Asia Pacific Market: Turned softer as US budget talks deteriorating
Asia Pacific share markets fell into the sea of red on Friday, December 21, 2012, as heightened uncertainty about the outcome of budget negotiations in Washington among President Barack Obama, House Speaker John Boehner and other Republican lawmakers.
Market participants are in stalemate amid skepticism over U.S. budget talks and efforts to avoid the so-called fiscal cliff of automatic spending cuts and tax increases that will take effect next year in the absence of a fresh accord.
The U.S. House of Representatives postponed voting on a bill on Thursday to extend tax cuts, raising concerns about the so-called fiscal cliff, in which the expiration of major tax breaks and an expenditure cut will occur simultaneously.
House Speaker John Boehner said he would try to push through the House of Representatives his Plan B to extend Bush-era tax cuts for those with incomes under US$1 million, but late Thursday evening he canceled a House vote on his so-called Plan B to avert much of the fiscal cliff because lacking Republican supports to pass the bill in the House.
House Speaker Boehner's so called plan B bill would raise taxes on Americans earning more than $1 million per annum, others would have Bush-era low tax rates extended. It also included a provision to permanently index the alternative minimum tax and preserve the current top rate for the estate tax. Obama wants the level to be $400,000.
The MSCI Asia Pacific Index slipped 0.7% to 128.32 late afternoon, reversing an early 0.6% gain that was driven by reports which added to signs the U.S economy is recovering. Latest economic figures showed US economy grew at a 3.1% in the 3Q, more than the previously reported 2.7%. Initial jobless claims rose by 17,000 to 361,000 last week, in line with expectation. Existing home sales for November rose 5.9% MoM, more than twice the 2.3% increase expected by economists.
In the Asia Pacific, Japan's Nikkei 225 Stock Average declined 1% as the yen advanced against all of its 16 major counterparts. Australia's S&P/ASX 200 lost 0.2% and New Zealand's NZX 50 Index slipped 0.5%. Hong Kong's Hang Seng Index fell 0.7%, while China's Shanghai Composite Index dropped 0.7%. South Korea's Kospi Index fell 1%, Taiwan's Taiex Index declined 1% and Singapore's Straits Times Index slid 0.4%. India's BSE30 lost 1% and Malaysia's KLSE Composite dropped 0.7%.
Back to country wise- Tokyo market closed steep lower after wiping out initial gains, dragging the benchmark Nikkei Stock Average 99.27 points from prior day to finish at 9,940.06, registered second day of straight fall, on worried about market overheating and continued uncertainty about the fiscal cliff. Meanwhile the dollar's weakening to the 83 yen level and euro to 110 level fueled selloff as well. The benchmark index briefly rose to 10,175, its highest point since April 2, when it hit 10,190. For the week, the benchmark still managed a gain of almost 2.1%, and remains up nearly 18% year-to-date.
Exporters were lower on profit taking after yen appreciated against major currencies, with Sony Corp declined 1.6% to 906 yen, Canon Inc 1.5% to 3,305 yen, Fujitsu 0.6% to 345 yen, Pioneer Corp 5.3% to 213 yen, and Sharp Corp 2.3% to 295 yen. Hitachi dropped 1.4% to 482 yen and Fast Retailing Co shed 1.4% to 20,090 yen. Mitsubishi Motors Corp surrendered 5.9% to 208 yen after government rebuke for issuing a fourth vehicle recall over the same safety issue.
Shares of realty and financials players eked out gains on hopes for more accommodative central bank and economic stimulus policies under the incoming Liberal Democratic Party-led coalition government. Mitsubishi Estate Co was up 2.9% to 1,897 yen, Sumitomo Realty & Development Co 3% to 2,643 yen, Tokyo Tatemono Co 7.2% to 419 yen, and Heiwa Real Estate Co 3.5% to 1,098 yen. Nomura Holdings added 0.5% to 431 yen.
