollar loans increased while deposits declined, the Hong Kong-dollar loan-to-deposit ratio picked up to 84.4% at the end of January from 82.1% at the end of December 2013. Seasonally adjusted Hong Kong-dollar M1 dropped 1.8% in January but expanded 4.8% year on year. Seasonally unadjusted Hong Kong-dollar M3 picked up 0.4% during the month and grew 2.4% from a year earlier.
In India, Indian stock market closed nears its 5-week high, on the back of solid gains in gains in TCS, Tata Motors, Sun Pharma and ONGC. As per provisional closing, the SP BSE Sensex was up 87.68 points or 0.42% to 21,074.67.
Indian marker saw buying pressure largely after BJP’s prime ministerial candidate for this year’s Lok Sabha elections Mr. Narendra Modi’s reformist agenda and promised policy implementation in a speech on Thursday, 27 February 2014, and on dovish remarks from Federal Reserve Chairwoman Janet Yellen before the Senate Banking Committee on Thursday, 27 February 2014. The market sentiment was also boosted by data showing that foreign funds remained net buyers of Indian stocks on Wednesday, 26 February 2014.
Narendra Modi, the BJP’s prime ministerial candidate, said on Thursday, 27 February 2014, that India’s traders and grocery store owners must learn to compete with large modern stores and online retailers. “We should not worry about the challenges from global trade,” he told a gathering of the Confederation of All India Traders. Rather, he said, small traders should emphasise on quality of their products to compete better and could enter into contracts with big online retailers to create “virtual malls in small shops”. With the general elections fast approaching, Modi also laid out his economic views separately at a conference on the Indian economy on Thursday, 27 February 2014. “Speedy, yet sustainable economic growth that is inclusive of all is the need of the hour,” he told a crowd of businessmen, bankers, economists and diplomats. As India is vast, he said there are no tailor-made solutions for the problems of the entire country. “The government must identify the strengths of each state and devise strategies accordingly,” he said. Modi, chief minister of Gujarat, said he also favoured introducing a nationwide goods and services tax (GST), a long-pending reform expected to bring a uniform market, reduce costs of businesses and increase government revenue. Modi answered only two questions from members of the audience, one of which was related to energy security. He said he preferred using the country’s own natural resources such as solar energy and wind energy to energy imports.
Elsewhere in the Asia Pacific region, New Zealand’s NZX50 added 0.5%. South Korea’s KOSPI index added 0.1%. Taiwan’s Taiex index grew 0.45%. Indonesia’s Jakarta Composite Index added 1.1%. Malaysia’s KLSE Composite rose 0.2%. Singapore’s Straits Times index jumped 0.38%.
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