Asia Pacific Market: Stocks mixed on Fed speak, Carl Ichan comments

Asia Pacific shares finished mixed after zigzagging between gains and losses on Tuesday, 19 November 2013, as investors took money off the table following sharp recent rally and as overnight fall in Wall Street after cautious comments on equities by Carl Icahn.

The MSCI Asia Pacific Index closed 0.1% to 143.13 after falling as much as 0.2%. The measure jumped 3.2% in the three trading days through yesterday as China pledged to execute economic reforms and Federal Reserve chairman nominee Janet Yellen said she would continue U.S. stimulus.

Activist investor Carl Icahn said on Monday he is very cautious on the stock market, saying he could see a big drop because earnings at many companies are fuelled more by low borrowing costs than management's efforts to boost results.

Investors were turning their attention to the minutes of the Fed's October 29-30 meeting due tomorrow, 20 November 2013, as well as a speech by Fed Chairman Ben Bernanke later in the global day for further indications on the future course of U.S. monetary policy. The Fed has always maintained that it could trim its $85bn-a-month bond buying stimulus when the US economy improves, as officials expect it to. The central bank will announce its monetary policy decision on 18 December.

At a Nov. 14 congressional hearing on her nomination to run the Fed, Vice Chairman Janet Yellen indicated she'll press on with the central bank's monetary stimulus until she sees a robust recovery, downplaying risks the policy is inflating asset bubbles.

Fed FOMC voting member William C. Dudley said on Monday that while he was more hopeful that the US economy was strengthening, however it was not enough to warrant cuts in the stimulus as yet. However, Fed officials continue to hold divergent views and non-voting FOMC member Plosser said yesterday that the labour market had improved enough to warrant Fed winding down asset purchases.

Among Asian bourses, Japanese shares fell down on profit booking following sharp rally last week and Yen hardening against the greenback. The benchmark Nikei225 index sank 1.62 points to 18164.30, while broader Topix index rose 2.63 points to 1247.67. Turnover was relatively thin on cautious ahead of the Bank of Japan 2-days monetary policy meeting that begins tomorrow. Market experts whispering that the Bank of Japan might maintain status quo.

Japanese Yen was trading slightly stronger vis-vis the US Dollar late afternoon on Tuesday, extending yesterday's gains amidst broad Dollar-weakness. USD/JPY was currently trading lower around 99.77 compared to yesterday's close of 99.99. The U.S. unit touched 100.40 yen in Tokyo Monday before suffering a sell-off.

Shares of Japanese exporters continued falling for second day in row, as stronger yen triggered profit taking. Auto majors Toyota Motor Corp dropped 0.8% to 6300 yen and Honda Motor Co fell 1.1% to 4095 yen. Electronic maker Pioneer Corp shed 1% to 195 yen, Sharp Corp 1.8% to 278 yen, Fujitsu 1.3% to 463 yen and Tokyo Electron 3.6% to 5310 yen. Subaru car maker Fuji Heavy Industries fell 0.4% to 2804 yen after announcing its U.S. plant was damaged by a tornado.

Sony Corp, however, rose 1.3% to 1886 yen on the top of 0.9% gain prior day on reports of strong sales for its just-launched PlayStation 4 videogame console. Olympus Corp rose 3% to 3280 yen on report that it may work with Sony on camera components.

In Australia, Australian shares drifted lower, weighing the benchmark S&P/ASX 200 index down 31.80 points to 5352.90 on catching the downbeat sentiment from offshore bourses. All sectors eased, exception being healthcare, with shares in precious metal, realty, industrials, financials, energy and materials companies were amongst the biggest drags.

Shares of precious metal producers declined the most in Sydney, as bullion extending losses for the second consecutive session. The safe haven appeal of the Yellow metal has come under pressure amidst the recent rally witnessed in global equities and the largely positive global risk sentiment. Among bullion stocks, Newcrest Mining shed 0.9% to A$9.16, Perseus Mining 11.1% to A$0.32 and Kingsgate Consolidated 4.5% to A$1.285.

Materials and resources were also down inline with fall in base metal price at LME. Base metals fell as expectations of a growing surplus of the metal and a lack of immediate measures to boost commodities demand in China's reform package. The shutdown of Glencore Xstrata's PASAR copper smelter and refinery in the Philippines along with a fall in US dollar against basket of currencies with ongoing speculation over the Federal Reserve to maintain its stimulus program until well into next year supported the metal prices at lower levels. Among miners, Australia's second biggest miner, Rio Tinto falling 0.8% to A$65.16 and the larger BHP Billiton 0.1% to A$37.90. Fortescue Metals was down 0.2% to A$5.88. Arrium (formerly OneSteel) was down 1.2% to A$1.62.

Commonwealth Property Office Fund surged 5% to A$1.27 after a bidding war broke out for the company -one of Australia's largest office landlords. GPT Group on Tuesday made a cash-and-shares offer for the firm, valuing it at A$3 billion and beating a joint offer from Dexus Property Group and Canada Pension Plan Investment Board.

