Asia Pacific Market: Shares tread water on Thursday

Headline shares of the Asia Pacific market closed mixed on Thursday, 15 May 2014, as expectations of credit easing by the European Central Bank was offset by concerns about the continuing crisis in Ukraine. Weakness in the US markets for the first time in six sessions overnight also gave a negative lead regionally. The MSCI Asia Pacific Index was little changed at 140.37

Investment rationale across the region was subdued on worries about the continuing crisis in Ukraine and on caution ahead of Federal Reserve Chair Janet Yellen speech later in the global day. Investors were also awaiting for European growth figures later Thursday.

Traders were watching to see if violence escalates in Ukraine, as separatists lead an effort to join Russia, with Western nations critical of Russia for not doing more to diffuse tensions.

U.S. stocks pulled back from record levels on Thursday as investors sought safe assets. The Standard & Poor's 500 fell 0.5% to 1,888.53 and the Dow Jones industrial average dropped 0.6% to 16,613. The tech-heavy Nasdaq composite fell 0.7% to 4,100.63.

Among Asian bourses, Japanese share market declined today, as the stronger yen and a slump in Sony shares overshadowed data showing Japan's economy grew faster than expected in the first quarter of CY2014. The benchmark Nikkei 225 index slipped 0.75% to finish at 14298.21, while the Topix index of all first-section shares was down 0.41% to 1178.29.

The yen's strength against the dollar was a major factor behind today's decline, as it makes exporters less competitive abroad and erodes repatriated profits. In currency markets, the dollar fetched 101.83 yen Thursday afternoon, down from 101.87 yen late in New York and well off the 102.20 yen in Tokyo earlier Wednesday.

Just before the market open, Tokyo said that Japanese economy grew at its quickest pace in more than two years during the first quarter of 2014, as millions of consumers rushed to stores before an April sales tax rise. Last-minute buying of everything from cars and refrigerators to televisions and new clothes drove a 1.5% on-quarter expansion in gross domestic product for the three months to March, beating market expectations and a tepid 0.1% rise in the last quarter of 2013.

The GDP figures were quite strong, but the focus has already moved to April-June figures, which are expected to fall sharply due to the consumption tax hike.

Sony Corp shares dived 6.1% to 1695 yen after the electronics maker on Wednesday warned it would remain in the red for another year after booking 128.37 billion yen annual loss for the fiscal year ended March 2014, blaming costs tied to its exit from the personal computer business. Revenue rose 14.3% to 7.76 trillion yen owing to a weak yen, record sales for the new PlayStation 4 games console and strong smartphone sales. Sony expects to lose 50 billion yen in the current fiscal year to March 2015, despite seeing losses narrow in its hard-hit television business. Moody's downgraded its credit rating on the firm to junk in January.

Sumitomo Mitsui Financial Group Inc lost 3% to 4,059 yen after saying it expects profit to drop 19% to 680 billion yen in the year ending March.

In Australia, Australian share market finished slight higher after clawing back intraday losses late afternoon, on the back of gain in the consumer staples, financials and energy stocks. The benchmark S&P/ASX200 and the broader All Ordinaries each rose by 0.26% to 5510.80 and 5490.20, respectively.

The Sydney market opened 0.4% down as weakness in U.S. markets for the first time in six sessions overnight and a pullback from six-year highs in Europe had given a negative lead locally. but the market clawed back those losses to finish slight above the neutral line on the back of gains in energy stocks and a record breaking Commonwealth Bank share price.

Financials stocks finished higher with Commonwealth Bank of Australia adding 0.4% to new record A$81.20 after delivering a 16% increase in 3Q cash profit to A$2.2 billion. Westpac Banking Corp rose 0.8% to A$34.48 and ANZ Banking Group 0.2% to A$33.20. National Australia Bank closed marginally 0.03% down at A$33.59.

Energy stocks closed higher, as world oil prices rose on Wednesday due to drawdown on US stockpiles and ongoing tension in Ukraine. Brent crude rose by 0.8% to US$110.14 a barrel while US Nymex rose by 0.8% to US$102.37 a barrel. Woodside Petroleum was up 1% to A$42.10 while rival Santos had risen 0.6% to A$14.29.

Materials & resources stocks were mixed, BHP Billiton declining 0.1% to A$38.26 after the company said it was considering selling off its nickel business in western Australia, as the miner pushes ahead with plans to streamline its portfolio. Rio Tinto added slight 0.05% to A$62.81. Fortescue was down 0.6% to A$4.70.

