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Asia Pacific share market closed slight higher on last trading session of the week, Friday, 16 June2017, as investors chased for bargain buying following previous session losses on capital flows out woes. MSCI's broadest index of Asia-Pacific shares outside Japan closed flat.
The Federal Reserve raised short-term interests on Wednesday, and outlined plans to shrink the U.S. central bank's balance sheet, raising concerns about tighter liquidity globally and capital flows out of Asia.
The Bank of Japan, which is seeking to avoid speculation about an early exit from stimulus, held its main policy rate steady at minus 0.1% and stuck to its pledge to keep the yield on 10-year Japanese government bonds around zero.
In commodities, oil was lower on continued worries over rising US gasoline inventories adding to already elevated global supply. US crude fell 0.1% to USD 44.39 a barrel, remaining near Thursday's six-week low, on track for a 3.1% drop for the week. Global benchmark Brent also slipped 0.1% to USD 46.86, set to end the week 2.7% lower.
Gold crept higher following Thursday's 0.6% drop on the dollar's strength. It was marginally higher at USD 1,254.25 an ounce early on Friday, but still poised to close the week with a 0.9% loss.
Among Asian bourses
Australia Market gains on banks strength
Australian equity market ended modest higher, buoyed in large part by a rebound by the banks that more than offset the drag of mining stocks. The S&P/ASX 200 finished up 10.8 points, or 0.2%, at 5774.0. The benchmark S&P/ASX 200 grew 1.7% over a holiday-shortened week, taking back the bulk of last week's slump. For the session, 2.83 billion shares were traded with a value of A$8.09 billion
Shares of Financials were the top gainers, with National Australia Bank leading the major banks higher for the day, rising 0.5%. Westpac Banking edged up 0.1%, Commonwealth Bank of Australia added 0.2% and Australia & New Zealand Banking rose 0.4%. Investment bank and asset manager Macquarie picked up 0.6%.
Energy stocks were mixed on Friday, with Woodside Petroleum losing 0.2% and Santos falling 0.3% but Oil Search gaining 0.7%.
Shares of materials and resources, however, remained pressured by continuing weakness in commodity prices, compounded by a poor outlook. Rio Tinto slipped 0.3% and Fortescue Metals Group lost 0.2%. BHP Billiton pulled back from its early weakness to finish down 0.1% after it said it had appointed director Ken MacKenzie, former boss of packaging company Amcor, to succeed Jac Nasser as chairman.
Nikkei gains as soft yen boosts exporters
The Japan share market finished session in positive territory, as investors appetite for risk assets supported by the yen's depreciation above 111-level against greenback on the back of brisk U.S. economic indicators released on Thursday. Investors also took heart from the Bank of Japan monetary policy statement. No change was made in the BOJ's monetary policy as expected, following a two-day meeting. Securities, precision instrument and machinery-linked issues comprised those that gained the most by the close of play. The benchmark Nikkei 225 average gained 111.44 points, or 0.56%, to close at 19,943.26, while the broader Topix index of all first-section issues finished up 7.95 points, or 0.50%, at 1,596.04. Rising issues outnumbered falling ones 1,237 to 652 in the TSE's first section, while 129 issues were unchanged.Volume grew to 2.285 billion shares from Thursday's 1.881 billion shares. Export-oriented names attracted buying thanks to the weaker yen. They included automakers Nissan and Honda, camera maker Canon, electronics maker Panasonic, technology firm Kyocera and electronics parts producer Murata Manufacturing.
An overnight rise in U.S. long-term interest rates helped push up financial issues, such as megabank groups Mitsubishi UFJ, Sumitomo Mitsui and Mizuho, insurers Dai-ichi Life and Sompo Holdings and brokerage firms Nomura and Daiwa.
By contrast, game maker Nintendo, semiconductor-related Tokyo Electron, industrial robot maker Fanuc and restaurant chain operator Skylark met with selling. Also on the minus side were power firms, such as Shikoku Electric and Tohoku Electric, retail giant Seven & i Holdings and daily goods manufacturer Kao.
China Stocks fall on slowdown woes
The Mainland China equity market closed lower, as investors sentiment was soured by renewed concerns about slowdown in the world's second-biggest economy after weak producer inflation and investment data. The Shanghai Composite Index fell 0.3%, or 9.32 points, to 3,123.17 while the CSI 300 which tracks the large caps listed in Shanghai and Shenzhen dropped 0.3%, or 10.03 points, to 3,518.76. The Shenzhen Composite Index lost 0.2%, or 3.66 points, to 1,866.05 while the Nasdaq style ChiNext shed 0.3%, or 6.21 points, to 1810.05. For the week, CSI300 dropped 1.6%, while Shanghai Composite Index contracted 1.1%.
Data this week showed that China's economy generally remained on solid footing in May, but tighter monetary policy, a cooling housing market and slowing investment reinforced views that it will gradually lose momentum in coming months.
Despite several fund injections into the banking system from the central bank over the past five days, liquidity remained tightening amid capital outflows. Last week a total of 40.9 billion yuan (US$6 billion) left the stock market, reported the China Securities Investor Protection Fund Corporation.