Seven Group (SVW) held its AGM today, telling shareholders it is looking at different sectors such as agribusiness and water for growth following a downturn in its mining services business WesTrac. SVW shares today rose 1.1% to A$7.55.

Australia's central bank has left the door open for more interest rate cuts to support the economy, saying growth in the year ahead will be constrained by lower mining investment, a high exchange rate and weak public spending. In the minutes of its Nov. 5 board meeting, the Reserve Bank of Australia said that given the substantial degree of policy stimulus that has already been imparted, it was prudent to hold the cash rate steady but not to close off the possibility of reducing it further. RBA held interest rates steady at a record-low 2.5% at that meeting.

In China, Chinese financial market declined for the first time in last four sessions, as investors took money off the table on market overheating woes following sharp recent rally after ambitious reform agenda. The Shanghai Composite declined 0.2% to 2193.12 while the CSI 300 Index shed 0.7% to 2412.16.

China's top securities regulator on Tuesday reiterated a commitment to easing the government's control over the initial public offering (IPO) process, but said the government will also intensify its auditing of companies hoping to list. Detailed reform plans released on Friday after a party meeting pledged to push forward stock issuance registration system reform, suggesting firms seeking to tap equity markets will no longer depend on official approval. The reform will bring China's IPO vetting process closer to that in developed countries where firms register their IPOs and go through a rigorous audit before listing.

China's money markets showed signs of easing strain on Tuesday, with rates falling from yesterday level after the central bank injected a sizable CNY35 billion into the money market today as the bank faces growing calls to move carefully in its bid to force the financial system to deleverage. The seven-day repo, a gauge of borrowing costs among banks and usually watched as an indicator of liquidity stress, traded at a weighted average of 4.880% by late afternoon compared with 5.75% prior day. The overnight repo, a benchmark measure of interbank funding availability, traded at a weighted average of 4.10% compared with 4.60% previous day.

Consumers' confidence in China continued to pick up in the third quarter, as consumers from small cities grew more optimistic about their financial conditions and were willing to spend more against the backdrop of a modest economic recovery, a private survey released Tuesday showed. China's consumer confidence index was at 110 in the third quarter, steady from the second quarter and up from 106 in the third quarter of 2012, according to Nielsen -- a global consumer information provider. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.

In Hong Kong, HK shares finished little lower after zigzagging between gains and losses as investors withdrew some money off the table due to sharp rally prior day. Hong Kong's benchmark Hang Seng Index fell 2.25 points to finish at 23657.81, while the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong added 0.5% to 11365.45, paring an earlier gain of as much as 2.1%.

Among the HK 50 blue chips, 20 stocks rose and 28 fell, with two stocks remaining steady. China Resources Land (01109) slid 4.7% to HK$21.45, while China Life (02628) gained 4.8% to HK$24.2, making themselves the biggest blue-chip loser and winner.

Coal mining stocks in Hong Kong were mixed despite the output for October grew 2%. China Shenhua (01088) added 1.2% to HK$25.9. China Coal (01898) and Yanzhou Coal (01171) softened 0.6% and 0.5% to HK$4.86 and HK$7.85.

Chinese insurers and energy companies listed in Hong Kong were up after China policy makers unveiled the biggest package of economic reforms since the 1990s last week. Among insurers, China Life surging 4.8% to HK$24.20, while Ping An Insurance (Group) Co., China's second-largest insurer, added 0.6% to HK$69.90. Among oil & gas producers, China Petroleum & Chemical Corp. rose 1.2% to HK$6.99. Kunlun Energy Co., a gas supplier, increased 2.1% to HK$13.64. PetroChina Co., the nation's biggest oil and gas producer, advanced 2.5% to HK$9.49.

Hong Kong Monetary Authority announced today the composite interest rate, which is a measure of the average cost of funds of banks, increased slightly by 2 basis points to 0.34% at the end of October 2013, from 0.32% at the end of September 2013. The rise in the composite interest rate in October reflected increases in the weighted funding cost for both deposits and interbank funds.

In India, Indian benchmark indices eked out small gains in lacklustre trade. The market breadth, indicating the overall health of the market, once again turned positive from negative in late trade. The barometer index, the S&P BSE Sensex, was provisionally up 27.69 points or 0.13%, off 55.97 points from the day's high and up 49.74 points from the day's low. In the foreign exchange market, the rupee edged higher against the dollar, on broad decline in dollar triggered by speculation Federal Reserve speakers including Chairman Ben S. Bernanke will reiterate economic growth isn't yet sufficient to trim stimulus.

Indian index heavyweight and cigarette major ITC edged lower in volatile trade. IT major Infosys extended intraday gains in late trade. Small car maker Maruti Suzuki India edged higher. Bharat Heavy Electricals (Bhel) rose after the company said it has bagged a main plant package contract worth Rs 1300 crore for setting up thermal unit from NTPC. Offshore oil services providers gained on renewed buying.

Elsewhere in the region, Indonesia's Jakarta Composite index rose 0.11%. South Korea's KOSPI rose 1.04%. Taiwan's Taiex index jumped 0.84%. Malaysia's KLSE Composite added 0.82%. Singapore's Straits Times index shed 0.34%.

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