Asia Pacific Market: Stocks up on strong PMI
China's factory activity expanded at its fastest pace in 18 months in July as new orders surged, a preliminary HSBC survey showed on Thursday, the latest indication that the economy is picking up as government stimulus measures kick in. A preliminary reading of the manufacturing PMI for China from HSBC Holdings Plc and Markit Economics increased to 52 in July, from 50.7 the previous month when the gauge moved into growth territory for the first time this year. It was the highest reading since January 2013, and above the 50-point level that separates growth in activity from contraction
Euro-area manufacturing and services activity strengthened in July in a sign that a recovery in the 18-nation region is gathering pace. A combined purchasing managers index for both industries jumped to 54 this month from 52.8 in June, matching a three-year high reached in April, Markit Economics said on Thursday. Numbers above 50 indicate expansion.
Germany's figures also came in better than expected, with the manufacturing PMI rising to a three-month high of 52.9. The composite PMI climbed to 55.9, also a three-month high.
Among Asian bourses
Australia shares extend gain for seventh day
Australian stock market closed higher, registering gain for seventh session in row, on the back of better than expected Flash Chinese manufacturing data for July and US company earnings. But gain on the upside was modest as investors generally believed stocks are close to fully valued and are also waiting on the local company financial reporting season, which gets underway in in August. The benchmark S&P/ASX 200 Index advanced 11.10 points, or 0.2% to 5587.80, a highest closing level since June 2008, while the broader All Ordinaries Index added 9.80 points, or 0.18%, to 5576.80.
Most of the ASX sectors climbed up, with shares in technology, consumer discretionary, consumer staple, healthcare, financial and energy companies being the biggest gainers. Shares of mining companies declined amid lower iron ore prices in China.
Insurance Australia Group jumped 2.2% to A$6.17 after upgrading its full-year profit margin expectations to their highest level since listing, citing benign weather.
Telstra Corporation rose 0.6% to A$5.48 following a decision to send more than 600 jobs offshore.
Shares of with iron ore miner Fortescue Metals Group falling 1.1% to A$4.57 after iron ore price fell below $US95 for the first time in three weeks. Rare earths miner Lynas Corp dropped 7.5% to A$0.185 on profit booking following strong recent gain. Rio Tinto rose 1.1% to A$65.25. Junior iron ore miner Atlas Iron gained 3.5% to A$0.59 after showing record June quarter production.
BHP Billiton advanced 0.2% to A$38.06 as a raft of analysts reiterated buy ratings after the company delivered a bumper June quarter production report and upgraded its 2015 production guidance on Wednesday.
New Crest Mining sank 6.2% to A$10.78 after the gold miner told the market today it had beaten its own gold and copper production targets for the year. But NCM warned it will be posting asset impairments in its next result from between A$1.5 to A$2.5 billion for FY14, when it reports next month.
New Zealand shares rise
New Zealand share market rose after the central bank raised its benchmark interest rate and signaled it will now pause increases amid benign inflation. The market gain was paced by Xero after the cloud-based accounting software firm said it is mulling a New York listing where shares in Facebook and Apple have rebounded. Telecom Corp rose to the highest since it spun out Chorus, as the deadline for the network provider's regulated price cuts looms. By the provisional closing, the NZX 50 Index rose 28.182 points, or 0.5%, to 5174.712. Within the index, 34 stocks rose, 11 fell and five were unchanged. Turnover was NZ$111 million.
The Reserve Bank of New Zealand lifted its official rate by 25 basis points to 3.50% on Thursday, 24 July 2014, the fourth consecutive rise to the highest level in more than five years
The NZ central bank said it would now take a breather as it looked at the impact of its tightening and watched inflation in the economy. RBNZ Governor Graeme Wheeler said in a statement that the speed and extent of future rises would depend on the impact of its 100 basis points of tightening since March, and the strength of data.
The bank's forecasts in June implied the cash rate reaching 3.75% by the end of the year, two additional 25 basis point rate increases this year, and a steady pace through 2015.