In a sign that China's central bank intends to stabilise market sentiment, the People's Bank of China (PBOC) injected a net 410 billion yuan ($60.17 billion) into money markets this week, the biggest weekly injection since mid-January.
The odds that MSCI will announce on June 21 its intention to include Chinese A shares in its global equity indices - a watershed moment for the mainland's capital markets - have increased after the index provider said this year it will cut the number of stocks eligible to 169 from the original proposal of 448. However fund managers are skeptical as to whether a favourable decision would actually lead to any material change in underlying market trends, given the small increase in Chinese weighting in the indices. China's securities regulator said on Friday that it hopes U.S. index provider MSCI will decide next week to include the country's so-called A shares in its Emerging Market Index - but if not, Chinese capital market reform will not be derailed. "We would always be happy to see that A shares are included in the MSCI index, and we could welcome such a decision," Zhang Xiaojun, China Securities Regulatory Commission (CSRC) spokesman told a news conference, according to CSRC's official website.
MSCI has rejected China's inclusion three times. It is due to announce on 21 June 2017 - whether to open up its Emerging Markets Index to China shares. Investors and analysts have said a "yes" decision is likely this time, after MSCI proposed in March to change the methodology for a China inclusion.
Hong Kong Stocks end with gains
The Hong Kong stock market ended higher, as investors chased for bargain hunting after the previous day's sharp losses triggered by U.S. monetary tightening. Sector performance was mixed, with financials rising, but property developers, which is vulnerable to higher borrowing costs, continuing to fall. The Hang Seng Index rose by 0.2%, or 61.15 points, to 25,626.49 by the close, although it remains 1.6%, or 403.80 points, lower on the week. The Hang Seng China Enterprises index was 0.4%, or 38.74 points, higher at 10,384.89. Daily market turnover was HK$80.69 billion, up from Thursday's HK$74.99 billion.
The Federal Reserve raised short-term interests on Wednesday, and outlined plans to shrink the U.S. central bank's balance sheet, raising concerns about tighter liquidity globally and capital flows out of Asia. Sentiment has also been dented by China's weak producer inflation and investment data, which reinforced concerns of a renewed slowdown in the world's second-biggest economy.
Blue Chips were mixed. China Mobile (00941) rose 0.66% to HK$84.15, while HSBC (00005) gained 0.81% to HK$68.35. Tencent, the most heavily traded stock, fell modestly by 0.1% to close at HK$272.6. Ping An Insurance closed flat at HK$50.15, while AIA gained 0.6% to HK$55.80. Hutchison Telecom surged 3.5% to HK$2.68 and China Unicom was up 0.9% at HK$11.3.
Hong Kong property stocks remained under pressure. Sino Land was down 0.2% to HK$13.24, Sun Hung Kai slid 0.6% to HK$5.02, and Hang Lung group saw a 2.9% drop to HK$31.6. Cheung Kong Property, however, managed a 0.4% rise to HK$61.1 after buyback calls.
Hengan International (01044) put on 1.28% to HK$55.25 while Geely Auto (00175) dipped 2.35% to HK$14.14, making themselves the top blue-chip gainer and loser respectively.
Cowell (01415) surged 19.07% to HK$2.81 after it expects to record a significant improvement in the group's interim profit.
Indian Market ends on a flat note
A divergent trend was witnessed on last trading day of the week as the barometer index, the S&P BSE Sensex, settled with small losses while the Nifty 50 index registered small gains. The barometer index, the S&P BSE Sensex, fell 19.33 points or 0.06% to settle at 31,056.40. The Nifty 50 index rose 10 points or 0.1% to settle at 9,588.05. Selling in index heavyweight Infosys and pharma stocks was mostly offset by gains in index heavyweight ITC and HDFC Bank.
Index heavyweight Reliance Industries (RIL) rose 0.24%. RIL and BP yesterday, 15 June 2017 announced that they are moving forward to develop already-discovered deepwater gas fields, bringing new gas production for India. The two companies have agreed to deepen and expand their partnership to work jointly across a wide range of areas throughout India's energy sector. The announcement was made after market hours yesterday, 15 June 2017. RIL and BP announced that they will award contracts to progress development of the 'R-Series' deep water gas fields in Block KGD6 off the east coast of India. The project is expected to produce up to 12 million cubic metres (425 million cubic feet) of gas a day, coming on stream in 2020. This is the first of three planned projects in Block KGD6 that are expected to be developed in an integrated manner, producing from about 3 trillion cubic feet of discovered gas resources. Development of the three projects, with total investment of Rs 40000 crore ($6 billion), is expected to bring a total 30-35 million cubic metres (1 billion cubic feet) of gas a day new domestic gas production onstream, phased over 2020-2022.
ICICI Bank fell 0.13% after the company said that the committee of executive directors of the bank is scheduled to meet on 20 June 2017 to consider fund raising by way of issuance of senior unsecured long term bonds in the nature of debentures in single/multiple tranches on private placement basis. The announcement was made after market hours yesterday, 15 June 2017.
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