Asia Pacific Market: Stocks mixed as North Korea woes linger

Asia Pacific share market closed mixed on Tuesday, 05 September 2017, as investors' risk averse mood continued amid concerns of escalating tensions on the Korean Peninsular.

The market mood remained "risk off" with investors opting not to make bold moves amid ongoing concerns about a possible escalation of tensions on the Korean Peninsula. South Korea said there were signs the North was preparing another rocket launch, possibly an intercontinental ballistic missile similar to the one fired over Japan last week.

Tensions on the Korean peninsula spiked after Pyongyang conducted its sixth nuclear test on Sunday sparking global condemnation and a warning from the US of a "massive military response" if it or its allies were attacked. Traders and investors largely opted to stay on the sideline ahead of events including North Korea's possible missile launch around the national founding day on 9 September 2017.

US financial markets remained closed yesterday, 4 September 2017 in observance of Labor Day. The US on Monday called for the strongest possible sanctions to be imposed on North Korea a day after the North said it had tested a hydrogen bomb.

Among Asian bourses

Australia Market ends steady

Australian equity market finished session marginally higher after recouping early losses, thanks to after a relatively upbeat message from the RBA and more solid economic data. Most of ASX sectors recovered, with strong commodity prices which pushed up material stocks higher while financial stocks erased early losses. At the close, the S&P/ASX 200 index closed 0.07%, or 4.20 points, lower at 5706.20, while the broader All Ordinaries index closed up 0.07%, or 4.03 points, at 5767.80. Falling stocks outnumbered advancing ones on the Sydney Stock Exchange by 663 to 512 and 351 ended unchanged. The S&P/ASX 200 VIX, which measures the implied volatility of S&P/ASX 200 options, was down 0.33% to 13.525.

The ASX lost ground early and spent the rest of the session recovering from that morning low as the major banks turned opening losses in modest gains by the close. Despite the lingering geopolitical concerns, the overall market mood was relatively calm through the day and a no-change decision on interest rates from the Reserve Bank of Australia in the afternoon reinforced that steady tone. Another upbeat set of economic data, this time on trade and government spending over the June quarter, provided a temporary boost to the dollar and helped buoy the mood.

The Reserve Bank of Australia (RBA) kept its key cash rate at 1.5% for the thirteenth straight month, explaining a no-change stance is best to foster "sustainable growth in the economy" and to achieve its inflation target over time.

Shares of material stocks finished higher, with BHP Billiton ending 0.5% up to A$27.62, its highest close in more than seven months. Major miners Newcrest Mining, Rio Tinto both rose 0.7% and copper miner OZ Minerals gained 1.1%.

Financial stocks recovered from losses incurred early after a class action lawsuit against Commonwealth Bank of Australia over a money-laundering scandal knocked the market heavyweight and others in that sector lower. The National Australia Bank and Australia was up 0.3% to A$30.35 but the New Zealand Banking Group was down 0.1% to A$29.35. Commonwealth Bank of Australia and Westpac climbed 0.2% Bendigo & Adelaide Bank dropped 3.3% as it traded without the right to its most recently announced dividend.

Nikkei extends losses on North Korea woes, yen rise

The Japan share market extended losses, as investors' risk averse mood continued amid yen appreciation against dollar and concerns about any fresh developments in the North Korea nuclear crisis. Most of TSE sectors declined, with marine transportation, securities and air transportation-linked issues comprised those that declined the most by the close of play. At the close, the 225-issue Nikkei Stock Average dropped 122.44 points, or 0.63%, to 19,385.81. The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, lost 12.84 points, or 0.80%, to 1,590.71. Falling issues far outnumbered rising ones 1,786 to 181 in the TSE's first section, while 58 issues were unchanged. Volume rose to 1,640 million shares from 1,595 million shares on Monday.

Export-linked issues came under pressure due to the strength of the yen as they tend to get sold when the yen is strong as their profitability and competitiveness in overseas markets becomes diminished. Nintendo fell 2.28% to 35,940 yen while SoftBank dropped 1.68% to 8,621 yen.

Fukui Computer plunged 16.87% after the surveying calculation system developer said on Monday that a large shareholder demanded it hold a shareholder meeting to replace its president.

Japan Post dropped after reports said the government was planning a second share sale this month worth billions of dollars.

China Stocks extend gains for third day

The Mainland China equity market closed session at fresh 20-month highs, as investors appetite for risk assets underpinned after a flurry of data for August reinforcing expectation that the momentum will largely hold up through to the end of the year despite tighter policy. The blue-chip CSI300 index rose 0.3%, to 3,857.05 points, while the Shanghai Composite Index added 0.1% to 3,384.32 points. The Shenzhen Composite Index and the start-up board index ChiNext gained 0.2% and 0.1% respectively to 1,972.14 and 1,885.16.