Grain handler Graincorp (GNC) said that its first half net profit fell 43% to A$50 million for the six months to the end of March. Falling grain volumes because of drought was the main driver of the result. Additionally the result was affected by A$11 million in significant items associated with its oils business. However the underlying net profit, adjusted for significant items, fell 44% to A$61 million. Revenues fell 13% to A$2 billion. Notwithstanding the fall in profit, the group maintained a fully-franked interim dividend of 15 cents a share. GNC shares ended higher by 0.78% at A$9.00

In New Zealand, equities on the New Zealand stock market closed weaker paced by Ryman Healthcare after its annual earnings, and Fletcher Building after the government waved tariffs on imported building products. Mainfreight led the NZX 50 Index lower, while Xero, a2 Milk and Meridian Energy benefited from inclusion in global indexes. By the provisional closing, the NZX 50 fell 18.399 points, or 0.4%, to 5194.960. Within the index, 18 stocks fell, 22 rose and 10 were unchanged.

Fletcher dropped 1.2% to $9.21 after the government said it is temporarily removing tariffs and duties on imported building products to cut the cost of an average home build by an estimated $3,500. Fletcher is New Zealand's largest company with a near monopoly on construction supplies and building products. Telecom rose 0.7% to $2.71.

Ryman fell 2% to $8.70 after the retirement village operator said annual underlying profit, which excludes non-cash items such as deferred taxation and unrealised gains on investment properties, rose 18% to $118.2 million, marking its 12th consecutive year of profit growth.

Transport company Mainfreight fell 5.4% to $13.05, after it was dropped from the MSCI Small Cap Index after the global benchmark was reweighted for the quarter.

Xero, the cloud-based accounting software firm, rose 2.9% to $32.78, after it was added to the MSCI Global Standards Index.

In China, Mainland China market declined for third consecutive session, dragging the benchmark Shanghai Composite 1.12% to finish at 202497. The selloff in the local bourses triggered on concern that economic slowdown in Asia's largest economy would hurt earnings.

Adding to gloom, Chen Li, the chief China equity strategist at UBS, estimated that companies in the nation's CSI 300 Index will post a 3% drop in earnings this year, versus consensus forecasts for a 14% gain. The CSI 300 index's downside risk is between 15% and 20%, excluding banks, Chen warned.

Property developers stocks declined on profit taking following gain in the past three days. China Vanke Co fell 0.7% to 7.58 yuan , Poly Real Estate Group Co was down 2% to 7.37 yuan and China Union Holdings slumped 5.9% to 2.73 yuan.

Shares of nickel-related business, which had soared in the past week, also fell back. Chengdu Huaze Cobalt & Nickel Material Co was down 10% to 21.47 yuan and Jilin Ji En Nickel Industry Co dropped 5.8% to 15.05 yuan.

In Hong Kong, shares in city's bourse has extended winning streak for sixth consecutive session, lifted by tech heavyweight Tencent Holdings, which posted better-than-expected first quarter result. The benchmark Hang Seng Index jumped 148.09 points to 22730.86 on turnover of HK$54.88 billion.

The social networking and online gaming firm Tencent reported a record net income and the biggest profit growth in three years. Tencent also conducted a five-for-one share split to attract small investors. Tencent net profit rose 59.7% year-on-year and 65.1% quarter-on-quarter to 6457 million yuan for the three months ended 31 March 2014. The revenue was 18400 million yuan, an increase of 35.8% year-on-year and 8.4% quarter-on-quarter.

Tencent Holdings added 5.8% to HK$108.8, contributing 104 points gains to the benchmark Index. The company started its 1-for-5 share split today. Other internet-related stocks and software developers were higher on the back of Tencent's rally. IGG (08002) soared 9.32% to HK$6.1. Kingsoft (03888) shot up 6.07% to HK$23.6. Boyaa (00434) added 2.42% to HK$9.3.

China developers met profit taking selling. China Resources Land and China Overseas Land & Investment softened 2.7% and 1.3% to HK$15.58 and HK$19.58.

Companies with capacity in Vietnam were hard hit amid rising anti-China sentiment in Vietnam. Texhong Textile (02678) plunged 7.5% to HK$5.05. Fittec (02662) dived 10.53% to HK$0.34. Kingmaker (01170) weakened by 2.67% to HK$1.46.

In India, intraday volatility continued as key benchmark indices alternately swung between positive and negative zone in mid-afternoon trade. At 14:20 IST, the S&P BSE Sensex was up 13.02 points or 0.05% at 23,828.14. Among the 30-share Sensex pack, 15 stocks gained and rest of them declined.

Tata Motors edged lower in choppy trade after the company said its group's global wholesales, including Jaguar Land Rover (JLR), fell 7.65% to 75,026 units in April 2014 over April 2013.

Bajaj Auto declined 2.11% after the company reported weak Q4 results. The company's net profit fell 0.24% to Rs 763.93 crore on 2.54% rise in total income to Rs 5117.10 crore in Q4 March 2014 over Q4 March 2013. The result was announced during market hours.

Elsewhere in the Asia Pacific region, Taiwan's Taiex index declined 0.03%. South Korea's KOSPI index was up 0.06%. New Zealand's NZX50 fell 0.17%. Singapore's Straits Times index added 0.41%. Indonesia's Jakarta Composite Index added 1.43%. Malaysia's KLSE Composite closed 0.03% higher.

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