Nikkei falls 0.29% as growth concerns persist
Japan share market declined for second consecutive day after the government cut its fiscal year growth forecast and official data indicated Japan's trade deficit ballooned to a record in the first half of the year. The benchmark Nikkei 225 index lost 0.29%, or44.14 points, to close at 15,284.42, while the Topix index of all first-section issues declined 0.20%, or 2.53 points, to 1,269.86.
Data from the finance ministry showed the Japan's logged a record 7.60 trillion yen ($74.7 billion) deficit for the first six months of the year, expanding 58% from a year earlier. The half-year figures were released with June data that showed the monthly deficit more than quadrupled to 822.2 billion yen from 180.5 billion yen a year earlier. Last month, exports fell 2% year on year to 5.94 trillion yen while imports rose 8.4% to 6.76 trillion yen.
The figures come days after the government cut its fiscal year growth forecasts, blaming weak exports and a jump in imports as well as the negative impact of an April sales tax hike on consumer spending and business confidence. The Cabinet Office revised down Japan economic growth forecast to 1.2% in the year to March on Wednesday, compared with a previous estimate of 1.4%. The announcement comes a week after the Bank of Japan also lowered its outlook to 1% from an earlier 1.1%.
Shares of steel and non-ferrous metal producers and information technology firms were among the weakest of the 33 sectors on the Topix index. Nippon Steel & Sumitomo Metal dropped 1.2% to 307.6 yen, while Mitsui Mining & Smelting lost 1.3% to 299 yen. Telecommunications giant SoftBank fell 1.8% to 7,459 yen and Nippon Telegraph & Telephone shed 1.9% to 6,714 yen.
Shares of exporters and yen sensitive companies declined as Japanese yen maintained its firmer tone, particularly against the euro, denting risk-taking sentiment. Casio Computer Co lost 2.1% to 1518 yen and Tokyo Electron fell 2.5% to 6579 yen. Mazda Motor Corp dropped 1.2% to 481 yen. Nippon Paper Industries Co dropped 1.7% to 1756 yen. Credit Saison Co fell 1.5% to 2063 yen.
Nintendo retreated 3.4% to 12,595 yen. Jefferies downgraded its recommendation on the game-console maker to hold from buy and reduced its price target on the shares to 12,400 yen from 19,000 yen.
Matsui Securities Co. sank 1.9% to 964 yen after the online brokerage said first-quarter profit slumped 50% to 2.93 billion yen.
China stocks rise to 3-month high on upbeat manufacturing data
Mainland China share market advanced on Thursday, 24 July 2014, extending winning streak for third consecutive day, boosted by the better than expected Flash Chinese manufacturing data for July. The benchmark Shanghai Composite advanced 26.57 points, or 1.28%, to 2105.06, the highest closing level since April 16. Trading turnover increased to 128.68 billion yuan from yesterday's 106.70 billion yuan.
A preliminary reading of the manufacturing PMI for China from HSBC Holdings Plc and Markit Economics increased to 52 in July, from 50.7 the previous month. It was the highest reading since January 2013, and above the 50-point level that separates growth in activity from contraction.
The preliminary factory figures came after the HSBC upgrade of domestic GDP forecast. HSBC has upgraded its forecast for China's year-on-year gross domestic product growth to 7.5% from 7.4%, saying recovery has been stronger than expected. The Chinese economy expanded 7.5% year on year and 2% quarter to quarter (seasonally adjusted) in the second quarter. In the first half of 2014, China's economy expanded 7.4% from a year earlier.
Shares of financial, including banks, developers and brokerages, companies being the biggest gainers in mainland China on optimism over the economy after the government accelerated spending, allowed some local governments to loosen property curbs and cut reserve-requirement ratios for some lenders.