Following stronger-than-expected factory activity surveys released last week, August data is expected to suggest China's momentum may hold up through the end of the year despite tighter policy. Adding to the upbeat mood, a private business survey on Tuesday showed that China's services sector expanded at a faster clip in August as new business orders picked up.

The Caixin China Services Purchasing Managers' Index (PMI), a private gauge of sentiment in the mainland's services sector, rose to a three-month high of 52.7 in August, up from 51.5 in July, indicating a stronger expansion, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media. The increase in new activity was the fastest seen in three months, with several firms linking growth to improving market conditions and new marketing strategies, the survey said.

The Caixin manufacturing PMI, which was released last Friday, rose to a six-month high of 51.6 from 51.1 in July. China's official manufacturing PMI, leaning toward larger and state-owned companies, rebounded to 51.7 in August from July's 51.4, said the National Bureau of Statistics. Economists said strong production and a rebound in new orders lifted the August PMI, with better-than expected economic growth likely to be recorded in the third quarter.

Banks and insurance shares advanced, with Ping An Insurance gaining 2.1% to 56.3 yuan, and China Life Insurance up 1.5% to 29.28 yuan. China Pacific Insurance Group Co Ltd rose 4.67% to 39.65 yuan. The Agricultural Bank of China rose 2.67% to 3.85 yuan, and China Construction Bank added 2.62% to 7.06 yuan.

Hong Kong Market ends marginally higher

The Hong Kong stock market finished marginally higher, registering first gain in last four sessions, on tracking stable performance in mainland Chinese markets and on bottom fishing. However, upside move capped as investor sentiment still affected by the regional political tensions that had troubled the market the day before. Sector performance was mixed, with gains were lead by property developers, as top developer China Vanke posted solid sales growth in August. The Hang Seng Index fluctuated between 27,685.3 and 27,871.76 during the day before closing up 1.09 points at 27,741.35. The Hang Seng China Enterprises Index, known as the H-share index, was up 0.1%, or 8.92 points, to close at 11,191.59. Turnover decreased significantly to HK$77.1 billion from HK$87.7 billion on Monday.

HK investors remained in a defensive mood on persistent concerns over North Korea. South Korean officials believe more provocation from the reclusive state is possible, despite international outrage over Sunday's missile test and calls for more sanctions on North Korea.

The northbound quota balance of the "Shanghai-HK Connect" program was RMB12.837 billion, accounting for 98.7% of the daily allowed quota of RMB13 billion. The southbound quota balance was RMB9.455 billion, accounting for 90% of the daily allowed quota of RMB10.5 billion. It indicated a net outflow of RMB78 million. As for the Shenzhen-HK Connect, the northbound quota balance was RMB12.104 billion, accounting for 93.1% of the daily allowed quota of RMB13 billion. The southbound quota balance was RMB9.77 billion, accounting for 93% of the daily allowed quota of RMB10.5 billion.

Among market movers in Hong Kong, Wharf Holdings jumped 3.6% to HK$76.65, after the conglomerate filed an application to the exchange to spin off its property unit for a separate listing on the main board. Wheelock and Co. (00020) put on 1% to HK$57.9. Wheelock will own a 62% stake in Wharf REIC.

Shares of property developers advanced, as top developer China Vanke posted solid sales growth in August. Shares of the dual-listed property giant China Vanke climbed 3% to HK$23.75 after it reported a 47.3% increase in contract sales for the first eight months of the year. Vanke announced that its contract sales grew 85% to RMB37 billion in August. Credit Suisse raised its target price for the developer from HK$25 to HK$28, and reiterated its "outperform" rating. Among other developers, Henderson Land Development and China Resources Land rose 0.9% and 0.6% respectively to HK$48.8 and HK$24.3. Sunac China soared 7.7% to HK$25.3.

iPhone's supply chain components makers saw profit-taking after yesterday's rally. AAC Technologies Holdings (02018) edged down 0.7% to HK$143.8. TK Group (02283) fell 2% to HK$3.78.

Sensex posts modest gain

Indian stock market logged modest gains in volatile session of trade as positive European stocks boosted sentiment, triggering an intraday recovery in latter half of the session. The barometer index, the S&P BSE Sensex, rose 107.30 points or 0.34% to settle at 31,809.55. The Nifty index rose 39.35 points or 0.4% to settle at 9,952.20. Gains were led by index heavyweights Reliance Industries and HDFC.

Index heavyweight Reliance Industries (RIL) gained 1.34% to Rs 1,633 after a foreign brokerage house reportedly said it expects the oil and gas major's gross refining margins to gain on a global supply glut concerns.

Index heavyweight and housing finance major HDFC advanced 0.65% to Rs 1,767.

Wipro fell 0.05%. The company announced the launch of its newest digital pod in Edinburgh, Scotland, deepening its commitment to offer digital services at close proximity to its UK and European customers. The announcement was made after market hours yesterday, 4 September 2017.

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