Australia's share market finished lower in the red region on Friday, December 21, 2012 as investors sold off stocks amid worries about US fiscal cliff negotiations. Domestic shares gave up its morning gains to turn negative after a vote was cancelled that may have helped the U.S. avoid the worst of a looming so-called fiscal cliff. A controversial Republican plan to let tax breaks expire on millionaires crashed to defeat Thursday when it failed to earn enough party support, leaving negotiations on averting the 'fiscal cliff' up in the air. By the provisional closing, the benchmark S&P/ASX 200 closed down 10.5 points, or 0.2%, at 4623.6 points, reversing gains that had seen the index up as much as 0.5% at 4658.7 points. Meanwhile, the broader All Ordinaries index was down 11.4 points, or 0.25%, at 4,635.2.
Australian mining stocks suffered some of the heaviest losses, with Rio Tinto down 56 cents to A$64.74, BHP Billiton shed 34 cents to A$36.70 and Fortescue Metals had given up 12 cents to A$4.38. Qantas Airways ended flat, outperforming a downbeat market, after reporting that it carried 6.4% more passengers in November compared to the same period a year ago.
South Korea's benchmark Kospi Composite declined 1% to 1,980.42, dragged down by, heavyweight Samsung Electronics Co, erasing 4.1% after European Union regulators said late Thursday that they plan to issue a complaint against the firm as part of a probe over patents.
Mainland China shares closed lower, as investors indulged into profit taking after solid recent gains, and on worried about possible glut of share supply. Selling was also fueled amid dimming hopes that US politicians will reach a debt deal before the end of the year. The benchmark Shanghai Composite index settled session at 2,153.31, down by 15.04 points from prior day closure. The benchmark managed eked out 0.4% weekly gain, and was still up nearly 194 points or 10% from a lowest level in 47-month hit on December 3, 2012. The Shanghai index fell 2.1% this year.
The Chinese market performance was confined by the relatively tight liquidity as unlocking of massive non-tradable shares. A total of 91 billion yuan worth of non-tradable shares will be allowed to circulate in the Shanghai and Shenzhen markets this week, up 88% from the previous week and marking the biggest weekly infusion this year. Selling was also intensified as non-tradable shareholders reduced their holdings. Non-tradable shares worth of 3.8 billion yuan were sold so far this month after they were allowed to circulate in the Shanghai and Shenzhen stock markets, up 21.4% from a month earlier.
Chinese lenders and realty stocks ended lower today after the China Securities Journal said the government may introduce new housing curbs as home prices rebounded. Minsheng Banking declined 1.4% to 7.33 yuan and China Construction Bank Corp lost 2.7% to 4.41 yuan. China Vanke Co dropped 0.5% to 9.43 yuan, Poly Real Estate 1.5% to 12.12 yuan, and China Merchants Property Development Co 1.6% to 25.97 yuan.
Brokerages were down on reports that 236 million shares of ten listing brokers have been liquidized by their holders in the fourth quarter. CITIC Securities, China's biggest listed brokerage, lost 1.4% to 11.87 yuan. Soochow Securities Co dropped 2.6% to 7.48 yuan. China Merchants Securities Co declined 2.4% to 9.95 yuan.
Hong Kong share market ended lower, mirroring losses across Asia amid dimming hopes that US politicians will reach a debt deal before the end of the year. The benchmark Hang Seng Index declined 153.49 points to 22,506.29, while Hang Seng China Enterprises Index dropped 123.36 points to 11,229.09. Energy firms were weighing in Hong Kong, with China Petroleum & Chemical Corp. down 1.4%, and Cnooc falling 0.4%, as benchmark U.S. oil futures briefly dropped below the $89-a-barrel level on the fiscal-cliff vote news.
India's 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), was down 216.14 points (1.11%) at 19,237.78, on weak global cues due to uncertainty over the US fiscal cliff. Lenders were hit by profit-taking, while Bharti Airtel declined after federal police filed charges as part of a probe into alleged corruption in the allocation of mobile airwaves a decade ago.
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