Industrial Bank added 5.5%, while China Construction Bank Corp. gained 1.5%. Poly Real Estate, China's second-largest developer by market value, rallied 7.6%. China Vanke Co, the biggest, advanced 4.1%. Changjiang Securities Co. soared 10% and Sinolink Securities climbed 5.9% on speculation new share sales will boost earnings.
Hang Seng rises to a three-year high
Hong Kong share market advanced to a three-year high today, on the back of stronger than expected flash manufacturing gauge from China and euro-area. The benchmark Hang Seng Index climbed up 169.63 points, or 0.71%, to 24141.50, the highest close since April 11, 2011. Turnover increased to HK$86.03 billion from yesterday's HK$79.82 billion.
HSBC (00005) was the engine for the rally. It contributed 28-point gains to the HSI. It nudged up 0.8% to HK%80.75. China Mobile (00941) added 1.2% to HK$85.15, adding 20 points to the benchmark index.
Ping An Insurance advanced 3.7% to HK$64.20, the top blue-chip winner, after Great Wisdom reported that UBS AG, JPMorgan Chase & Co., Blackstone Group and others spent more than HK$2 billion buying about 36 million Ping An H-shares in the first two weeks of this month.
Shares of Great Wall Motor jumped 7.4% to HK$32.50 as China International Capital Corp (CICC) recommended the shares after the auto-maker posted preliminary results. CICC raised its rating on the stock to buy from hold, while Barclays Plc said the company's operating profit margins held up better than expected in the first half.
Huadian Power slid 6.8% to HK$5.09 after saying it will raise HK$1.38 billion ($178 million) by placing 286.2 million new H-shares at HK$4.92 each. That's a 9.9% discount to yesterday's close.
Sensex closes at new high
Indian stock market closed at fresh highs as stocks of steel, metal and mining companies rose after Chinese manufacturing gauge topped estimates. The Sensex rose 0.48%, or 124.52 points, to close at an all-time high of 26,271.85 points, while CNX Nifty added 0.45%, or 34.85 points, to end at a fresh high of 7,830.60 points.
Shares of insurance companies gained after reports that the Union Cabinet has approved hike in the ceiling on foreign direct investment (FDI) in insurance sector to 49% from 26%. Reliance Capital gained 4%, Max India advanced 0.9% and Bajaj Finance added 2.7%.
Jaiprakash Power Ventures lost 7% after the company has informed that Taqa India Power Ventures will withdraw from the acquisition of Karcham and Baspa hydropower project. The company also said Taqa will be liable to pay breakup fee as per the acquisition terms. Jaiprakash Associates fell 6.1%.
Shares of Cairn India tumbled after a loan given to its parent raised investor concerns about the use of the company's cash reserves. The stock slumped 6.67%. As per reports, Cairn India's management disclosed at a post-result conference call yesterday, 23 July 2014, that the company has lent $1.25 billion to parent Vedanta for a two-year period as a part of the company's treasury operations. Cairn India had already disbursed $800 million to Vedanta in Q1 June 2014 and the balance amount will be disbursed in the coming quarters. Cairn India reported 65.05% fall in consolidated net profit to Rs 1092.90 crore on 10.33% rise in total income from operations (net) to Rs 4482.85 crore in Q1 June 2014 over Q1 June 2013. The result was announced after market hours on Wednesday, 23 July 2014.
Elsewhere in the Asia Pacific region-- Taiwan's Taiex index rose 0.3% to 9527.54. New Zealand's NZX50 added 0.55% to 5174.71. Malaysia's KLSE Composite was up 0.28% to 1877.05. Singapore's Straits Times index added 0.39% to 3353.89. Indonesia's Jakarta Composite Index added 0.11% to 5098.64.
Bucking the trend, South Korea's KOSPI index fell 0.08% to 2026.62 after finance ministry cut its 2014 growth estimate to 3.7 percent from 3.9 percent. The South Korean government unveiled 11.7 trillion won ($11.4 billion) of measures to shore up economy after growth slumped to the weakest pace in more than a year in the second quarter.
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